5 Reasons Why Businesses Fail

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Your dream is to get away from the mind numbing torture of your current job and finally take the plunge and start your own business. 

Yes, you know it will be hard work at first, but you know in your heart if you put everything into the business with your passion, enthusiasm and creativity, you'll be a surefire success.

But ask yourself this. Are you REALLY prepared?

Statistics state that Nine out of Ten businesses fail. 

Now ask yourself again.

So why do so many start-ups go wrong and how do you avoid being one of them?

Why Nine Out Of Ten Businesses Fail

The truth is the odds are against you when you start a business. Here are five reasons start-ups fail. Avoid these and your chances of success will increase dramatically.

1. They Provide Something Few People Need

So you want to sell a product or you have a great service you can provide.

Make sure there's a genuine market for what you want to provide. Many first time entrepreneurs make this mistake. They fall in love with their idea and assume everyone else will feel the same.

Never assume. Do your research. Do some more. Study the marketplace and make sure you know everything about all potential competition.

In a survey by Fortune this was the number one reason for failure. 42% of polled start-ups admitted to a lack of a market need for their products or services.

Most successful start-ups find a way to reinvent something that's already in the market.

2. They Don't Target The Correct Audience

Many new business owners waste time and money trying to reach everybody. What they fail to realise is that there is a specific audience for what they offer. Once you find that audience, your advertising costs will bring a vastly improved ROI. 

This is again why research is so important. You need to have a detailed biography of your ideal customer. Try to pinpoint the customer that really needs what you offer.

Remember the Who, Where, Why:

  • Who is the ideal customer? (sex, age, interests, marital status, employment, the list goes on and on)
  • Where are they? (location, what are they doing, where are they doing it, where can you get their attention)
  • Why are they interested in what you offer? (what's their motivation for your product or service)

3. They Don't Offer Value

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Many start-ups make the mistake of just going straight in for the hard sell and expect people to part with their hard earned cash immediately.

It's so important to give value and it's amazing how many of your potential competitors are not doing it. This is where you find your edge. This is why you'll stay the course while the competition falls away.

You can provide value in so many ways. Your initial contact with a customer should be all about offering them value in some form.

  • This could be some simple information related to your product or service that the customer would find useful. This would then enable you to engage the customer and grab their attention.
  • A free sample of what you offer.
  • A free gift relating to what you offer.

Remember, once you get their business keep offering value to them. Maintaining your relationships with your customers is just as important as getting their business in the first place. You'll gain their trust and your business will thrive from a good reputation.

4. Not Clear On Their Mission

Again, so many start-ups concentrate only on making the sale and neglect this very important point.

You need to be clear about what your mission is, what the core values of the business are. What is it's purpose?

From this information you can develop your brand culture. This will help you define exactly who your audience is TO your audience.

Once you get this right and your mission statement is clear, your customers will have the WHY question answered for them.

5. The Entrepreneur Doesn't Become A Leader

You've got a fantastic idea and the business has the potential to be a huge success. Now how do you lead your business to greatness?

Very few people are natural born leaders. It's something that grows with you as you start to build confidence with the previous points in this list.

If you don't feel you can be that leader, then get someone else to do that role and concentrate on what you do best. The most successful entrepreneurs know when to outsource work. It's not about ego.

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