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Is your startup on life support? Or have you delayed birthing your plans out of fear of joining the 80% of new businesses that die within the first 18 months? It’s not too late to resuscitate your idea.
The key to turning things around—or to starting off on the right foot—is to identify the areas most likely to cause problems. Understanding these issues can help you retool your strategy or create a smart plan from the start. Here are six common reasons most businesses never get off the ground or fail quickly after they do.
1. Inadequate Research
Wharton Business School says 32% of startups fail because of inadequate research and development. The only way to know if a great idea can become a profitable business is to do plenty of market research long before ever considering a launch.
Does your product or service create a solution to a problem that needs to be solved? Will customers pay for your solution (and enough to make your business profitable)? Are there others offering the same product or service? If so, can you differentiate enough to compete?
Eric Ries sums it up in “The Lean Startup”: “We must learn what customers really want, not what they say they want or what we think they should want.” Valid market research is easily 90% of the startup battle. Without it, you’re falling victim to the “If you build it, they will come” mentality, which is almost always a quick path to failure.
2. Lack of Passion
It’s not enough to focus solely on whether there’s a market for your product or service. The key to success is finding something that will sell and about which you’re insanely passionate. Starting and running a company takes an inordinate amount of time and energy, so you’ll need to be pursuing something you enjoy.
If you choose an idea that will soon have you feeling bored or uninspired, you’re more likely to abandon ship when times get tough. Perhaps you can scale up quickly enough to sell the company or hire someone else to run it, but what if you can’t?
3. Rely on Passion
Starting a business simply because you love a product or service is rarely enough to sustain a company over the long haul. Nor is it wise to start a company just because you want to be your own boss. In addition to passion and an entrepreneurial spirit, it helps to have real skills.
Many successful entrepreneurs focus their startups in areas related to their particular expertise, rather than trying to turn a hobby or passion project into a business. Also, they tend to have strong finance and leadership skills, or recognize weaknesses in these areas and seek out help to shore them up.
4. Make No Plans
Benjamin Franklin says, “by failing to prepare, you are preparing to fail,” and never is this more true than in business. One reason many startups fail is because they lack fundamental planning documents, including business and marketing plans.
A business plan outlines the company’s goals and plans for achieving them. It provides a roadmap for the future to keep management from accidentally veering off course. The marketing plan lays out a clear strategy for identifying and targeting a customer base.
Creating these guides, even if they are only a few pages long, forces entrepreneurs to think through difficult questions, come up with solutions to potential roadblocks, and set themselves up for success.
5. Afraid to Sell
Putting up an “open” sign or making your online shopping cart live isn’t enough to generate sales. Too often, new business owners fail to get out and sell their product or service. Instead, they just hope buyers will magically appear.
Even if sales is not your strong suit, no one feels as passionately about your business as you do and no one is better positioned to sell it than you. Getting in front of prospects to pitch your product can generate sales, and also provide valuable feedback to help you to adjust to market needs.
A business is not a success until prospects become buyers and buyers become repeat customers and frequent referral sources.
Too often, new entrepreneurs underestimate how much money they’ll need during the startup phase. They also tend to overestimate how much money they’ll earn and how quickly it will come in. These mistakes doom many new businesses to an early end.
It takes money to make money. A lack of funding in the startup phase can make it difficult—or impossible—to get your product or service to market. Whether it comes from your own bank account or from investors, sufficient operating funds are necessary to keep the lights on for the one to two years it takes most businesses to become profitable.
This business startup calculator can help you ascertain how much money you’ll need until you have enough sales to cover costs.
Carol Naff, Certified Visibility Coach
Everywhere (in magazines, newspapers, email, Internet, and blogs), we read tips and tricks to clear our clutter. We often think of that clutter as papers, books, and piles of stuff. While it is important to manage that clutter, consider for a moment that our time also can be cluttered.
Give yourself a gift of time. Tackle time clutter for a stress-free life. Use the timer on your phone or get a small timer and designate it for use as your business timer.
- Stay on Track. By setting your business timer as a reminder of your next event, you can focus totally on your project without having the distraction of constantly looking at the clock. You won’t waste time or energy constantly redirecting your attention. You’ll get more done in less time.
- Set time limits. Set your timer for 30 or 60 minutes or more. Completely focus on just one thing for that entire time. Then if you need more time for the project, add minutes as needed. If a project or task pops into your thoughts tempting you to move to that activity, jot a note on a paper to deal with that later. We are tempted to interrupt our focus because it will only take a moment and we don’t want to forget to do it. Interruptions kill our creativity.
- Email notification. Shut it off! Every time an email comes in and the ping sounds, it distracts you. Every distraction takes 5 – 15 minutes away from your project. You might set your timer to alert you a few times each day to check your email.
- Relaxation. Set your business timer for power naps or periods of relaxation to relieve stress. Then relax completely without having to worry about missing the next event.
- Avoid perfectionism. Work for excellence – get it 80% perfect and get the job done.
- Limit social media time. Set a timer for a limited amount of time to check your social media sites. Respond to items that are urgent. Save the rest of the items if you have abundant time later in the week to respond.
Strategy: Use these tips to enable you to focus and get more done in less time. That way you are giving yourself a Gift of Time. By clearing your time clutter, you will have more of it to savor the moments.
© 2017 All rights reserved. Carol Naff
Carol Naff, Certified Visibility Coach, is the author of several articles including Toot Your Own Horn without Blowing It and The Referral Project, Building a Referral-Based Business. A practical, down-to-earth speaker and unconditionally supportive coach, Carol helps businesses implement their best strategies to get more clients. Carol offers comprehensive resources with free articles and valuable marketing tools for business professionals.
B2B Marketing Maven … Creating Results Creatively
Were you among the millions who hit the theater last weekend to see the new Lego Batman movie? Experts predict the flick will likely go on to top the $469 million box office hauled in by the first Lego movie. Pretty staggering numbers.
Even more amazing? It wasn’t that long ago that Lego nearly went out of business. In 2001, the company was nearly bankrupt after years of over-expanding. It was bleeding nearly $1 million a day. But instead of dying off like so many other major brands, Lego survived and thrived.
How? The turnaround started when Lego executives hired a 33-year-old consultant named Jorgen Vig Knudstorp to investigate what was going wrong at the company. His report, which didn’t mince words, shocked the executives. Vig Knudstorp said Lego hadn’t created value since 1993, and predicted the company would continue to decline. He was right. The next year, the company’s sales were down another 40% and it owed about $800 million.
In a surprising turn of events, the executives named Vig Knudstorp CEO. Just 35 at the time, he had no experience leading a brand as large as Lego and was the company’s first non-family CEO.
As expected, Vig Knudstorp shook things up. He put the company’s earnings reports up on the walls for every employee to see. He scaled back on office space, cut the number of Lego designs by nearly two-thirds, and sold off the company’s stake in Legoland theme parks. He also had his designers live with Lego customers for a week to see firsthand out children played with the product.
“We decided to hardly grow for 5 years while we were fixing the business,” he has said.
Vig Knudstorp’s prescription for the problem? First stop the bleeding, then rehabilitate, and only then focus on re-growing the company. By 2013, Lego had record profits of $869 million. In 2016, revenues grew 25%.
After going from the brink of bankruptcy to one of the largest toy countries in the world, Lego’s turnaround provides a valuable lesson for any executive or entrepreneur facing tough times. The solution may feel antithetical to all we are taught as leaders. Rather than pushing down on the gas, try tapping the brakes. In extreme cases like Lego, you may even need to slam the brakes.
Slow down, reevaluate, fix what’s broken, then slowly rebuild—one Lego at a time.
B2B Marketing Maven … Creating Results Creatively
Doing good is good for business — at least if you listen to respondents to The Alternative Board’s March 2015 Small Business Pulse Survey.
We surveyed 350 business owners, 38% of whom strongly agreed to the statement, “My company is built around positively contributing to society.” When we took this segment as a group and compared them to the rest of the survey respondents, the differences were surprising.
Not only do owners of socially driven businesses expect higher rates of business growth in the next few years, these business owners tended to have more confidence in their own personal and professional visions and stronger connections to their communities and customers.
The potent combination might help explain the reason socially driven companies like Patagonia, TOMS, and Honest Tea are seeing such huge success.
What can you learn from them?
How optimism breeds growth
The unifying factor for socially driven companies? Optimism.
When we asked respondents about their previous year’s revenue, the results for socially driven companies and other companies were very similar. But when we asked how they expected revenues to change in the coming year, the results were striking.
26% of socially driven business owners expected revenue to sharply increase, compared to 14% of others.
89% of socially driven business owners expected revenues to grow, compared to 83% of others.
Only 2% of socially driven business owners anticipated a decrease in revenue over the next year, compared to 10% of others.
Additionally, more socially driven business owners agreed that they were “ahead of the competition” (48%) than other companies (38%), and fewer (5%) felt they were “behind the competition” compared to other companies (12%).
This may be a sign that socially driven business owners are naturally more optimistic than their counterparts, though many also cite the social purpose as one of the main positive differentiators between themselves and their competition.
Trusting in a strong vision
Having both a strong personal vision and a strong company vision are critical to business success. While the percentage of business owners in both categories who selected a 10 when asked to rate their personal and company visions was fairly low, socially driven business owners were nearly 4 times as likely to rate their personal and company visions as a 10 than other business owners.
This suggests that socially driven business owners are more likely to have a strong sense of what their purpose is — a factor which may also contribute to their growth.
Want to learn more? I wrote about finding your vision in this post: Have You Checked In With Your Mission Lately?
Creating connections with community and customers
By nature, socially driven companies tend to have a more clearly defined and executed relationship with their community. When we asked business owners to rate the statement “My company is a fixture in the communities that we serve,” 45% of socially driven companies selected Strongly Agree, compared to 16% of other businesses.
That’s a stark contrast. 65% of socially driven companies believed that they achieved success by causing human connections and relationships, compared to 59% of other businesses. They were also more likely to agree with the statement “My company pursues win-win relationships with customers, employees, partners and other key stakeholders” (85%, compared to 69%).
You don’t need to have a socially driven company in order to benefit from optimism, a clear vision, and strong connections with your customers and community. While it’s clear that socially driven companies tend to have these things more naturally, all companies could see greater growth by focusing on these areas.
Does it seem like it gets harder and harder to get your content noticed with each passing day? You’re not imagining it. There are 12 new active social media users being added every second and 27 million new pieces of content being shared online each day. No wonder many of us often wonder if we’re just shouting into the wind.
In an online world flooded with information, what does it take to get a like, comment, share, or follow? One increasingly popular tactic is to be deliberately controversial. When it comes to social media, it seems, the more contentious you are, the more attention you’ll receive.
Don’t believe me? Take a look at the trending topics on Facebook or Twitter. Go ahead. I’ll wait. Back? Let me guess…you found the names of a few celebrities or politicians currently embroiled in one scandal or another? Of course you did.
The Kardashian culture pervades more than the pop-culture-friendly formats of Snapchat and Instagram. Even professional-minded LinkedIn is home to attention-seeking behavior. A recent and well-known example is Bikini Luxe. The company’s founder, Candice Galek, used a series of provocative posts with photos of women in bikinis to generate buzz.
The approach got notice (including from LinkedIn, which temporarily took down Galek’s account) and helped Galek grow Bikini Luxe from a home business to a company with more than 40 employees in less than 20 months.
Success stories like Bikini Luxe leave many believing that “shock and awe” is a solid marketing strategy. But is negative attention really better than no attention?
For every Bikini Luxe there is also an Abercrombie & Fitch. The clothing company was known for sexy ads featuring young, slender models, and for hiring attractive employees to sell trendy, form-fitting clothes for women not larger than a size L (although they made men’s clothing in XL and XXL). But when old comments the company’s CEO made about the brand being purposefully exclusionary were circulated on social media in 2013, the controversy that followed was costly. Sales dropped 11% and 220 stores were closed.
Controversy has always had a place in marketing, and that won’t change. But in today’s fast-paced world where social media can spread a message (good or bad) in a matter of minutes, marketers must understand the risks.
Before angling for attention for attention’s sake, ask yourself whether the approach makes sense for your brand and audience, and whether the timing is right.
Yes, your goal as a marketer is to get likes, comments, shares, and follows. But at what cost? In the end, getting the right attention from the right people for the right reasons is almost always better than getting noticed for all the wrong reasons.
Successful marketers spend their days promoting and selling products, services, or brands to targeted consumers. The job description isn’t a fit for everyone, but here are seven telltale signs you’re born to be a marketer.
1. You love to sell, but you’re not “salesy”…
People don’t want to feel tricked into buying something. Most of us hate pushy sales people, and would rather walk out of our favorite store than be hassled by an aggressive employee.
Selling isn’t your first priority. You think about how you can help your target client and how your brand can fit into their lifestyle, rather than squeezing cash out of them. You love to do research on your ideal customer and your competitors, and you love to communicate how your brand can help them.
2. You’re always analyzing marketing materials…
Magazine ads, Youtube commercials, billboards…you constantly notice and critique marketing messages. You know what works, what doesn’t, and are always thinking about what you would do differently. You can tell the difference between an ad campaign that’s going to reach the ideal consumer, and one that’s pointless and confusing.
You’re hypersensitive to visual merchandising in stores, as well. With a clothing set up, you can tell why they placed a certain shirt next to a certain wallet and pair of jeans. On the other hand, you can’t help but want to rearrange things when they don’t work together.
3. You shop online…
You understand consumers have moved to online shopping. While some people still enjoy going to the store, you realize the benefits and convenience of shopping online. You shop online and are aware of the successful and unsuccessful marketing tactics online stores have in place.
You shop at online stores that understand your lifestyle and have targeted their brand to you in a creative and thoughtful way. You appreciate the work they’ve put into attracting you, and would love to do this for a brand yourself.
4. You have an eye for design and trends…
To successfully market a product, service, or brand, an eye for design is essential. You’re quick to notice everything from typography to color palette on websites or in ads. You appreciate the importance of a well-curated Instagram account, and you’ve always admired pretty stationery shops and trendy home décor stores.
You have an eye for trends, whether it’s the clothes someone wears or a tech product that just hit the market. You know what’s going to be big, so you’re able to set trends before they take over the mainstream.
5. You understand the power of social media…
If your brand isn’t on social media, it’s likely costing you a lot of business. You understand the importance of social media and it feels like you’re constantly posting, commenting, and replying on your social media networks.
You already feel like a large chunk of your life involves building connections online, and you understand social media marketing is the way of the future. Before you visit a café or store, you often check out their Instagram first to get recommendations or see if it’s worth a visit.
6. You have the influencer role down pat…
Online influencers (think bloggers and Instagram stars) have become influential marketers—sometimes without even realizing it. You love to write reviews, create content, style outfits, give advice on what to do or where to eat in your city, and people listen. You’re passionate about these things—not because you’re getting paid to write about them, but just because you love doing them.
7. You save examples…
When an email, blog post, or website completely captures your attention, you recognize they’ve done a great job reaching their target customer. And you save these examples for inspiration.