What You Thought Your Business Would Be

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Why Businesses Fail

I am sure you have heard the statistics. About 95% of businesses fail in the first five years. What you may not have heard is the other statistic which says that about 80% of those who do stay in business, 4 out of the 5 of the 100, never achieve the kind of business success they thought they would achieve when they started the business. Which means that only 1 out of 100 business builders actually end up building the fabled business of their dreams.

What happens to the rest of the businesses that survive? They hobble along, never finding their groove, never hitting their stride and yet unable to give up as they have too much invested - emotionally and otherwise - in their businesses. By the way, these statistics are from before the great recession that started in 2008. The new statistics might be much worse.

Do you own a business? If you do, perhaps you remember the time when you started it. You may also remember that at that time, you had a vision, an image of how you wanted it to turn out. It may not have been a very vivid, detailed image, but it was there. Some expectations, some hopes, may be even a dream. Much of that vision may have come true. But some of it didn't. Perhaps your business is a little less than what you thought it would be. Perhaps it's not at all What You Thought It Would Be.

On this page, we explore why businesses fail and what a business owner like yourself can do to build a thriving, successful business she envisioned at its startup.

"Irrationally held truths may be more harmful than reasoned errors."
~ Thomas Huxley

Which Advice Do You Hear the Most

About Starting a Business?

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Why Build a Business?

Your Business Goals

Your business goals give you motivation and shape your passion. If you ask business owners why they had their own businesses, you will hear some of the following answers. What was your reason for starting your business? (Don't own your own business? Perhaps you have thought about starting one. If you have, can you identify with some of these reasons?)

Freedom from work, job, shackles, boss, employment.

7 points

Create something meaningful; fulfillment.

5 points

Sense of accomplishment or achievement.

5 points

To make money doing something you really enjoy/love doing.

4 points

Become wealthy; retire rich.

2 points

Because I can do it.

2 points

Make the world a better place.

2 points

Employ others; help the economy.

2 points

Why not?

1 point

10

Leave a legacy; something for the next generation.

1 point

11

If you have to ask, you won't understand the answer.

1 point

12

Make a good living.

0 points

13

Rule the world.

0 points

14

Impress friends, family and strangers.

0 points

15

Can't get a "real" job.

0 points

"Truth comes out of error more readily than confusion."
~ Francis Bacon

"Don't Do It" or "Just Do It?"

Do you remember the time before you started your business? May be there was a time you were thinking about starting your business and you asked around for some advice. There is a pretty good chance that you heard two kinds of advice.

One was some version of "Don't Do It". These words most likely came from family and friends. They obviously were not being very helpful and encouraging. In fact, after you started your business, there is a pretty good chance that these "naysayers" around you became a pretty big liability for you as you went about building your business.

But the other advice you may have heard, in my opinion, might much more damaging and, in fact, dangerous. It most likely comes from a motivational speaker type of a person. This advice is: "Just Do It."

When I started my first business, I got that advice, too. And I took it. Now I cringe every time I hear it. Why? Think of it this way. If you don't know how to box and get in the ring with Muhammad Ali, how long does it take before the knockout? About 10 seconds? If you're lucky! That's what many of us do with starting our businesses.

You see, the reason why so many of us fail at building a successful business is very simple: We Don't Know How to Play the Game - the Game of Business-Building.

Who Do You Listen To

When Building a Business?

In building a business, first and foremost, you must listen to:

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Expert advice.

inhousefinancing says:

Networking with other successful business owners both in your industry and not is a great way to grow and share ideas that work and perhaps avoid ideas that didn't. This can save you time and money. I would also like to add you must listen to your customers. Give them the best service possible. If a customer is happy they may tell someone. If a customer is unhappy, they will tell everyone. Nip it in the bud. Rectify the problem with empathy. This will help you grow and turn this person into a happy consumer.

tembrooke says:

You really do need to listen to experts, at least to some degree. I've worked with small businesses and so many of those people lost tons of money because they had no idea how to run a business.

MattMax says:

Other people. Just because you love the idea of purple spaghetti does not mean anyone else will, no matter how many reasons you can offer as to why it is the coolest thing EVAR.

John says:

Expert advice is important because I can avoid mistakes made by others without having to make them myself!

Your own inner voice.

MiddleSister says:

Inform your own inner voice with lots of knowledge. But your own inner voice is what's going to keep you going. You know more than you think you do. Intuition is valuable.

Phillyfreeze69 says:

One must listen to their inner-self and follow ones passion for a business that they believe in. If you do not believe in your vision, it will be extremely difficult to ask investors/Banks to believe in your business plan if it is a start up.

Starting a new business venture has often times been compared too giving birth!...to see ones business plan come to fruition and be successful can be an exhilarating experience indeed.

AmyPKelly says:

the customers. When they buy and are happy...you have found a market pain point that matters, will be profitable and meets a need.

darciefrench says:

I have come this far listening to the silence of the Presence of God :)

ModernChakra says:

your heart

 
view all 11 comments

A Sport, a Skill, an Art Form

Not an Intellectual, Theoretical Exercise

The school, the college, even our MBA degree didn't prepare us to be business owners. They prepared us to be employees: nurses, doctors, engineers, lawyers and even vice presidents, CFO's and CEO's. Nothing wrong with, except that if we expect traditional educational system to teach us the skill of business-building, we are very likely to be disappointed.

Here's what I mean. Learning a skill, like business-building, is a journey from the head, to heart, to gut and then to actions. You see, building a business is not really an intellectual exercise. It's also not just a physical or even an emotional exercise. It's a combination of it all. It's a skill. It's an art-form.

The reason why small businesses are failing is because most business owners who start their businesses are entering the business arena at the novice level while other businesses - their competitors - are playing the same game at the expert level. They are entering the tennis court without having ever hit a ball across the net and their competitors are tournament champions and trophy winners. They are entering the Karate competition at the white-belt level while their competitors are 4th degree black-belts. They have never been into a boxing match before and yet they enter the ring to fight with a heavy-weight champion.

False Premise:
Human (and business) growth and development is an intellectual process.

What's Required for Business Success?

Entrepreneurial Skills

When you ask "experts" which entrepreneurial skills are required for business success, you will hear some of the following answers. Please vote up those that you agree with and vote down those that you disagree with.

Vision, mission, strategy.

8 points

Self knowledge: knowledge of one's strengths and weaknesses.

5 points

Great product or service.

3 points

Management skills.

3 points

Self management skills.

3 points

Proper focus, discpiline.

3 points

Right market, timing.

3 points

Bookkeeping and financial skills.

2 points

Leadership skills.

2 points

10

Business plan.

2 points

11

Clients, customers, revenues and cash-flow.

2 points

12

Selling skills.

1 point

13

Marketing know-how.

1 point

14

Street smarts.

1 point

15

Drive, desire to win or succeed.

1 point

16

Adequate funding.

1 point

17

Time management, ability to multitask.

1 point

18

All of the above.

1 point

19

College education, professional skills or certifications.

0 points

20

None of the above; business success is pure luck.

0 points

"We are generally the better persuaded by the reasons we discover ourselves than by those given to us by others." ~ Blaise Pascal

From Head to Heart, to Gut, to Actions

Head, Heart and Hands

Now, I am a realist. Working with business owners has taught me that most people who are about to start their businesses will still jump into it prematurely, regardless of what statistics say. Entrepreneurs are notoriously hard-headed. And to an extent, that's a positive quality. They will need that sense of supreme self-confidence to hack it in the world.

My message is really meant for those business owners who have been at the game of business-building for a while. They are the ones who really "get" what I am talking about here. They have experienced the trials and tribulations of building a business. That's why, they are more open to my message.

But they have a serious dilemma. Many, if not most business owners accept and recognize that they need to continue to develop their skills in business-building. But they don't have the luxury of taking two years off and disappearing onto a college campus. Even if they did, it would not help much because the world of academics is far removed from the real world.

They need to learn how to build their business while they are engaged in the process of building it. In other words, they need to bring their head, heart and hands together. They need the intellectual help - the best practices and principles of successful businesses. But that's only 25% of the way to mastering the sport of business building. They also need help in internalizing that knowledge by engaging with it emotionally, making it a part of their gut system and taking meaningful actions. As I like to say, they need to take the knowledge from the head to the heart, from the heart to the gut and form the gut to the actions.

"Education should no longer be mostly imparting of knowledge, but must take a new path, seeking the release of human potentialities."
~ Maria Montessori

Not Just Build, Learn How to Build

What business-builders need is a change in the mindset, a shift in thinking. If they went from merely building a business to learning how to build one, the actual building of their business will happen almost as a by-product.

A sport I love is Martial Arts or Karate. Karate has intricately woven both the Art and the Science of the sport together in a system that could be taught and learned, step-by-step, incrementally and by practicing it. In other words, Karate is more about how to fight, rather than actually fighting.

Business-builders can take their inspiration from this model. They can treat their business not just as the means to achieve their dreams - which, of course, it is - but also as a way to learn how to build a business, by building it. When they do this, they can easily detach themselves from the act of building a business and see it as a sport they enjoy, a sport they look forward to playing every Monday morning.

"Don't just do it. Know what you are doing." ~ Bhavesh Naik

Where Do You (Jump) Start...

Your Business-Building Education?

At the time of this writing (September 8, 2011), a search on "business books" on Amazon.com returns 1,998,630 results! Also, the book searches on "management," "business management" and "leadership" return 660,493, 338,287 and 69,299 results, respectively. It's safe to assume that there are tens of thousands of business theories in existence, if not hundreds of thousands. The question is which theory to pick as obviously, it's humanly impossible to be an expert in all of them. Who is right? My take on it is: they are all right but they are also all wrong. Let me explain.

Most management theories are an intellectual framework. They present an excellent theory but lack the depth and breath of total human experience. Intelligence is a part of human experience too, certainly, but only a fraction. In my work with people, I have identified seven distinct human faculties. Most management theories address only one and touch on perhaps 2 or 3 more. (Please refer to my page, Management by the Way of Awareness, for more information.) What's lacking in mainstream business development approach is an integrated human approach.

In other words, it's not that we need more advice or more information. The information is all around us. What we need is ability to bring it all together. But we do need a starting point, which I have presented below.

Do It Yourself

Business Books

I recommend three bodies of work that I wish I had digested before I had started my first business. If you could read just three books, master only three subject matters in business building, they would be these.
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Business Building Templates

Click the Links to View and Download

For the last 15 years, I have worked with over a hundred business owners in helping them build their businesses. I have distilled everything that I have come to know about business-building in some very simple tools. The following section gives you three extra-ordinarily simple but powerful tools to help you get started right away. If you have questions about them, please ask them in the guestbook below and I will be sure to answer them.
Product Sheet Template
Whether you are just starting out or have been in business for years, if there was one good thing you could do for your business, it would be to complete this sheet the best you can and then keep improving it over time. Have one for each of your products and services, one for each of your product-suites and one for your overall business. You can do it individually or with your team at the next executive retreat!
Business Blueprint Worksheet
If you own a business, you already know this: Most business owners don't write a business plan. If they do, they find out later that it was a complete waste of their time, unless they wrote it to raise money and were successful at it. Most written business plans collect dust on shelves, almost never help in running day-to-day operations and their authors hate to look at them. A better idea is to develop a short Business Blueprint that evolves with the growth of the business and the growth of its leaders. I present a template here.
"Awayre" Business Systems
What we habitually, consistently do, perhaps even without thinking, like driving a car, defines us to a great extent. Our habits drive our successes and our failures. Our habits make us efficient or inefficient. Our habits make us healthy or unhealthy, sharp or dull, wealthy or poor. Because a business is made of people, the same holds true for businesses. Habits of a business, sometimes referred to as Systems, define its character. Habits drive its successes and failures. Habits make it thrive or wither away and die. Habits make it a market leader or a mediocre survivor. Habits bring out great lines of successful products or failures after failures. Presented are some key areas where a business needs to develop systems or habits.

More Resources

On Marketing Message, Business Plan and Business Systems

Want to Jump Start Your Sales? STOP Marketing!
It is conventional wisdom. If we are starting out in a business, the first thing we must do is have a logo and "identity". Then we must have some flyers and brochures - some marketing materials, we say. Then all we have to do is get the word out. Place an advertisement in the local newspaper. Join the local chamber and network, network, network. And then wait for the phone to ring.

Most of us are cruelly reminded that business does not work this way...
Why Business Plans Don't Work
My eyes became misty as I listened to the speech. The speaker was a successful business owner who had finished telling a powerful story. The story was about how he started his business from almost nothing and grew it into a successful distribution company with over $6 million in sales. He was persuasive and eloquent as he made his final point.

The point was that to be successful in business, you must have a business plan...
A Perspective on Systems
A marketing and selling system is a set of activities and behaviors that you are committed to doing consistently over time.

With such a system: - You can accurately forecast and predict your revenues, profits and cash-flow months in advance. - You have control over the amount of revenues and sales you generate. - Your month-to-month sales and revenues remain consistent so that you can avoid fluctuations in your sales volume...

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I plan to add more resources, links, articles and templates to this page as they become available. Bookmark it and check it often. Don't forget to leave us a comment. Did you find this page useful? Why not give it a thumbs-up? Thanks for visiting!

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Copyright

Copyright © 2011 by Bhavesh Naik and Awayre, LLC. All rights reserved.

by

bhavesh

Since I was a little kid, I wanted to play tennis. One Friday evening a few years ago, a burst of inspiration hit me. So I went to the local bookstore... more »

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