Sales Masters Guild Mentor, James Davey, looks at entrepreneur training, why businesses fail and what the answer may be.
There are 5.7 million businesses in the UK at the moment, 5.4 million of which employ fewer than 9 employees. These are described as ‘Micro Businesses’. The number of businesses in the UK have increased every year since the turn of the millennium.
Many of these businesses have come about because of changes in the structure of the economy. Larger organisations are shedding middle management staff and many experienced managers are finding themselves out of work. Unable to find alternative employment, many start their own businesses.
The desire to run a small business are strong. Tired of giving 100% for very little recognition, many people have decided that they would rather run their own businesses, keeping the money they have generated for themselves rather than giving it to their employer in exchange for a monthly salary. Being your own boss is seen as a source of freedom from the daily grind.
The barriers to starting your own business are low. You don’t need to pass examinations or gain a qualification – anybody can start a business with very little money. But UK business failure statistics are evidence that just having a great idea and a desire to run your own enterprise are not sufficient to make a success of it.
There are organisations out there that can provide new entrepreneurs with some support. Some of the available training is better than others. My advice would be to look for people who have done it themselves successfully because practical experience is more valuable that technical know-how. Making a success of your own business requires resilience, determination and a positive mindset which not everybody has.
It comes as a shock to some people who leave corporate structures to start their own businesses. They are used to having the backup of a corporate infrastructure to make things happen. IT is taken care of by the IT department, new employment contracts by the HR department and finance by the accounts department. Managing cashflow is someone else’s responsibility and all those little jobs that keep the organisation ticking over nicely are handled by someone – until it’s all your responsibility.
The result of all this ‘stuff’ falling into one person’s lap is overwhelm. You work all hours and still don’t get to the bottom of your ever growing ‘to-do list’. Prioritisation and effective time management become essential, but not everybody has had the training to do all this themselves. You need to delegate some of this stuff, but who do you delegate it to?
Why do Businesses Fail?
There are many reasons that businesses fail. The uncomfortable truth is that 30% of new businesses fail within their first three years. Here are some of the reasons businesses fail:
- Lack of Capital– Running out of cash is a sure way of going bust. Underestimating the capital required to get the business off the ground accounts for many business failures. It often takes longer to reach the steady level of business required to finance ongoing growth than is originally planned.
- Inadequate Management– Failing to see the wood for the trees often leads to focusing on the wrong things. Concentrating on the urgent rather than the important leads to wrong priorities.
- No business plan– If you don’t have a plan, you don’t have a road map to take your from where you are now to where you need to be. It doesn’t have to be a 100 page document of facts and figures, but you do need have a clear idea of where you are going and what you need to get there.
- Poor Marketing– Marketing is not something you can switch on and off. If you are to avoid the common ‘feast and famine’ cycle, you need to have a consistent marketing plan covering between six and eight routes to market clearly focused on your unique selling proposition.
- Lack of Leadership– It’s all well and good to have a great plan in your head, but if you can’t communicate it to your team, you are not going to get the benefit of having everybody striving for the same thing. Everybody needs to know their part in realising success for the business.
- No Clear Competitive Advantage– Unless you have a source of clear competitive advantage, you will never dominate your chosen niche. There will always be someone else who can do it better, do it cheaper or do it more quickly than you.
- Not in Touch With the Market– There are many great ideas out there, but unless the market sees a need for them, it will never get you the success you need. Understanding your market, knowing their pains and desires and keeping one step ahead of the competition will ensure your success.
- Un-profitable Business Model– Having the right business model is essential to making money. Keeping your model up to date is also essential to ensure survival. We all remember great businesses that have failed because they failed to see how the market was changing and adapt accordingly. Thomas Cook is a great example of this.
- Poor Financial Management– Many profitable businesses fail due to lack of financial management. Managing your working capital cycle is essential if you are going to have the funds available to pay your creditors when they fall due. This means managing accounts receivable, inventories and accounts payable effectively.
- Overtrading– Growing too quickly can cause you to run out of cash. Accountants call it ‘death valley curve’ as the cash needed to fund next month’s sales exceed the money coming in from last month’s sales. I call it ‘sliding down the razor blade of business life’. Whatever you call it, you need to know your self-funding growth rate and controlling your business so it can finance it’s own growth.
So, what’s the answer?
The good news is that you are not the first person to be faced with these challenges. Others have been there before you, made the mistakes, worked out the solutions and created a model of the ‘business that works’.
By attending an Entrepreneurs Training Day, you will be introduced to the formula for success. It starts with deciding what winning is to you. There is no ‘one size fits all’. Different people want different thing from their businesses. Some want to grow to be the leaders in their field, others want to stay small and achieve a work-life balance that suits them. Whatever it is you want from your business, you will only get it if you can visualise the outcome and put the building blocks in place to get you to your chosen destination in measured steps.
We are called The Sales Masters Guild for a reason. At the heart of every business is someone who can generate a steady flow of sales. Without sales, there is no business. Without sales, the overheads cannot be paid, your staff cannot be paid and ultimately, you won’t generate what you need to pay yourself to get by each month. We can help you overcome tour fear of selling by introducing you to our simple 5 Step sales process that makes selling so much easier. We can help you hone you ‘value proposition’ so you can engage with your prospects and explain in language they understand just what you can do for them to help them overcome their challenges.
The basic structure of the ‘formula for success’ is the same for every business. The details will depend on your own circumstances and desires. By attending an Entrepreneurs Training Day, you will be able to put together the basics of a plan to build on and achieve your objectives.
Head over to James’s mentor profile page to find out when he is holding his next Entrepreneurs Training, book yourself into one or to contact him to discuss the training and the benefits to you.
James Davey is a Sales Masters Guild Personal Business Mentor.
Having started his business career as an accountant working in industry, James decided that there was more to the game of business than just keeping the score. He’s now a mentor as well as running a successful health and fitness business with over 2,800 members,