Businesses Fail Because
According to SCORE, businesses fail for many reasons. I listed the top eight below.
Lack of a well-developed business plan 78%
Not pricing properly 77%
Being overly optimistic – sales, money 73%
Not recognizing, or ignoring, what they don’t do well
and not seeking help from those who do 70%
Ineffective prioritization 66%
Denying problems exist 65%
Minimizing the importance of marketing 64%
Insufficient business experience 63%
Not having a business plan is the single biggest reason a small business fails and it drives all the other reasons a business fails.
Let’s translate what will happen when these problems occur:
1. Can not grow sales
2. Can not improve people skills
3. small business marketing suffers
4. can not build effective teams.
5. not reaching out for help – especially business coaching
A business plan has four primary objectives:
1.Defines what you do and why others will buy from you and your firm
2.Define the markets, companies, people, etc who can buy from you and how to reach them
3.Defines the road map to making money, where you need to spend your money (i.e., marketing, Internet, computers, fax, telephones, etc)
4.Defines weaknesses where you should be looking for help or areas to you need to address
A business plan is essential. You would not try to build a house with blueprints. Why would you start or run a business with the same type of blueprints.
The strange part is that if you don’t know how to do a business plan you need to ask. Number four above, really should be number one. If you don’t know what you don’t know, how do you know you don’t know it? How do you know to ask for help?
A business plan, depending on its purpose, can be a short as one page or more than 100 pages (venture capitalists want to know everything).
Just going through the exercise of writing a business plan will tell you more about what you don’t know about your business than any single exercise.
A business plan is a living document that should change as you and your business change. I will give you seven simple questions that you need to answer as part of your business plan:
1. Why are you in business? If you are not really passionate about your business, you will have trouble during the hard times and, most like you will lose interest and fail.
2. What are you selling? What problem do you think your product or service solves for your target market?
3. What is that one thing you do better than anyone else in my market? It could be as simple as free shipping to a lower price point using a new production break process.
4. Why would your target market care about what you do? Put yourself in their shoes and ask yourself “what’s in it for me?”
5. Why would your prospects buy from you? Even if you are the best, will people buy form you and if so why?
6. How much money do I need to get started? Do not underestimate.
7. How will I make money and how long with it take before I am profitable.
I do not expect you have these answers to all these questions immediately (except #1). The answers to these questions will changes as you mature as business owner and you gain in understanding about your marketing, your industry, your products, your customers and your services.
The important part of this plan is to test everything. Ask your prospects and call your competitors, do research. If you spend some time up front answering these questions, you will save yourself much pain and suffering.
Call me if you have questions and a free consultation.
Ron Finklestein
303-990-0788
ron@akris.net
