As I have spent several years working with SCORE in and around my 41 years earning my paycheck with street-level entrepreneurs, I thought it was about time the Quad State Business Journal did an article on why businesses fail.
I know that SCORE and SBDC folks are ‘supposed’ to accentuate the positive with entrepreneurs and business owners who seek their advice. It’s dictated by the SBA and Commerce Department among other ‘polite’ societal norms.
My time with SCORE was fun, don’t get me wrong. We helped a lot of sharp entrepreneurs get launched. But I suppose what was the beginning of the end of our relationship was the time that I told a newly-retired NASA engineer who retired from the Goddard Space Flight Center to go home and thank the Lord he has a pension.
And to forget his business idea–simply because he was uncoachable, unteachable and was unwilling to listen to even the most timid among us SCORE counselors–unless he is aiming for a huge write-off.
SCORE and SBA Aren’t Used To Telling Dysfunctional Entrepreneurs They are Dysfunctional
That’s not meant to be as irreverent as it sounds. I have always felt empathy for founders and their stakeholders. After all, it’s not as if I were some paragon of virtuous behavior when I was an executive, either. Nobody’s perfect.
Nevertheless, you can’t fix a problem until you face the truth. So whenever I have an opportunity to help a promising startup that can’t find its way or a mature company in need of a turnaround, it is difficult to watch them fail simply because those in charge aren’t willing to deal with their limitations.
Of course, we’re all human. But the beauty of an organization is that the head honcho does not have to go it alone. Here in our Quad State region, there is a lot of help for both the start-up and ‘mature’ entrepreneur if one is willing to extend oneself. That even goes beyond SCORE, SBDC or various ‘governmental’ help.
Is There Non-Governmental Help In the House?
There are successful business owners, right now, in our region, who would be thrilled to help a new entrepreneur get started or a mature entrepreneur get through a sticky business issue–if approached decently. (I suppose that ‘if approached decently’ is fodder for another full article.)
And yet, in all the years I’ve been doing this, the most common preventable failure mode by far is when CEOs are simply not willing to do what is best for their company. Call it fear, greed, myopic views or just plain selfishness, a business–whether start-up or mature–cannot survive their owner denial to give their dreams life-giving marketplace air.
I say “not willing” because it is a choice. Denial is a choice. Failing to challenge your own comfort zone is a choice. Maintaining the status quo is a choice. Listening to groupthink is a choice. Lacking the courage to face your fears is a choice. And putting your own self-interest ahead of those of your stakeholders and your business is a choice.
Make It Your Business to Understand Your Market
Stephen Covey’s writing wisely asked us to ‘understand, then seek to be understood.’ Gerber, author of ‘The-E-Myth told us to ‘work on your business, not in your business.’ If you are too busy to go outside your market to take a look at it from an outsider’s or a customer’s point of view, hire a consultant to give you that perspective.
Any decent psychiatrist will tell you that on some level smart people do understand what’s really going on. They do have common sense. They hear what others are telling them. They know what they’re doing. So when they suppress it, bury it in their subconscious, hear what they want to hear – call it what you want – that, my friends, is a choice.
Sure there are indeed concrete reasons why companies fail. Jump on any SCORE or business publication website and you will see a list. But failure of leadership is at the root of a great 99.9% of them.
Sure there are unforeseen things–even right down to selling a company and thinking that the proceeds will fund one’s retirement. And then you get shafted. I can personally give testimony for that! But what do you do after that?
You Have to Lead Yourself, Number One: Be In It for the Long Haul
There are so many terrific Quad State business owner stories about owners who were dealt a bad hand, a dirty deal, a sudden change in their market. We wish we could tell them all. But these owners gave short-shrift to their pity party and re-invented themselves and their businesses.
Lots of companies run out of cash. But while some can’t raise capital, you would not believe how many can and simply don’t. Oftentimes, their founders aren’t willing to give up a piece of the pie. They try to bootstrap a promising venture and end up starving it to death. Or they have too high a burn rate, aren’t willing to invest the time it takes to raise a round of funding, wait too long and run out of time.
It’s hard to imagine how many beneficial ideas, inventions and innovations never see the light of day because they offer solutions that don’t actually solve any real problems. Or they’ve come up with concepts, not products.
Lots of entrepreneurs are not in it for the long haul or for the right reasons; they think they can make a quick million or feed their egos. Some don’t think they need a unique value proposition or competitive differentiation. Others have holes in their strategy so big it would take a miracle to fill them.
I see this stuff every day. And none of it is rocket science, folks. It’s Startup 101. You should all know better. In all likelihood, you probably do. But you do it anyway. And fail. That’s what I’m talking about.
Success Is Hard–But So Is Failure–We Must Take Risks but We Need to Manage Them
Look, it’s not easy starting and growing a business. If it were, every startup would succeed. The problem is they can’t. Don’t kid yourself. Markets are zero-sum games. They are elastic but they are also competitive. People and companies have limited budgets. Ad dollars are finite. We are all after the same number of eyeballs and page views.
Just so this isn’t misunderstood or misinterpreted, let me make an important distinction. You should take risks. You should do what you love. You should take the plunge if it is in you to do it. You will never know how things would have turned out if you don’t. All I’m saying is do it with your eyes open.
I don’t care how inspired or passionate you are. Like it or not, there are laws of physics, finance, and human nature your ego simply cannot overcome. By all means, reach for the stars. But if you don’t keep your feet planted firmly on the ground, you’re just going to end up floating away. And trust me when I tell you, there are no customers up there.
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Originally appearing in www.QuadSBusinessJournal.com
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