There are a lot of “top reasons” lists floating around out there claiming to spot the reasons businesses fail. For example, here’s one from Investopedia, a resource that I respect and trust.
The issue I find with most is the “problems” most lists cite for business failure are symptoms, not causes.
If you’re going to navel gaze at your business, do yourself a favor and try to get at the root cause for whatever ails your business.
With that in mind, here are the top seven issues I see with my clients that either trip them up, hold them back, or make businesses fail:
Not Solving a Real Problem
Caridnal sin #1 – failing to have a conversation with actual customers or potential customers. This leads to a special kind of groupthink that results in a solution in search of a problem. Make no mistake: you can successfully raise millions of dollars for business ideas created in this fashion, but it doesn’t mean they’ll succeed.
Come up with your idea any way you can. But have real conversations with real people about their real problems and your solution. Have the conversations early in your cycle – well before you’ve invested your blood and millions. Let them help you pivot.
The Team Doesn’t Understand, Like, or Trust Each Other
I’ve seen team dynamics get in the way to the point that nothing else truly accomplished. Almost everything on the list below this item involves the team coming together, agreeing, and acting as a unit. If the team doesn’t understand each other’s communication styles, work styles, and intentions, that gets exceptionally hard to accomplish.
This is part culture building, and for many teams, part marital counseling. It’s really critical to find some way to build a culture of cohesion and understanding. I’m not talking trust falls and weekend retreats. I’m talking rituals and ways of treating one another. As for the marital counseling in business team form, there are a number of tools designed to help teams get past that gap in interpersonal understanding. Contact me or another consultant for more information in this space.
If you’re the leader – the top cheese, the boss, the head honcho, numero uno (you get the idea) – you’ve got two choices. Either you set an exceptionally clear vision yourself and tell the team, or you get the team to build the vision with you.
My preference is you build an exceptionally clear vision in conjunction with the team, while you “keep your thumb on the scale,” as it were.
Here’s the critical bit. When you’re building and communicating the vision, don’t target your management team. Target the lowest person in your organization. Make sure the lowest person in your organization hears the vision, understands it, knows how they relate to it and deliver against it. Communicate is to THAT person clearly and incredibly often. Beat it (figuratively) into their heads.
I cannot stress enough how critical it is that everyone have a clear vision, and that when you think you’ve beaten the vision to death, you need to do it again. Trust me on this.
If vision is “what we’re going to build,” then strategy is “the big picture of how we’re going to get it done.”
I find that most teams, with a little coaxing, can spit out a pretty clear vision. Things start to get a little fuzzy spitting out a strategy. If your strategy is fuzzy, get professional help. Full stop. You need a strategy that is both sound and ready to pivot.
Strategy can be a bit of an art so it’s tough to summarize in a paragraph. But a good indicator of whether you’re on the right track is if you’ve got clear, written Objectives identified that cover the scope of your vision. If those objectives are back-planned from a three year time horizon, even better.
Can’t Cross the Gap from Strategy to Plan
The second biggest stumbling block I see in my clients is a developed strategy that’s totally disconnected from the day to day planning and execution.
The truth is unless you have a plan, method, and step-wise approach for getting there, it can be quite challenging to make the transition from big-picture strategy to tactical execution.
It will always be challenging but it doesn’t have to be rocket science. Your goal here is to chunk your Objectives into smaller bits, most commonly called Key Results, and plan how to accomplish them. If you have measurable indicators of what success achieving your Objectives looks like, it makes it a ton easier to achieve them.
Fail to Execute
This is the biggest issue I see. Even without a clear strategy, most business owners and leadership teams I know are incredibly intelligent and can come up with their own idea of what needs to be accomplished. Where things tends to fall apart is in the doing.
It depends. What’s your deal, yo? Sometimes the responsible person just doesn’t know how to do the job. That can be fixed (often). Sometimes the person doesn’t want to do the job. That may also be fixed (sometimes).
Sometimes things are a little bit more complicated… like when the issue involves illegal actions, inappropriate relationships, or threats from competitors.
But the vast majority of the time, it’s a simple matter of people knew what to do and just didn’t get the job done. This is a case where it’s time to build a culture. The choice of culture is up to you. Personally, I advocate a culture of collaboration and support (think Three Musketeers – “All for one and one for all”) blended with a healthy dose of accountability that everyone is expected to do their jobs without fail, absolutely.
This is the oddball out. Everything else on this list is 100% human. This one is human primarily if you’re raising venture capital (where relationships are more important than folks will admit).
There is no substitute for funding. You have to secure the capital you need. If you’re going the venture route, do not under-estimate the power of relationships.
Bringing it Together
Make no mistake: The people aspects of your business and leadership team have the power to set your business apart and make you stand apart from your competition. They also have the power to sink your business.
Do you see yourself in any of the above issues? Drop me a message and let me know.