Identifying the 5 Core Issues Of Business Failure
Business Failure is an epidemic
It is clear that business failures are a significant problem in Australia and they leave a trail of devastation in the lives of the owners, staff, other businesses that supply them and the communities that they live and serve in.
Business failures can be avoided by making well-informed decisions. Better business decisions accelerate business success and improve the lifestyle of the business owner. Better business decisions identify issues earlier, meaning that appropriate actions are also made earlier and this leads to better outcomes and the avoidance of decisions and activities leading to early failure.
Using holistic techniques means that you look at your business from the outside in and the inside out so that the entire business organisation is considered. When creating processes and policies, rather than focusing only on one or some of its specific components you look at your business as a whole, created of many individual parts. By using a holistic approach to business management, you can be certain that your business is running at full potential.
“Cash Flow” is NOT the problem
According to research by the Business Insider 82% of the businesses that fail, fail due to a cash flow problem. Cash flow is directly impacted by one thing; the money coming in is not covering the money going out. One of the leading reasons for this, especially in a small business landscape is a lack of customer, which usually means a lack of leads or an inability to turn leads to sales otherwise known as “Sales & Marketing”.
Therefore the root cause, in many cases, can be traced back to failure at a more fundamental level where the “cash flow problem” is the result, not the cause.
Identifying The 5 Core Issues
When looking at your business holistically (inside out and outside in), there are five core issues that can be identified to diagnose the root cause of “cash flow problems”
Unidentified purpose: The “I thought it would be a good idea” Philosophy
Purpose provides clarity. You must know why you are in business, if you don’t have clarity around why you are doing what you are doing how can you expect anyone to buy into your products or services?
- No set goals; The “Fingers crossed” Philosophy
Goals give you commitment. If you don't have clear goals you are stealing commitment from your self. You’re effectively burying your head in the sand and hoping that it will all work out.
- Unidentified target market; The “I work with everyone” Philosophy
You must identify whom you are in business to serve. There is only ONE purpose in business - to solve your customer’s problem. If you don't know who your customer is, how can you solve their problem?
- No product ecosystem; The “Why won’t you just buy it?” Philosophy
Think of a product and as a commodity and as an interaction your customer has with your business. Every interaction builds your customers trust. Your product ecosystem takes your customer on a journey from unaware to raving fan. Each product must be designed with your customer’s next step in mind.
- Poor communication; The “Waffle” Philosophy
As a business owner, you are always communicating your value. Anytime someone asks you what you do, your job is to communicate the next viable interaction that person can have with your business. Think of everyone as a potential contributor to your business success. They are either your ideal customer or they know your ideal customer. So understanding what to communicate and how to communicate is imperative to success.
Holistic Business Strategy
Following a holistic business strategy will rectify your cash flow problem by allowing the development of clear, well-understood mindsets and beliefs about a business and the roles within it. This, in turn, creates dramatic change in the potential of a business and the ability of the operators to take full advantage of that potential.
This type of business strategy is fundamental to achieving desired outcomes in short timeframes. To reach well-established goals in shorter time frames, a proper, detailed and well-constructed foundation must be laid - a strong holistic business strategy.
A holistic business strategy gives you Clarity on your overarching purpose to be in business. Identifies your goals so that you can stay Committed to yourself, your business, your clients and your suppliers. Defines who your Customers are and who they are not so that you are only working with people who value you, your product and service. A business system that has clearly defined its Commodities and creates a product ecosystem that articulates; what you sell, how you sell it and when you sell it. Finally, it has clearly defined Communication: content and channels. Content about you, about your business and about your products presented in channels where your customers will easily find it.
These 5 key ingredients (Clarity; Commitment; Customer; Commodities; Communication) are imperative to every successful business and all business practices can be filed under one of these 5.
A solid holistic business strategy puts you in a position of power because you know your value. Once you know your value, you are ready to beat your own drum and market the shizzle out of your business.