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!
Related Posts:
- Making The Jump Into Small Business Ownership by @davidnilssen & @JeffLTheESource
- Becoming A Business Leader with Mike Schultz
- Thoughts of a Concerned Tweeter
Loading ...
"You’re such a smart boy!" were his first accolades heard. So, it’s no wonder that this phrase became the title of his business, Smart Boy Designs.
Read more about Christian 
{ 10 comments… read them below or add one }
Twitter: DrRhia
February 23, 2012 at 7:18 am
This is a very sensible analysis. I think the willingness (and ability) to change is key to success…whether it be for a business, a teacher, or even a language (languages that don’t change with the times die out!) Yet so many people seem reticent, and even fearful, to change. This adaptability is key, especially in my field of special education!
Rhia Roberts recently posted..What do American Idol and Hitler have in common?
Such a nice post! I totally agree, to be successful, the most important thing at the beginning of an online business is a well-designed business plan.
Putting up a business needs a very good strategy. Owner needs to have a fully and well designed business plan, especially these hard times, not all businesses can be successful. I totally agree with what he said.
Twitter: DrRhia
February 24, 2012 at 7:55 am
I was thinking that stamina should be added somewhere too, especially the stamina needed to get through the downturns.
Rhia Roberts recently posted..Relax!
Twitter: smartboydesigns
February 25, 2012 at 2:38 am
Great thought. Where should that stamina be derived from? There always has to be a reason it’s sustained. Seems it’s different for each person (e.g. making money, helping others, spreading a message).
Christian Hollingsworth recently posted..Why Do Businesses Fail? Thoughts by @JeffLTheESource
Twitter: DrRhia
February 26, 2012 at 8:06 am
I think you’re right in saying that stamina comes from different places for different people. Don’ t you think we all have our own ‘currency’ or something that makes us tick? If I were guiding a business owner I’d identify and highlight that so that there would be stamina to get through the difficult times (and the pot would be refilled during the good times). As you can tell, business isn’t my field so I don’t have the jargon…but being in the field of sp ed, I know how important stamina is! Rhia
Rhia Roberts recently posted..May the Force Be With You.
Such a great article with useful advices! It’s always nice to get some helpful tips from a such recognized man like him. There are a lot of articles on the net about this topic, but none of them was written by such a great man.
Twitter: jocelynwilhelm
February 26, 2012 at 3:46 pm
Business Plan! Yes, many businesses take the plunge without a properly written, well-thought out business plan. It’s the first and most critical phase of any business endeavor. Great reminder!
Jocelyn
Jocelyn Wilhelm recently posted..How to Get More Engagement on Facebook
Twitter: smartboydesigns
February 27, 2012 at 9:43 am
Most certainly. It would be like starting a home, without building the foundation first. Not going to last long or weather ANY storms.
Christian Hollingsworth recently posted..25 Reasons I Work From Home
Great analysis Jeff,
The fact is our economy and existing business models are changing at a rapid pace and everyone is feeling quite uneasy with our future prospects.