The Chief Cause of Business Failure & Success

Business rises and falls on leadership. According to business guru, Brian Tracy, "Leadership is the most important single factor in determining business success or failure in our competitive, turbulent, fast-moving economy." Still not convinced? Based on a study by Jessie Hagen of the US Bank, here are the main reasons why businesses fail:

? Poor Business Planning
? Poor Financial Planning
? Poor Marketing
? Poor Management

Proper application of these key factors is a function of good leadership. Let's look at some of the conclusions of the US Bank report. According to Hagen's study, in the Business Planning category, 78% of businesses fail due to lack of a well-developed business plan. It boggles my mind that so many people go into business without a plan, as if it were the ice cream flavor-of-the-month! Is it any wonder that when I came across the DEA Police & Government auction site of confiscated property, there is a gleeful statement that declares, "Most businesses fail within their first two years, so chances are, you will come across some relatively new merchandise. At (our) auction, get what you need without paying full price."

If you just rolled out of bed with 'a great business idea' and don't want to be a part of this grim statistic, run to your nearest bank, get a free business plan template, and write your plan now! Honor the time-proven cliché, "If you fail to plan, you plan to fail." Leadership is about planning for success before it happens. Sun Tzu, the 6th century Chinese philosopher, in his epic work The Art of War, gave some sound business advice that still applies today: "When your strategy is deep and far-reaching, then what you gain by your calculations is much, so you can win before you even fight. When your strategic thinking is shallow and near-sighted, then what you gain by your calculations is little, so you lose before you do battle."

In the Financial Planning category, a whopping 82% of businesses failed due to poor cash flow management skills followed closely by starting out with too little money. Business leadership is about taking financial responsibility, conducting sound financial planning and research, and understanding the unique financial dynamics of one's business. Before even starting a business, show your plan to your accountant and get their counsel. What a concept! Asking for the advice of someone who sees the bottom-line realities of business day in and day out; someone who sees the birth certificates, successions, and autopsy reports of thousands of business entities. It just makes good business sense. But many people will ignore this advice and eventually meet with business disaster. [Word of caution: don't rely on just one opinion. Get at least two or three opinions from different accountants to get a more informed view].

The third business failure factor profiled in the report, and a critical one, was Marketing. Over 64% of the businesses surveyed in the Marketing category failed because of owners minimizing the importance of properly promoting their business followed by ignoring their competition. Again, as a business leader, you must be able to effectively communicate your idea to the right people and understand their unique needs and wants. Leadership is all about taking initiative, taking action, getting things done, and making decisions. If you're not doing anything of significance to market and promote your business, you are most likely headed for business failure. I recommend every time you get up in the morning, jot down 5 new things you can do to promote your business and go DO them! If you can't think of anything to jot down, I highly recommend reading Jay Conrad Levinson's book, Guerrilla Marketing, which has oodles of useful information and tips on promoting for small business.

Know your competition. Leadership is also about providing value to people. If your main competitors are all providing a better quality and lower priced product than yours, how can you possibly create any value? Either you harness your strengths to provide different benefits such as speed, convenience, better service; lower your price and improve quality; create a different product for an unmet demand; or get out of the game.

Finally, one of the most important reasons why businesses fail is due to poor management. In the Management category, 70% of businesses failed due to owners not recognizing what they don't do well and not seeking help, followed by insufficient relevant business experience. Not delegating properly and hiring the wrong people were major contributing factors to business failure in the Management category.

Leadership is about knowing yourself ? understanding your strengths and weaknesses. Leaders are aware of their potential. Losers ignore their potential. Leadership is ultimately about influence and delegation. As a leader, you must have the humility to be able to surround yourself with people who are brighter than you and who can make up for your weaknesses and limitations so you can do what you do best: seize the day and lead! ■

Sharif Khan is a professional speaker and author of "Psychology of the Hero Soul," an inspirational book on awakening the Hero within and developing people's leadership potential. You can reach him at [email protected] or by visiting http://www.herosoul.com

Sharif provides inspirational keynotes and leadership development workshops that entertain, educate, and empower. To book Sharif as a speaker for your next event call: (416) 417-1259.

In The News:

Capital planning in an unpredictable world | Digital Construction  Construction Global - The Global Construction Platform
Town Board discusses 2021 Strategic Plan  Estes Park Trail-Gazette
TSU launches strategy planning for next decade  Stephenville Empire-Tribune

Documenting the Exit Strategy in Your Business Plan

All investors greatly desire and are motivated by a clear... Read More

19 Questions to Supercharge Your Business Plan

Whether you are seeking capital for your company or are... Read More

Are You Aware of Planning in Business?

Human beings are rational agents. Rationality endorses one to take... Read More

Ten Steps To A Great Strategic Plan

Ask a small business owner about their strategic plan and... Read More

Fail to plan... or Plan to FAIL??

Running a business, whether it be an offline multi-billion dollar... Read More

Going Self-Employed ? A Few Handy Hints

The day you decide to take the plunge and work... Read More

6 Steps To Laying Out Your Competitive Strategy

Why do so many companies languish and watch as their... Read More

Invalid Excuses for Poor Business Results - Rising costs

Note to Northwest Airlines ? It's not about fuel costsFor... Read More

Writing a Business Plan for Success in Business and for Funding

Writing a business plan to help you direct and manage... Read More

Secrets Of Effective Brainstorming

Have you been in a "brainstorming" session where each person... Read More

The Tables Have Turned - Its Officially a Sellers Market

Private equity firms have raised so much capital over the... Read More

Offense: Beat the Odds

When in doubt, cut that out! Yeah, yea, doubting Thomas... Read More

The 7 Critical Steps to Formulating Your Annual Strategic Business Plan

Businesses tend to avoid doing their annual business plan thinking... Read More

The Top 10 Priorities That Guard Your Five-Star Reputation

Making money doesn't make your reputation... your reputation makes you... Read More

City of Cortez and South Western Colorado Market Survey

We have been spending many hours surveying the market for... Read More

Microsoft Great Plains in Agriculture ? implementation highlights

In this small article we'll concentrate on farmers associations and... Read More

Resilience

I. INTRODUCTIONThe term resilience, which is of frequent use in... Read More

Urban Flight in Ohio

Many of Ohio's downtown areas are in need of upgrading... Read More

Is Your Company Growing Fast Enough for You?

Are you frustrated by the lack of growth in your... Read More

TQM Total Quality Management, the book

Every decade we seem to come up with a buzz-word... Read More

Invalid Excuses for Poor Business Results - The Economy

Note to Rite Aid and CVS: It's not about the... Read More

Writing Your Business Plan is Actually Storytelling

Storytelling and writing a business plan actually go hand in... Read More

Microsoft Great Plains in Aerospace & Defense industries ? implementation & customization highlights

Microsoft Great Plains fits horizontal markets clientele and in case... Read More

Business Plans Keep You On The Success Course

Where would your business be without a proper plan? A... Read More

Art of Succession Planning

Succession planning, like any business acumen, is both an art... Read More