How to Avoid the Most Common Reason for Business Failure

Buying
You can have the greatest idea in the world for a new product, or service, but if no one will buy it, you will not have a business—at least not for long.

In my last article, dealing with why businesses fail, I pointed out that almost 50% of the business failures studied by CB Insights failed because they tried to sell to a market that didn’t exist.

Even worse, 8 out of 10 reasons for failure had to do with wrong product, disconnected customers, or market problems. Or, in simpler terms, the startup founders built something that few people really wanted… a solution looking for a problem, or need, that just wasn’t there.

Continue reading How to Avoid the Most Common Reason for Business Failure

Why Businesses Fail

Man with empty pockets

 

In a prior article I gave a few general reasons why businesses fail. Those reasons seem to be the common ones being bandied about by “experts” and pundits in the business community. They are also somewhat generic in nature.

Since then, I ran across a more in-depth study done by CB Insights that provides very specific reasons for business failures.

CB Insights took a seemingly unusual approach to finding the answers to why businesses fail—they directly asked a group of over 100 owners why their startup businesses failed. Continue reading Why Businesses Fail

When Failure is Imminent!

Sorry, We're Closed

A while back I posted an article titled “When is it Time to Call it Quits,” but, just picking a time to close your business is only a small part of the process of calling it quits.

Oh sure, if you had tried to run a small home or Internet business, and it just didn’t work out while it was still young, you could probably simply ignore it and let it die off without any fanfare.

But, if you had a more established business with customers, creditors, employees, investors, and the like, it is a completely different story. This is especially true if you intend to start another business (and if you are truly an entrepreneur—you will).

So, if failure is imminent, here are a few things to help you get through the failure so you can move on to your next new venture:

  1. Use Your Outside Counselors.In the article mentioned above we discussed the importance of using outside counselors when trying to decide whether of not to shut down your business… it is just as important to continue using them for advice and feedback when you are going through the process of closing.
  2. Share everything.Everyone involved with your business needs to know exactly what is going on, including employees, investors, lenders, your advisors, and, especially, your family. It would be devastating for your spouse to have a process server knock on the door and serve papers to them saying you were losing your house. Don’t hold anything back just waiting for the “surprises” to happen.
  3. Have an orderly shutdown.If you decide to shut down your business, try to make it as orderly as possible… don’t just live day-to-day while circumstances close your business for you. Make a list of all the things you need to do to shut down your business; from coordinating with your landlord and utility companies, to having a parking lot sale. Schedule your closing events and approach them like any other project you do.
  4. Never, Never say: “I failed.”Failure is an event, not a person. Your business failed—you did not fail. This is never an easy concept to grasp—our business is personal to us, but it is important to separate business from emotions, especially when shutting down your business.
  5. Start the next one.Any true entrepreneur will be preparing to start their next business while they are closing down the old one. To put this into perspective, think of this: “Most great people have attained their greatest success just one step beyond their greatest failure.”
    — Napolean Hill

Failure is not a popular subject in the business world… it is often dismissed as “insignificant” in the overall scope of things. Unfortunately, it is all too real, and most of us will be faced with failure in some form, whether it is in product development, services performed, or an entire business.

It is important to understand, that having a business fail is part of the entrepreneurial life. In fact, it is an important aspect of entrepreneurship.

Here is what Thomas J. Watson Sr. had to say about business failures: “If you want to increase your success rate, double your failure rate.” The point Watson was making here is that you must constantly be putting forth a concerted effort at entrepreneurship.

The important thing to remember is that failure is not fatal. More important, I believe the following sums up what is truly important in our lives when facing a failed business:

“I really don’t think life is about the I-could-have-beens. Life is only about the I-tried-to-do. I don’t mind the failure, but I can’t imagine that I’d forgive myself if I didn’t try.” —Nikki Giovanni (Grammy-nominated American Poet and Author)


Note: For a more in-depth presentation and checklist on the process of closing a business, read my online report on Closing a Business.


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Is Failure Really a Good Thing?

End of TP Roll

When this represents the status of your business, you may want to revisit how well prepared you were to start your business in the first place.

I watched an interview with Richard Branson a short time ago, where he encouraged aspiring entrepreneurs to “screw it—just do it.”

Well, every year over 6 Million would-be entrepreneurs seem to follow Branson’s advice to “screw it—just do it,” … and….

Most of them quickly fail! Continue reading Is Failure Really a Good Thing?

Daylight Saving Time is Costly–and Dangerous!

Clock-on pole

Well, it’s been a few days now since our semi-annual ritual of the “changing of the clocks,” otherwise known as Daylight Saving Time (DST).

Did you finally get that difficult-to-reach clock changed?

How do you feel? The change to DST can affect some people for a full 3 weeks following the changeover (Sleep Medicine Journal– 2009 edition).

How has this change affected your productivity and your business? I’ve been studying the effects of switching time standards on business productivity for some time now, and here are a few of the things I discovered:

  • The economic cost of changing over each year is estimated at $433,982,548. (“Estimating the Economic Loss of Daylight Saving Time for U.S. Metropolitan Statistical Areas” -2012 study by Chmura Economics & Analytics.)
  • On the job accidents increase in both number and severity on the Monday after DST starts. (Journal of Applied Psychology -2009.)
  • There is a dramatic increase in “Cyberloafing” (surfing the Web when you should be working) on the first Monday after DST starts. (Journal of Applied Psychology -2012 study.)

Based on the above information, it is obvious that changing time standards twice yearly is a detriment to the business community.

Perhaps more startling however, are some facts that indirectly impact the business community, such as:

  • Heart attacks are 3.9% higher than normal the first week after the start of DST. (Sleep Medicine Journal-2012 edition.)
  • There are 8.6% more traffic accidents than normal on the Monday following the start of DST. (New England Journal of Medicine -1996.)
  • The journal Accident Analysis and Prevention calculated that simply staying on DST all year around would save 366 lives from fatal auto and pedestrian accidents. (“Accident Analysis and Prevention” report -2004).

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Apparently Ben Franklin first suggested ways to better utilize daylight in the summer months back in the 18th century—to save candle wax.

Proponents of DST cite energy savings as the main reason for the change, but a study done in Indiana when it went to state-wide DST showed that the switch cost the state of Indiana about $9 million per year in increased energy consumption.

It seems that since the days of using candles for lighting, the world has developed automatic heating and cooling; automatic street and highway lighting; automatic security lighting; and automatic building lighting… all of which are only concerned with temperature, dawn, and dusk—regardless of what our clocks say.

Cash Squeeze

But, if DST got you down this year (remember, it takes some people 3 weeks to adjust to the change), just be comforted in the knowledge that the folks in Washington know better than you do what is best for you.

And what do the folks in Washington care about only 366 additional fatalities each year because of the time change? That’s nothing compared to all the other deaths attributed to accidental causes.

Of course each state can opt out of DST if they want, but Arizona and Hawaii are the only two states to stand up to the Washington bureaucrats so far.

It seems to be the actual “changeover” from one standard to another that creates all the problems. I don’t think it matters much whether it’s standard time, or daylight saving time… well, maybe it does if you are lighting your home with candles.

Some time ago, I did a little research on the subject of “time” and the keeping thereof, and presented it in a blog post. If you have any interest in how we got to where we are today, you can check this out—click here.

What do you think—is changing time standards twice a year a good thing?

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