Reason Why Business Fail:
10 Mistakes that People Make
Here are the 10 mistakes that are the reason why business fail. They are primarily focused toward a home business, but apply to any business.
1) UNREALISTIC EXPECTATIONS
2) THEY DON’T TREAT IT LIKE A REAL BUSINESS
3) LACK OF CAPITAL / MONEY
4) LACK OF ACTION
5) LACK OF SKILLS
6) LACK OF LEADS / PROSPECTS
7) NO SUPPORT OR MENTOR
8) NO SYSTEM
9) DON’T MAXIMIZE TAX ADVANTAGES
10) GIVE UP TOO EARLY OR TOO EASILY
1) UNREALISTIC EXPECTATIONS
In 2000, Polivy and Herman published a study that showed that the decision to make change offers wonderful feelings of control and optimism. But those feelings are short-lived if the change is not accomplished. Repeated efforts at self-change, characterized by an expectation of an unrealistically high payoff in an unrealistically short time, actually reduce satisfaction with our lives by 40 percent. And unrealistic expectations is the number one reason why business fail.
We are bombarded all day long with commercials that tell us that we can change ourselves. In thirty seconds, the commercial actors can get smarter, thinner, prettier, and richer. But this fantasy world only sets us up for a fall.
We hear about the possibilities for wonderful changes people can make in their lives, and we want to duplicate those results. When we try and are not QUICKLY rewarded, we actually wind up feeling worse than we did before we started.
Many people starting a business have an unrealistically high payoff expectation (make $5,000 a month) in an unrealistically short time (3-6 months). They need to take a look at their expectations. What evidence do they have that their expectations are realistic or that their time frame is realistic? You can make 6 digits a year in a home business in your spare time. It will take 2 to 5 years to get there. But, where else can you make a 6-digit income in your spare time, starting with no experience – and do it from home.
Our goal is tell you what really works. It does take vision, discipline, a good attitude, and effort over time to see it through to the end. Positive change in your life will not be finished today, but it can start today.
One definition of happiness is: results exceed expectations. What if you worked for a month and didn’t receive a paycheck you were expecting – you’d be pretty upset. And rightfully so. What if you didn’t show up to work at all for an entire month. Would you expect a paycheck? Of course not. Yet, some people expect that they will somehow generate revenue in a business where they invest no money and put in no time or effort!? It just ain’t so. Don’t fall for it.
Bottom Line: A home business will not solve your immediate money problems. It is a long range plan that will eventually build a residual income.
2) THEY DON’T TREAT IT LIKE A REAL BUSINESS
One of the key benefits of a home business is: The low investment required.
One of the biggest reasons why business fail is: The low investment required.
Most people match a low investment with low commitment. The difference between mediocrity and excellence is a very slim margin. But the element that crosses that margin is: commitment. Many home “business” owners don’t have a long-term vision or a long-range plan.
Most business owners do not have a detailed and written business plan. No financial projections or break-even analysis. No marketing plan, customer service plan, training plan, personal development, or any other plan.
3) LACK OF CAPITAL / MONEY
Many people are looking for a get rich quick scheme that requires no effort on their part. These same people believe they can start a business with no investment and continue the business with no budget. It just ain’t so.
You will need money to start a business and a monthly budget to stay in business. However, you do not need a lot of money. In fact many home business systems, such as network marketing and affiliate programs, allow you to start a real and legitimate business for a very small investment. How much does it take?
We recommend starting with as little money as possible. Force yourself to be creative, force yourself to build a strict budget. You’ll be better prepared for the rapid growth of your business. It should take no more than $100-500 to get started. Then a $100-300 a month budget to keep it going until you’re in profit and your business is paying for itself – which should take from 3-6 months (depending on your level of effort).
The different investment levels are like different modes of transportation. If you wanted to go from New York to LA you could walk, drive, or take a plane. You can walk – it will take a lot of time and effort but it would cost next to nothing to get started. A plane would cost the most, but you would reach your destination much faster. The more you invest into your business (time can substitute for money to a degree), the faster you’ll reach your destination.
4) PEOPLE DON’T ANALYZE THE OPPORTUNITY
Surprisingly, some people do not analyze an opportunity in detail before throwing their money into it.
These are people who have a Fire-Aim-Ready or Fire-Fire-Fire mentality. They literally throw their money away because:
“They had a nice ad”
“They had a really awesome video”
“The guy on the phone was really nice” or “The guy on the phone was really excited”
For a checklist on how to analyze a business opportunity, click here. Here are the things you should analyze:
1) Sponsor, Business Partner, or Mentor
3) Product / Service
4) Compensation Plan
5) Personal Fit
5) LACK OF ACTION
People throw money into a business, and then do…NOTHING. Believe it or not, it’s true. Most of them do nothing because they don’t know what to do, they lack skills and/or direction, or they are “hoping” that everything will work out all right. They might as well go and buy a lottery ticket. People who are not going to take consistent and measurable action with a business should not waste their money or time. They need a job.
“Knowing what to do isn’t enough
if you haven’t developed the self-discipline to do it”
- Harvey Mackay (best-selling author of
Swim with the Sharks Without Being Eaten Alive)
Most people don’t take real action, and that’s another reason why business fail. Maximum effort and hard work are not going to ensure success – they are only a prerequisite, or the foundation. Efficient and focused effort are required to build upon that foundation. There’s a difference between “keeping busy” and “taking action”. Some people are running a “busy-nest” and not a business.
Many people who have been with a company or on a job for five years
do not have five years of experience.
But, unfortunately, it’s not just How Hard You Try. Effort alone and how hard you work on your business will not predict success. In a 1998 study, the single most overrated trait in producing success was: effort. Most people rank it as the best predictor of success when in reality it is one of the least significant factors. Hard work, by itself, is a terrible predictor of outcomes because inefficient effort is a tremendous source of discouragement. People conclude they can never succeed, since maximum effort has not produced results. What they also need are business skills and/or training.
6) LACK OF SKILLS / TRAINING
"Inherently, each one of us has the substance within, to achieve whatever our goals and dreams define. What is missing from each of us – is the training, education, knowledge, and insight to utilize what we already have." - Mark Twain
Hard work when combined with skills and training bring outstanding business results. Many people are unable to overcome their own arrogance and that is another reason why business fail. They are unwilling to admit that things they do not know are important to their success. The things we don’t know are what bring success. Many people wonder why they’re not succeeding because “they work so hard”. Yet, they make no attempt to ask for help or seek training that could bring them success. However, knowledge itself is not sufficient.
The US Air Force Academy in Colorado Springs has a saying:
“Man’s flight through life is sustained
by the power of his knowledge”.
The truth is “Man’s flight through life is sustained by the application of his knowledge.” Knowledge is the foundation of all skill. But it’s only the foundation. It must be applied.
Many people take a huge risk because they invest a lot of money into their business but they invest very little time or money learning how to run a business. And the best source to acquire those essential business skills is a mentor or other support system.
7) LACK OF SUPPORT / MENTOR
The primary purpose of a personal coach or mentor is to help keep you accountable. Just like a work-out partner or a sports team. Others are there to make sure you show up and put in a good effort. The same holds true with a business. One of the greatest benefits of a network marketing home business is a group of business associates that have a vested and personal interest in your success.
8) LACK OF LEADS / PROSPECTS
Many business owners have no idea how the “marketing sequence” progresses through different stages:
Leads -> Prospects -> Customers -> Repeat Customers
A successful business does not start with customers. It starts with leads (strangers) and turns them into prospects. Then, a prospect can be “converted” to a customer. Then, true business success happens when those customers are turned into repeat customers. Without leads or prospects, there are no customers.
Each stage requires a different marketing approach and a different plan. Unfortunately, most people don’t have a written marketing plan: how they will take each stage of the sequence and “convert” it to the next. And a written marketing plan is the first step in developing a business system.
9) NO ESTABLISHED SYSTEM
Most businesses have no system in place for the conversion of the marketing stages. No system for generating leads. No system for turning those leads into prospects, and then into customers, and then into repeat customers.
A system allows you to work efficiently while you work your business effectively. Efficiency is how well something is accomplished with minimum time, effort, and money. Effectiveness is how well an objective is achieved. It is possible to be highly efficient and completely ineffective. That’s why a system will not guarantee success. It is only a tool that acts as leverage for success.
10) THEY QUIT (OFTEN BEFORE THEY EVER GET STARTED)
It takes a tremendous amount of energy to launch a rocket into space. In the initial stage of the launch, the thrust is enormous with seemingly no response. Then the rocket finally lifts off and must battle the earth’s gravity and the drag of the atmosphere. At a certain point, the boost motor turns off and the sustainer motor engages, requiring significantly less energy.
Then the rocket reaches what is called escape velocity – the point where it leaves the earth’s atmosphere and escapes the earth’s force of gravity. When that occurs, the rocket is traveling at 15 times the speed of sound with no energy required to keep it there. If the rocket’s thrust stops just 1 mph short of escape velocity – it falls back to earth and fails to achieve an orbit.
A business is no different. The initial stage requires a lot of hard work and effort with little to no results. Eventually, you get to the point where minimal effort is required with a lot of results. Too many people quit too early or too easily – many of them not knowing just how close they were before they quit. An old saying goes: The darkest hour is the hour just before dawn.
Many people give half an effort (with no system, no skills, no quality prospects, and no support), and then they quit.
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