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Volume 7, No. 1 | Friday, January 18, 2008 |  |
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Why Businesses Fail
sk small business owners why some of them fail and they’ll tell you it’s because they don’t make enough money. This makes about as much sense as saying that Enron went under because the price of its stock fell. It begs the question, why don’t they make enough money, and misses the opportunity to seek out fundamental causes like:
Lack of revenue isn’t the root cause of small business failure. It’s the effect of inattention to strategic planning. We usually think of “strategic planning” as something that goes on in large organizations, not small businesses, yet it is as necessary for a neighborhood market as a multinational corporation. Know Your Market Financial experts call this due diligence. It’s the “reality check” which all ventures need if they are going to achieve their goals. We usually think of “strategic planning” as something that goes on in large organizations, not small businesses, yet it is as necessary for a neighborhood market as a multinational corporation. Due diligence asks, is there a market for the product or service I intend to offer? How many players are currently in that market? If I get into it, will there be enough of the pie left over for me to meet expenses and compensate myself adequately? The first step in due diligence is to take a hard look at the numbers. Compare projected sales against projected costs, and don’t forget to include the “cost” of your time—after all, you won’t be working at another job while you are getting your operation up and running. Will the margin be large enough to keep body and soul together while you grow? The second step is to take an equally hard look at the marketplace and measure the need for your product or service against those who are already providing it to determine if there is a niche for you.
If making projections is not your forte and your idea of market research is to ask a few friends what they think about your idea, get help (see sidebar). Talk to someone who knows how to crunch the numbers. You may be convinced that you offer a better widget than anybody else, but if you don’t know up front how many you’ll have to sell at what cost to stay alive you may be setting yourself up for disappointment. Large corporations minimize the risks of new ventures by the careful and methodical practice of due diligence, and you should do likewise, no matter how small your operation is. Know Your Business Businesses large and small fail when they do not communicate in clear and precise terms exactly who they are and how their customers can benefit from them. K-Mart got in trouble a few years ago because it had not been clear to its customers about what it stands for and its competitors had. Target is “cheap chic,” WalMart has low prices, but K-Mart vacillated between Martha Stewart and the Blue Light Special and the message got muddled. The future health and well-being of your business depends on defining who you are and directing every facet of your marketing efforts toward getting that message across. Many small business owners have only a limited understanding of what marketing is. Some confuse it with sales, which is a totally different animal. Some think of it as a synonym for advertising, but advertising is actually only one component in the marketing matrix, which is frequently presented as the “Four P’s”: product—what you have to offer, price—what it will cost, pipelines—how it will be distributed, and promotion—how you make it known. Advertising is a means of promotion, but by no means the only one. For a marketing program to be effective, every “P” must be well understood and implemented. Each is only a piece of the puzzle, and when the pieces all fit together the resulting picture is the defining message you communicate to your customers. The process of learning how to articulate precisely who you are as a business entity is difficult. Without extensive interaction with your customers and professional resources that challenge you and force to clarify your thinking, it’s almost impossible. It’s very much a birthing process—a seed is planted, an embryo forms and grows, and painfully a new being comes into the world. To be continued next month ...
Way of TransitionWorkshop with Beverly Ryle We live in a world where change is constant, and yet we make little space in our lives for dealing with it. The most significant events get swallowed up in our culture's pervasive impetus to move on. The end of a relationship, job loss or retirement, illness or death of a partner, limitations on our lives caused by illness and aging are but a few of the unrecognized major transitions in our lives. They are also spiritual opportunities.
Finding and Creating Work on Cape Cod Despite the lament that work is difficult or impossible to find on the Cape because of the lack of large companies, low wages, seasonality, etc., these conditions are actually part of a much larger change in the workplace that has had a dramatic affect on how people look for work everywhere! By understanding the bigger picture and adapting your strategy accordingly, you can tap into the opportunities the Cape’s unique environment has to offer.
Group Coaching with Beverly Ryle Group coaching is a structured process solidly rooted in best business practices and totally relevant to the day-to-day management of a business. Each session includes a training segment on topics generated by the group, as well as time for questions about individual business concerns.
40 Oak Leaf Rd About Us Our long-term relationships with clients, recognition by peers, and growing reputation as a community resource speak to the excellence of the services we provide and our commitment to making the world of work a better place for all.
Privacy Policy We at the Center for Career and Business Development respect your privacy: we do not sell, rent, share or otherwise misuse any data which we may have about you; its only purpose is to send you information which we believe will be of value to you. If you don’t want to receive this newsletter, use the SafeUnsubscribe™ link below and your name will be promptly and cheerfully removed from our list.
The stick illustrations in this issue are by Eloise Morley.
Copyright © 2008
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Also in this issue ...
As we move forward into the 21st century it’s pretty obvious to just about everyone that work isn’t what it used to be. Whether we work for ourselves, or for someone else, or are in transition, things are changing rapidly and we’re caught in a shift of seismic proportions. Many things are being demanded of us, and it’s going to require more than just new skills to survive and thrive. We’re going to need to learn how to get serious about taking care of the business of our professional lives. Taking Care of Business We invite you to share your thoughts by
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Will the market be able to supply the customer base you need to be successful? Large corporations spend millions of dollars doing market research, and small businesses must do the same.
