6 Most Common Reasons Why Businesses Fail – Part 1

by Brian on April 16, 2010

A lot of businesses are run by complete morons.

Think about some of the bosses you’ve had in the past.

Think about some of the business owners you have worked for.

Think about some of the people you know who own businesses.

I’ve worked with a lot of business owners. For every sharp business owner I run across, I come across 5 dolts who own businesses.

I’ve been blown away by some of the egos and complete lack of business sense I’ve encountered.

I know I’ve asked myself numerous times, “How in the Hell did this person get to where they are?”

If you think I’m referring to  you, I probably am.

I’ve seen some businesses that start on the right path to make tons of cash, fail miserably.  I’ve seen companies do stupid things that caused them to fold.

The sad part is that most things I see happen to companies that cause them to fold are avoidable.

The really sad part is that I see a lot of businesses following the same path to failure.

From my experience, the 6 most common reasons why most businesses fail are:

  1. Lack of a Common Goal
  2. Bad Hires
  3. Keeping Information Departmentalized
  4. Treating Employees Like Children
  5. Not Knowing Cost
  6. False Pride & Ego

Over the next 6 days I’m going to look at each one of these topics individually and give you my full take.

1. Lack of a Common Goal

I believe all departments in an organization should work together to achieve one common goal.

Time and time again, I see businesses set individual and team goals without setting a company-wide goal with a company-wide reward.

If there is more than 1 person in your company, you need to realize you are working in a team environment.

Team work is the key to making a company run successfully.

If everyone is working together to achieve a common goal and there is a reward attached to reaching that goal… A lot of time wasters will subside (office politics, excessive smoke breaks, personal internet use, bad hires).

If all of a company’s employees are firing on all cylinders and are working together, it creates a good buzz around the office… having a strong culture is key to a business’ success.

Once your employees help your business achieve that goal, reward them…

  • Saturday Champagne buffet brunch on a yacht.
  • Friday afternoon catered BBQ and kickball at a local park with their families invited (no pot luck).
  • Thursday evening bowling with a couple of iPods for prizes for the top scores; and have them bring their families.
  • Or something along those lines. These are only a few of a million different things that can be done inexpensively

If your team doesn’t achieve the goal,  reward your team for trying… Order pizza for them on Friday and let them know that you appreciate the hard work that every one of them did.

When everyone is working toward a common goal and knows exactly how their role helps the company achieve that goal, it helps build and foster a team environment. In addition, it will help to ensure your clients receive the same message, no matter who they are talking to at the company.

A lot of companies have a company motto… That’s great, but it’s not a specific measurable goal that everyone is working towards.

Here is an example of a Money Goal

  • Put an exact dollar figure on the revenue you want to achieve.
    • Aim high, but make it achievable.
    • Nothing sucks the drive out of employees faster than a goal that appears to be out of reach.
  • Assign a date that you need that reach that dollar figure.
  • Set Expectations.
    • Spell out exactly how each department can help Sales and Marketing reach and improve their numbers.
    • Spell out exactly how each department can help Customer Service retain clients and upsell.
    • Spell out exactly how each department can help Finance collect payments.
    • Spell out exactly how each department can help every other department to work together.
  • Spell out exactly what the reward will be.
    • Don’t give choices… if you do, someone won’t be happy.
  • Be excited.
    • Tell your team how much you want them to achieve the goal so you can give them the reward.
  • Ask if anyone has any questions.
    • Address any and all questions.
  • Hand out a copy of the goal and reward so everyone has it in written form.

If you’re not setting a common goal, try it… You might be pleasantly surprised at how things turn out.

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