26 Reasons Why Entrepreneurs Fail

Published by Mike Michalowicz (Google+)

A special thanks goes out to Shannon Nicholson (in my humble opinion, he’s the heart and soul of PitchRate) from PitchRate, the source for free publicity, for helping me assemble these amazing tips on Why Entrepreneurs Fail.

1. Everyone Will Want These!

Why Entrepreneurs Fail: While most businesses fail due to a variety of reasons, I think that one of the key reasons is that business owners don’t understand their target market. They might not even have one. They fall in love with their product (or service) and think that everyone else will too. Naive? Absolutely! But not unusual.

Thanks To: Rickey Gold of Rickey Gold & Associates

2. Humpty Dumpty Had A Great Fall

Why Entrepreneurs Fail: He fell off the wall. That is how the fall. They fail because they could not put it back together again. They spend more money then they bring in and their overhead is too high. They have a big dream, but they get shattered. They can not fix it and it fails. Maybe the out sourced themselves right out off business. They need to put it back again, but they can not.

Thanks To: Sheila A Caruso of AVON / PRIVATE QUARTERS

3. Conflict Over Conflict

Why Entrepreneurs Fail: Businesses fail because they suffer conflict over conflict. When reality clashes with hopes and dreams, and business owners are faced with difficult decisions, they may practice denial, procrastinate, take half-measures, and botch communications while reaching and announcing decisions. Instead, business owners must face conflict calmly, take decisive (but smart) action, and communicate well — and get outside, professional help dealing with conflict if they need it. Their business depends on it.

Thanks To: Jane Beddall of Dovetail Resolutions, LLC

4. Consistently Challenged

Why Entrepreneurs Fail: Most businesses seem to fail because new entrepreneurs think if they open a store or build a site people will automatically visit.

This is not “The Field of Dreams”, you have to market your business consistently. You cannot place an ad in your local newspaper or on a relevant site once. People need to see your ad on a regular basis. A customer might not read the paper or visit that site the one month you place an ad. You need to give people a chance to learn of and about your business.

Thanks To: Leah Oviedo of Investing In Women

5. Profits Before Prospects

Why Entrepreneurs Fail: I beleive that the number one reason companies fail is because they put profits ahead of their clients. Customer Service is a lost art in many industries. Without clients, you have no profits. Customers want value and service. Bottom line, we are very successful because we care about our clients success. We believe that providing value with ultimately provide results and create a win-win for everyone.

Thanks To: Savannah Ross of Rich Mom

6. Profitable Companies Fail Too!

Why Entrepreneurs Fail: I asked my bank manager and accountant “What is the one reason most companies fail?” and they both replied that they had seen many companies go bust due to one thing – CASHFLOW. If you don’t have an onsite bookkeeper, how do you produce accounts and cashflow projections? Here is the fix… Keep a business and personal spreadsheet projected out weekly, reconcile it to your bank account weekly so it’s a “living” document. If you watch your money closely, you’ll manage it properly!

Thanks To: Nicola Cairncross of The Money Gym

7. A Failure To Communicate

Why Entrepreneurs Fail: Companies fail because they fail to communicate ther message to the public. This is done by effective marketng and PR strategies which can be executed easier and less expensive than ever due to the web!

Thanks To: Peter Marino of reelWebDesign.com

8. Competitors, Not Cash Alone!

Why Entrepreneurs Fail: Beware of unrecognized competitors!

If entrepreneurs build a better mouse-trap, competitors will beat them over the head with it… then trade on the idea and try to deprive the owner of the ‘better’ aspect.

The government assigns money the #1 slot for failure. I disagree. Cash is needed, but everyone knows that, whether or not properly planned. Look to the unrecognized competitors–if threatened, they’ll get you as soon as you go public!

Thanks To: Richard Cavalier of Meetings/Cavalier

9. Customers Build Companies

Why Entrepreneurs Fail: Too many people build companies for themselves. Your company is not for you. It is for your customer. Because without your customer your business cannot exist. If you learn how to remove yourself and your business from your ego and think in terms of the best way to serve your customer, you will effortlessly create the solutions and do the things that allow you to build more meaningful experiences with and for them. When you learn to do this, the answers will come before the questions.

Thanks To: Shonika Proctor of Teen Renegade CEO’s

10. The Creative Class In Denial

Why Entrepreneurs Fail: Why do even great artists often starve? Wishful, narcissistic thinking. Too often, independent creative people are blind to the reality of running a business, or that they are even in a business. Often pathologically dismissive of sales and marketing, they believe that that “if my work is truly any good, it will sell itself” or “if something has to be sold, it is no good.” Talent is important, but knowing how to sell that talent will earn you a living.

Thanks To: George Smart of Strategic Development Inc

11. Make Marketing Your Master

Why Entrepreneurs Fail: Marketing and sales are the only activities in any business that generate revenue. Everything else (with the possible exception of innovation) is merely expense. Therefore, particularly in the formative stages of a new enterprise, failure to invest every possible penny into those critical cash-generating initiatives puts your business in peril. Remember there are but 3 ways to make more money: get more customers, get them to spend more when they buy, and get them to buy more often.

Thanks To: Bruce Ackerman of Ignition Marketing

12. Just 1 Real Reason For Failure

Why Entrepreneurs Fail: There are many theories and much has been written on “why businesses fail,” poor execution, inaccurate projections, faulty assumptions, poor marketing, inapt employees, inappropriate spending, unethical management, no plan, lack of communications, insufficient cash flow, this list could go on forever. I had to force myself to stop composing it. It’s that easy to make excuses for business failure. The truth is the only reason any big company or small business fails is due to lack of sales.

Thanks To: Jim Plouffe of Keep Doing It LLC

13. Invisibility

Why Entrepreneurs Fail: Most start ups never register in the consciousnesses of 95 percent of the people most likely to need and want their offerings. Many entrepreneurs feel that if they can offer a better mousetrap the world will beat a path to their door. But if no one who needs a mousetrap knows about the start up’s offering, no sale is made. Entrepreneurs need to spend at least as much time and effort on making their offerings visible to 100 percent of potential customers as they do in providing a great offering.

Thanks To: Donald Mitchell of The 400 Year Project

14. Where’s The Beef?

Why Entrepreneurs Fail: As much as we all like to think we are pricing our products correctly and charging enough for them….more often than not, your NOT! Failing to be profitable is one of the biggest reasons companies don’t make it…if the idea is good to begin with of course. Be sure you have consulted with an outside (or more knowledgeable) source to help you with costing and margin calculations. I have seen it over and over again and want your company to be successful.

Thanks To: Sarah Shaw of Entreprenette

15. Keep Your Eye On The Prize

Why Entrepreneurs Fail: The hands-down, number reason for business failures is the one you never read about. Entrepreneurs start a business because they have a particular skill, invention, innovative idea, etc. And they focus on delivering that product or service the best way they know how. In doing so, they forget why they went into business. You start a business to make a profit. Period. If you’re focused instead on your product or service, you will inevitably make the wrong decisions. And that leads to failure.

Thanks To: Michael Sisti of Sisti & Others, Inc.

16. Pr Must Be Part Of Overhead

Why Entrepreneurs Fail: The high failure rate is due to not realizing that PR/Marketing costs are not included in overhead when creating a budget.

You might be knowledgeable about the ins and outs of your business but might not have PR/Marketing skills. And with out that skill, your business is not going to make it.

Thanks To: Ann Tracy of Ann Tracy PR Consulting

17. No Follow Through, No Success

Why Entrepreneurs Fail: A lot of new companies start with a great idea and get all excited about their business but fail to follow through once they don`t see immediate success. I started my business almost 4 years ago and didn’t have a single paying client for more than a year. If you don`t keep following through with a great idea from the very beginning you will never make it as a company that doesn’t fail. It`s so easy to quit when the going gets tough, which is the reason why many companies fail.

Thanks To: Marc Anderson of TalktoCanada Corp

18. Not Keeping Records

Why Entrepreneurs Fail: Without recordkeeping, the business owner has no idea how much money the business is earning or losing. Keeping track of income and expenses then analyzing the results on a regular basis is essential for the success of any business.

Thanks To: Brigitte Thompson of Datamaster Accounting Service, LLC

19. Seven Deadly Business Sins

Why Entrepreneurs Fail: The real reasons businesses fail are: inadequate planning; using the wrong business model; failure to create a niche; failure to deliver the highest value in the marketplace; failure to establish partnerships and joint ventures; failure to establish adequate trust and credibility with prospects; and using inefficient tools and processes.

Thanks To: William R. Patterson of BaronSeries.com Business Coach

20. Stop Focusing On The Product

Why Entrepreneurs Fail: Unfulfilled businesses never get beyond the startup phase because they forget to sell! A lot of businesses focus on branding and marketing of the product to drum up sales. But, the reality is that until you know HOW to sell your idea, the buyers aren’t going to show up.

That means:
1. The customer’s benefit is far more important than your product. Quit stressing over the product and show some benefit.
2. Stop scatter-shooting your message. Send it to the right audience. Be targeted!

Thanks To: Mike Johnson of Vexxt

21. Stick To Your Knitting.

Why Entrepreneurs Fail: Businesses fail, in general, for one simple reason. They forget what it was that made then a business in the first place. They try to offer more services that they are ill equipped to provide. They spread themselves too thin, and they confuse their customers. Sticking to what you are good at – generally protects your future.

Thanks To: Marc Lawn of The Business GP

22. Ignoring Pareto’s Principle

Why Entrepreneurs Fail: The Pareto Principle, also known as the 80-20 rule, shows that 80% of your results come from 20% of your efforts. Often this seems more like a 95-5 rule. Small business owners are especially guilty of ignoring this – we might spend our days answering calls, checking email, running errands, etc. These things make us feel busy, creating a false sense of productivity that ultimately leads to failure. Hire good help for $10 an hour, focus your time on high payout activities, and bring in the money.

Thanks To: Brent Reader of Southwest Funding, LP

23. No Guts No Glory!

Why Entrepreneurs Fail: The biggest reason companies fail is that the owner is not truly committed to succeeding in business. They like the “idea” of owning their own business and are willing to work long hours, but when it requires making significant financial sacrifices and possibly using retirement money or selling a home so that you can continue to fund the business when bank loans are not available, most give up. No guts, no glory!

Thanks To: Charlene St Jean of Purple Diamond LLC

24. Synchronizing Business Finance

Why Entrepreneurs Fail: Start-ups do not have the resources to pay high priced accountants, bookkeepers, or money managers leaving them vulnerable to failure. Business finance is an expertise in it of itself and start-up entrepreneurs need to use their time concentrating on the expertise that established the start-up and not the finances. Knowing where the start-up stands financially during these early times is very vital to the success of a company therefore a means to determine this would increase the survival rates.

Thanks To: Bob Patrick of Budget Assist LLC

25. Lack Of Education In Marketing

Why Entrepreneurs Fail: A majority of small business failures can attribute to an owner’s lack of education or experience in the marketing field. Because larger corporations are getting consumers’ attention by implementing great marketing techniques, most small business owners are misinformed about the cost of marketing. They think that it takes a lot of money to market their product or service effectively, which simply, isn’t true. They’d rather live by the adage: If you build it, they will come.

Thanks To: Bonyetta Brison Kitts of The Brison Group, Inc.

26. Light It Up Or Fizzle Out

Why Entrepreneurs Fail: Businesses must expand their business model in order to be successful. They cannot stand on one leg (one approach) and continue to be profitable. They must constantly be putting their energy into lead generating systems, making connections, setting goals and, most importantly, building ladders to the public. If they are not moving forward; they are moving backwards. There is no such thing as standing still in business.

Thanks To: Cristin Frank of Cristin Frank Media

Compiled by Mike Michalowicz, Author of The Toilet Paper Entrepreneur

Category: Recommendations, Skill Toolbox, The Right Actions, Your Belief System
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