I often get asked, “why do businesses fail?”
What a great question!
I remember when I started my first serious business back in the early ’90s, The UK was in recession, supposedly the deepest since the Second World War. Inflation was high, interest rates likewise, however, it was a time of great opportunity, just as it is today.
Without going off on one, Coronavirus is likely to create another recession, which in my opinion creates a great opportunity for all businesses.
Back then it didn’t even cross my mind I would fail. Failure was not even in my vocabulary. Back then we didn’t have the internet and access to so much data and information at our fingertips, we had to do it the old fashioned way, ask questions, get out and speak to people, network! Within our first year of business we did £1.1 million in sales, within 5 years we were doing £16 million is sales. So what made us successful?
- Was it luck?
- Was it timing?
- Was it financial ability?
- Was it the product?
Thinking about the question further it was a number of factors that made us successful. It wasn’t luck, you make your own luck in life, it wasn’t timing, we didn’t have a world-beating solution to a problem. It wasn’t financial stability, we started with a small loan of £20,000 from family and that was the maximum we could muster. Was it the product? Yes, it was a great product, but we weren’t the only people selling this product. There were plenty of other company’s selling the same product.
So what was it then?
It was how we sold the product that mattered!
I keep saying this as though it was a long time ago, we are only talking 25+ years ago, but back then, we met our clients face to face in order to sell our solution/product. The clients bought into us, what we had to offer, we created the trust and delivered a compelling offer that went beyond our competition.
OK, this leads me to why I say your business will fail. I don’t really know you? You might be a great person, people love you and people think you are fantastic, but that doesn’t mean your business will fly and generate millions for you.
For example, let’s imagine a scenario a new restaurant opens in your high street, they decide that your high street needs another new restaurant, they spend a significant amount of money taking over the lease, putting swanky shop fitting in, interviewing new staff, printing new menus, creating a new website. The owner is a wonderful chef, in fact, a brilliant chef! The day of opening is coming, all the necessary preparation is ready for the opening evening.
Viola they open.
A few customers turn up for the opening evening for the free drinks on offer and to see what’s new. Over time, the number doesn’t pick up. In fact, the numbers don’t deliver the revenue needed to cover the debt burden, let alone pay any wages. However, down the road, another restaurant is packed every night. They start to wonder why?
They start blaming the clientele, they start to blame the area, they say that the clients don’t appreciate good food, they like cheap food, they don’t have any money, excuses, excuses. This then starts to create stress, unrest, arguments, and so on.
Let me tell you, I may be talking about a restaurant, but this applies to any business. High street or online the same principles apply. It comes down to one thing “Research“. Understanding your audience, what are they looking for? What do they need? What is important to them?
Research could have saved a serious amount of money, stress, anxiety, and blaming. Research would have helped the owners identify what the competition is doing right and what they are doing wrong. Market research would have helped them understand what clients are looking for in the local area. Research would have helped them put together a compelling offer that would have clients queuing outside every night of the week.
The food may have been the most creative, best quality food in the high street, but without understanding how best to offer this is a dynamic, critical world this is often the problem.
Instead of blaming the area, people, the weather they need to think about how they can get people queuing at the door, day in day out.
This goes for online businesses as well. There is no lack of customers, lets face it over 40 million people log in to Facebook every month in the UK, there are over 3.5 billion searches per day on Google, people are asking questions, searching for solutions to problems, etc.
What they should have done was look at what they have on offer. How could they make it better? How could they make it so compelling, people will queue to get in and eat at the restaurant. They needed to make the offer irresistible.
Often, the key to success is built around the initial offer. The offer to get the client talking and working with you. For example, if they had given a free starter or bottle of wine with every meal, then perhaps this would get the clients in. Once they have visited, tasted the food and they get to know the owners, they will always think of this restaurant first when going out for a meal. This irresistible offer could be a free e-book (not just a cheap quick put together e-book, a book that adds incredible value) or a free consultancy session, free training session, a free taster session, or perhaps “Try for 100 nights, free before buying.”