Entrepreneurship in the 21st Century

Entrepreneurship in the 21st Century

Why Businesses Fail?

Everyone wants to be their own boss and run their own business. However, running a business is no walk in the park as there are many things to consider before one decides to jump in the entrepreneurship bandwagon. According to a report in USA Today, only about 20% of new businesses survive past their first year of operation. This has been the trend for the past two decades and it still is until today. This could be due to a variety of reasons which are detailed as below:

1. Poor Cash Flow Management

A business owner has to be able to exercise full discipline in managing the finances of the company. Apart from good products and services teamed up with brilliant marketing strategies, survival of a business is heavily reliant on the liquidity and cash flow of the company. A business owner must be clear not to mix personal and corporate funds or trouble will ensue. The biggest sin in any business is when a business owner lose sight of this. A good business owner should understand the difference between seed money and profit. Profits made from the business should be re-invested to grow the business and not spent on reasons other than that. Business owners ought to do regular reviews of their financial standing and ensure that the funds available on hand must be able to sustain the business for over six months at least, if not a year.

2. Lack of Entrepreneurial Mindset and Skill

What is an entrepreneurial mindset? A businessman with an entrepreneurial mindset has the ability to see future profits and forecast the revenue from his business. This gives him the drive to work towards realising the profit he has set his eyes on. On the other hand, a risk averse businessman has a limited view, which refrains him from taking any risks. However, in the business context, taking a certain amount of risk is healthy for the growth of the business. A businessman with an entrepreneurial mindset is able to see the potential in a product or service and is able to transform the idea into money. Ultimately, for any business person, it is best to plan for the long term instead of focusing on short term gains.

3. Lack of Talent

In any company, it is best if its owner is involved in monitoring the health of the business. This can be done by performing regular reviews of the business performance from time to time. This aspect of the business is crucial as it allows business owners to formulate and implement necessary recovery measures before it is too late. Most business owners hope that their business can run on autopilot but that is wistful thinking. This might be feasible if the business is already full established and is led by a strong team of visionary leaders that have the same vision as the founder of the company. However, it is still good for a business owner to keep in touch with business performance to ensure business sustainability.

4. Business as Usual Mindset

In the 21^st century, having a competitive edge in your business strategy is crucial for the survival of a business. It has been and always will be about the survival of the fittest. Business strategies get outdated very quickly and advancement of technology and changing times resulting in different consumer demands will affect any business. Hence, the ability of a business to adapt to these changes will be the key determinant in its survival and growth. The hard truth is, nothing is constant. It is actually compulsory for businesses to apply innovation and creativity if they seek to be the top player in the industry that they are in.

5. Poor Customer Service

Poor customer service will push customers away and they will have a solid reason to bring their business elsewhere. There are many competing businesses offering the same products and services, but only a few seem to thrive. The main contributing reason for businesses that make it, is because they offer their customers something extra. Take for instance, the taxi industry is experiencing a difficult time due to its inability to deliver great customer service and refusal to change their operating system. Customers now opt for Uber or GRAB, which favours them in terms of convenience and safety. In comparison, taxi operators most of the time overcharge customers and do not give good service, while Uber and GRAB are transparent and offer cheaper rates. The latter also keep its drivers in check through a rating system, whereby drivers will have to maintain a certain standard of service to continue driving for the company.

6. Slow Response Time

The speed of response is critical as it will influence customer’s experience with a business. Customers will cease to trust a business that is slow to respond when customers reach out to them. As a consequence, customers will look for another alternative solution to their problems. This usually result in customers seeking out competitors of the business, whom they think will be able to deliver the same product or service at a much more efficient delivery time. This is a loss for the business as they are practically pushing their customers to their competitors. A simple example would be McDonald’s versus a street burger stand. McDonald’s has a much more efficient operating system that enables them to sell more as they are able to produce and serve their customers faster, compared to a street burger stand that takes double the time to do so. Customer’s time is precious and they must not be kept waiting. A business that is slow to respond will lose its customers to its competitor who is able to deliver at a faster rate.

7. Lack of Innovation and Creativity

What is good and trending today may be outdated tomorrow. Businesses that fail to innovate and go with the trend may be obsolete as they will be unable to compete with the ‘big boys’ of the industry. Creativity and innovation is the only way for a business to grow and be sustainable in the long term. With the advancement of technology, businesses ought to leverage on this to expand their business and do their best to deliver differentiated products and services to the customers they serve.

8. Poor Sales and Marketing Strategy

Businesses that rely heavily on customers for sales like the retail industry will suffer tremendously if its sales and marketing strategy is not solid enough. For instance, a retail company decide to go the extra mile to serve its customer by offering delivery services will be able to attract customers from its competitors’, who don’t offer the extra service. It is the hard truth that the way of doing business has changed over the years. Doing business online has taken over the mainstream way of having a brick-and-mortar establishment. Hence, it is necessary for a business to constantly review their business model and strategy to see how they can strive for better results in their business.

If you are an entrepreneur or business owner, we strongly encourage you to join our 3-day comprehensive entrepreneurship training by master trainer Jackson Ng. Jackson has helped many business people and entrepreneurs achieve breakthrough results in their business. The areas that Jackson will cover in his training are:-  The ’12 Creative Ways to Sell to Customer’ concept, managing talent, how to increase value to existing customers, convert customers into advertisers, branding and positioning of products, converting talent into money as well as building your brand solid.

Jackson Ng (4th from right) with a group of entrepreneurs at an entrepreneurship fair

Female entrepreneurs in-the-making