While small business continues to be the fastest growing segment of American business, a significant percentage of entrepreneurial ventures will die a premature death because they have failed to implement necessary life-saving strategies to succeed. According to data from the U.S. Bureau of Labor Statistics, about 20 percent of small businesses fail within their first year and by the end of their fifth year, roughly 50 percent fail.
- 75% of the businesses failed to use readily available financial information to determine shortfalls or to make necessary planning adjustments
- 30% of the businesses failed to produce monthly financial reports
- While 71% of the businesses effectively identified their core customer market, 87% of them operated with no marketing plan whatsoever
- In a startling statistic, more than half (55%) of the business leaders recognized stagnation within their companies, yet of this percentage, 66% chose to do nothing about it.
Herein lie some of the challenges to which entrepreneurs fall prey—I call them “fatal flaws.” But, there are solutions.
Five Fatal Flaws and Strategic Solutions
Fatal Flaw #1: Failure to Work From a Plan
Every business needs a written plan, which identifies the current stage of the business, how much you expect to growth within the coming year, and how you intend to get there. It needs to be realistic and specific so that you can benchmark your performance along the way and make necessary alternative plans. It should address such questions as: What if the economy declines? What if your best customer goes bankrupt? What if your product or service is no longer in great demand? Ask the tough questions as they relate to your specific business and be prepared with realistic answers of how to shift your strategies if necessary.
Fatal Flaw #2: Failure to Understand and Effectively Use the Concept of Marketing
Most small businesses throw money at unproductive marketing tactics rather than seek expertise on developing marketing strategies that are aligned with their company’s core values. Just as often they fail to allocate adequate funding to provide the marketing efforts necessary to fuel profits. Both issues must be carefully addressed in order to maximize marketing efforts. Money must be spent to make money, but it must be spent right.
Fatal Flaw #3: Failure to Effectively Deal With the People Factor
It is not the leader’s role to take a hands-on approach in running the company. The owner must trust those whom they have hired to perform in their respective roles. Far too often entrepreneurs are reluctant to let go of the reins—often at the cost of losing valuable employees who are talented and could play an integral role in the company’s growth. Either learn to trust enough to let go of the reins or replace those you cannot trust with those whom you can.
Fatal Flaw #4: Failure to Communicate Effectively
You don’t have to be charismatic, but you do have to be compelling in your ability to help others capture a passion for the company’s vision and purpose and to embrace the cultural values that drive the company’s success.
Fatal Flaw #5: Failure to Adapt With the Times
Change is as fluid in entrepreneurial ventures as it is in major publicly held corporations. As a leader you need both an attitude that embraces change and the willingness to allocate the resources to make necessary shifts.
Entrepreneurship will continue to be a driving force of America’s economy. The question is, will you be willing to conquer the fatal flaws in order to flourish and be part of that driving force or will you remain stagnant and merely survive?