A nice percentage of businesses do well, are happy and accomplish their goals. But not all meet with success. At the core there are several unique reasons businesses struggle, below are a few main reasons why.
They do not really want to own a business
To succeed in anything, you need to have a deep desire/commitment, and sometimes business owners are not fully committed to being their own bosses and running a business. Being tired of a boss or having a bad day at work are not reasons to explore ownership. Starting a business can have a profound impact on your personal, professional, and financial life, and as such, should not be taken lightly. Again, business ownership is not a way to get out of a bad career path or wanting to have more time for yourself.
Low commitment or effort
Owning a business is a big commitment. Whether it’s full-time or semi-absentee basis, you must commit the hours necessary to succeed and/or hire a strong manager. You must thoroughly run thru due diligence to understand clearly what is expected and the effort needed to achieve your goals. If you cannot commit the time and effort required with business ownership, or at least the industry you are exploring it may not be right for you.
If you have a hard time in your current role due to a lack of some basic skills such as communications, management, operations, sales, and time management then those deficits will follow you into business ownership. The greatest skill deficits are typically in management and sales which will make it very difficult for some business owners. If you cannot sell or manage and those are core to the ownership, then results will not be stellar. While completing the due diligence, get clear on what the necessary key skills are, and be honest with yourself. If you don’t have them, starting a business may be a mistake.
Underestimating the Investment
Running a business requires money. Working capital (money to keep the business running) is crucial until the business turns cash flow positive. Lack of working capital often results in under preforming because when you try to run a business without the proper capital you damage the business. Having enough money to put money into sales and marketing the business is vital and a must. Poor financial planning leads to poor execution that dooms many businesses.
Picking the Wrong Industry
Some people often fall in love with a business and want it at all costs. They fall for companies/industries that are red hot at the time, but there is a significant difference between thinking a brand is cool and operating the business. You should align your interests, strengths, and skills to the product or service that you are looking at. Dive into learning everything that is needed to run the business and what is expected of you . If you are not comfortable and excited to do the necessary tasks, it is probably not the right fit.
Poor due diligence
The ability to conduct thorough due diligence is essential when looking at business ownership. Reviewing the financial records, vendors lists, debt, employee turnover, systems, training, etc., are extremely important and you should have your accountant, or financial advisor involved to help go through the details. Pay particular attention to past marketing efforts and what additional efforts you can bring forth to create additional revenues going forward. One other very important point is that being a business owner, you must get highly involved in the community that your business exists. Whether its guerrilla marketing, community events, social media efforts, or business group involvement, you must participate to have a successful business.
****Looking for help to determine your business ownership options, contact me at Joshco Partners.