Jeff Levy is an Author (Making the Jump into Small Business Ownership), National Consultant, and Coach to individuals interested in exploring self employment with an emphasis in franchising. In 2009 he was named Franchisee and Coach of the Year out of 250 coaches in the US. Maintains a client based focus while working with 200 different franchise businesses. In 2007 he was co-winner of the Top Performer Award at The Entrepreneur’s Source.
After guiding many businesses, why do you believe most fail? What seems to be the common thread?
When a company survives more than 3-5 years it is assumed they have passed the critical start up phase.
Failures during startup (1-3 years) can often be traced to some common elements.
Often times companies are undercapitalized and they run out of money. Surprisingly, a company can run out of money if they grow too fast.
Failure to plan effectively and to anticipate challenges often contribute to the demise of a company in its early stage.
As a general rule, the chances of failure increase if the company: ignores their customers preferences and buying habits, uses inappropriate or overly aggressive assumptions for revenue and cash flow in the business plan, have a management team that is mismatched to the needs of the company and is confused as to their role (technician, manager, visionary) and forget that cash remains king.
It generally takes longer than planned to get a startup into the “black” and founders need to be extremely focused.
A long operating history does not always guarantee success.
I write this as I am saddened by the bankruptcy filings of Kodak and Hostess. Two mega companies that seemed to be iconic and unstoppable. In the case of these two companies they failed due to changes in technology (Kodak) and changes in consumer needs (Hostess).
In answer to the question, companies can fail, no matter how big when they lose touch with their customers needs and stay too long with a product offering that is no longer contemporary.
Why do businesses succeed?
Business success is a very interesting concept and more difficult to define than failure.
As a person who has managed several businesses, I realize that success can only be evaluated in terms of time.
Did you have a successful quarter, year, five year run? Did the company meet revenue, income and strategic goals? Does it have adequate resources to remain financially viable. Can management avoid the challenges that could stop the companies growth: technology, legislative, customer needs or economy related issues?
The general characteristics that gives a company the best chance for success would be:
- A solid business plan with conservative, realistic assumptions on revenue, margins and operating costs.
- A good team of management and operating personnel that have a commitment to the mission and goals of the company.
- A visionary that will help the company “see around corners” for potential problems and opportunities.
- A willingness to change as the needs of the market evolve.
Want to learn more? Buy Jeff’s Book!
Making the Jump into Small Business Ownership provides the information, encouragement, and insight you need to go from dream to reality.
As successful businessmen who have helped thousands of individuals begin small businesses, authors Jeff Levy and David Nilssen share their in-depth expertise.
Below you’ll find more information about the book, and a Free Excerpt beginning on page 5.
- Introduction (PDF Download)
- Media Kit (PDF Download)
- Entrepreneur Flaws and Weaknesses (PDF Download)
To purchase the book, click here.
Stay tuned! Next week co-author David Nilssen shares his thoughts on why businesses fail, and more free excerpts from the book will be provided!