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For a country with an incredibly low employment rate, many people are going into small business. That means start-ups are on the increase. So the data is extremely scary. It means thousands are investing savings and borrowed money to fail and within their first five years in business.
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The Money Question in Business Success
There are almost as many reasons start-ups and small businesses fail as there are businesses, but there is a general clustering of the reasons why businesses fail. The most common come down to two: the people and that is the people inside the business that is owners and workers and the people outside the business that is the customers and the competition. Those four groups of people are where your need to lay your focus.Contrary to what most people think capital, or lack of it will not impact the business as severely as the people. That does not make lack of capital an insignificant factor, it just means you have a better chance of success when you place your focus on the people a little more deeply on a daily basis than at the money end of things.
A feedback culture will save you tons of money
Of special note is that the greatest cause of business failure is when there is “no market need.” It mean that a business was started, but there is no customer to sell to. The next in line and closely related to that is a “poor product design” or a service that does not meet the needs of the customer.Typically, the textbook solution to this is to start with defining your exact “anticipated” customer. If you have ever started a business from ground zero, you know that is easier on the page than in practice. The target customer will change and shift in the market place. Yet, it is still a critical factor.
Once you have established your anticipated customer in the board room, your next strongest step is to ASK the customers themselves what they want. Almost all the challenges of start-ups and small businesses, except those that concern the directors can be solved by listening to the customer. Of the best early choices you will make for your business is to own a responsive website, where you can start to generate a conversation from the beginning.
The natural question for start-ups and small business is “how do I ask customers questions if I do not have customers?” Develop a heart for asking questions and be ready to receive answers.
I call it developing a survey culture right from the beginning. In other words present quick surveys to buyers and to prospects too. You can do that easily through your responsive website designed specifically with this function in place.
Establish a corporate habit of carrying out ongoing surveys, quick questionnaires, asking for referrals, asking for testimonials, reviews, etc. Generally keep the customer talking and factor a way to keep listening and using the feedback.
Choose your business partners with care and a heavy dose of prayer
The next common reason for failure for start-ups and small business is “inability to agree amongst the founders” and lack of alignment of business goals among investors and founders. It is said, a city divided against itself cannot stand and that is true of business as anywhere else.Sometimes the disagreements between founders start because the focus of passion of some or one significant member of the team develop a new direction and focus. There is often little to mitigate this unfolding for people will always move in life in accordance to their dreams and visions.
The only way to mitigate the inability to forge ahead of partners and/or investors is to first invite partnership relationships with care and with a huge dose of prayerfulness. We have very little ability to know where a person is headed in a year or five or ten, but you can listen to your heart. Your heart, that inner voice that guides will never lead you astray.
The other important way to mitigate is to be flexible. Never write legal agreements without a comfortable exit clause. The tighter your exit strategy, the harder it will hit when the time comes to change direction, partnerships, and an investor team. Do not lock yourself in with legalese. Accept that life changes and changes will inadvertently come with the passing of time.
Top Ten Reasons for Business Failure
Here is a quick list of the tops ten reasons of failure and the general percentage failure rate:1. No market need: 42 percent – Mitigate by reading how to explode your business this year
2. Ran out of cash: 29 percent – Mitigate by reading how to grow your own economy
3. Not the right team: 23 percent
4. Got outcompeted: 19 percent
5. Pricing and/or cost issues: 18 percent
6. User un-friendly product: 17 percent
7. Product without a business model: 17 percent
8. Poor marketing: 14 percent
9. Ignore customers: 14 percent
10. Product mistimed: 13 percent
Articles in This Series
Why Your Business is Bleeding a Lot of Money Daily
The Actual Cost of the One Customer Who Walks Away
Best Income Tips on Attracting More Customers
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