Why do we fail?

In today’s startup nation newsletter there was a top ten reasons why businesses fail.  While the site is more targeted toward general businesses there’s a lot of truth in those top tens. 

1.  Planning. I’m not sure one has to have a formal business plan, but certainly some idea of your goals, where you want to be in a year (realistically speaking) and goal setting is extremely wise.  In this day and age of twitterism it’s way too easy to get distracted from your targets.  As folks say, read the Emyth book.

2.  Incompetence.  Doctors tend to be great at medicine, suck at business (stereotypically speaking of course).  Find a local adult class and learn about business.  The basics of profit and loss.  Hire a bookkeeper or accountant as you get larger. 

3.  Undercapitalized.  Don’t use home equity or credit card debt to start your business.  You put your home at risk on the one, and run up expensive debt on the other.  See if there are family members to loan you money or better yet, find tools that allow you to buy per month. 

4.  Website.  If I had a dime for every IT firm website I went to that looked like a Front Page reject, I’d be a rich woman.  Have someone else look at your page.  I’d rather you have “A” web site than no web site, but a crappy looking web site may be worse than none at all. 

5.  Presentation.  I’ll tie this into attire.  You are your business card.  I am a professional.  I am a woman.  I react more favorably to a consultant who comes in with a Polo shirt or a button down shirt with a logo.  Ever seen Karl Palachuk in anything but a button down shirt?  Ever see him in an untucked plaid flannel shirt?  You are your presentation.   You want to have a small business trust you, not be your hunting buddy. 

6.  Advertise.  Now this is where this is hard to define what works the best in the IT world.  Word of mouth marketing is still hands down the best marketing tool you have.  But if you do send out flyers or newsletters, know your audience, don’t go over their heads, and target specifically their pain.

7.  Ask for the order.  One of the ways that you ask for the sale is to make the sale more paletable.  I buy three year volume licensing that spreads the payments over three years.  Thus when I get the annual bill, the smaller bite sized amounts are reasonable.  When you are putting in a brand new network, the total price can be a sticker shock moment.  Check out Microsoft financiing as ways to make it go down easier.

8.  Strictly for the money.  Do you have their best interests at heart or yours?  Lately I’ve seen what I call “cloud fear”.  There is a concern that Microsoft is pushing out services that go around the partner and direct to the consumer.  I’ve seen some partners go so far as to say that they are looking into deploying open source solutions that keep the customer more tied to the consultant than if they stayed with the MS stack.  The reality is that some of your clients would be better served with some parts of their technology in the cloud.  Some need it local.  Some would do better with Open Source.  But the minute a consultant steps over the line of “what’s best for my client” to “what is best for me”, be careful.  You aren’t the trusted advisor anymore.

9.  Mistakes.  We all have them.  Learn from them.  Share them with others so that they can learn.  Find a group to bounce business and tech issues off of.  Don’t be an island.

10.  Trends.  Don’t look now but you might get run over by a trend.  I’m not convinced that every business needs to have a blog/twitter/facebook/linkedin/social identity for every waking moment.  I’ve seen some people twitter so much they they must be twitting one handed on a blackberry.  Being social is good, going overboard is not.  Does “fill in the blank social communication” help you in your business, your communication with your clients or your staff in your firm?  If so, do it.  If you are only doing it because it’s the latest social fad, don’t.

Bottom line, plan, learn, look out for your clients as well as yourself.

4 Thoughts on “Why do we fail?

  1. I’m honored by the mention!

    But for the record: Plaid is my favorite color.

    But never untucked. 🙂

    And this top ten list sounds very much like the gospel Erick Simpson preaches every day!

  2. Nice top 10, Susan. On #1 – definitely put together a business plan. There are easy 1 page templates out there if this is a first-timer’s exercise. The secret is to continue to review and make changes to it regularly. Soon you’ll have a document that is a roadmap to your goals and helps keep you accountable. It’s like your project plan for your business. I don’t know too many successful professional services providers that land projects without a project plan (tip ‘o the hat to Mr. Palachuk).

    Erick Simpson
    MSP University

  3. Fantastic list. I think too many people skip over too many of these items even when successful.

  4. I’m a little slow to the party to catch this post but an excellent list for any small business.

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