June 29, 2010 Leave a comment
by NEIL PATEL
Let’s face it, you’ve wondered if your business is going to succeed or not. You keep on pouring your heart and soul into your business but for some reason you aren’t making a ton of money. Well the sad part is, there is no sure way to know if your business is going to fail or succeed. But these warning signs should help you determine your odds of succeeding.
1. You’re not making a profit.
It’s easy to say that you have to make money, but in reality that isn’t true. You need to be making a profit. Bringing in a million dollars a month is useless if you are spending a 100 million. That means you would be losing 99 million dollars every month.
Successful businesses make profit. And although you may not be profitable right now, you have to work towards it.
According to the Small Business Administration, most businesses fail in the first 5 years because they can’t make a profit.
2. You haven’t talked to a potential customer
Do you think your business is cool? Who cares what you think! All that matters is what your customers think because they are the ones paying you.
If you haven’t talked to a customer yet, you better get off your ass and do so. And more importantly, don’t just talk to one, talk to a few.
3. You don’t love what you do
If you love your business you are more likely to spend more time on it. And if you spend more time on your business, you are more likely to succeed. If you’re just in business to make money, there is a higher chance that you’ll get burned out and you won’t work as hard.
Working 40 hours a week just doesn’t cut it when you own a business. On average entrepreneurs spend 61.1 hours working each week.
4. You can’t take criticism
When a friend or family member gives you feedback about your business you shouldn’t get angry. Listen and try to really understand what they are saying.
Now this doesn’t mean you have to do everything they are telling you to do, but you have to at least listen. Who knows, one day they may give you advice that will change your business.
5. You don’t care about your customers
Customer service and support is something that can make or break your company. If you don’t care about your customers they won’t come back and buy from you again. Remember it’s typically easier to get repeat customers than new customers.
A good example of great customer support and appreciation is Zappos. They have great return policies and sometimes they’ll give you free next day air shipping.
And if you don’t think customer service is that important, Zappos was so good at it, that they ranked number 7 in customer satisfaction in the overall U.S.
6. People don’t talk about your company
Word of mouth marketing is the best way to grow your business. If no one is talking about your company, then you aren’t doing a great job.
Advertising and paid marketing is great, but the organic stuff is what really helps a business grow. For example people use Google because they heard about it from someone else. When Google first came out they never paid for advertising.
Out of all the marketing methods out there, word of mouth marketing is ranked as the most effective.
7. You’re not agile enough
The demands customers have over time change so you naturally have to adapt to them. If you aren’t agile you won’t be able to adapt quick enough, which means your customers will start going to your competitors who are adapting to their needs.
If you want to be agile, you have to learn about the 3 types of agility: strategic, operational, and portfolio.
8. You aren’t cheap
Lack of capital is the number one reason most businesses fail. This is why you have to be scrappy. Do whatever it takes to save a buck… as long as it doesn’t cost you more than it is saving you.
Plus in the business world there are always ups and downs. So if you don’t save while you are making a good amount of dough, you won’t have any cash to get you through tough times like now.
There are some things like recessions that aren’t in control. So save money when you can.
9. You don’t know when to spend money
It’s good to be cheap, but sometimes you have to spend money to make it. For example, paying more money for talented employees is a lot smarter than paying little money for mediocre ones. Mediocre employees can lose you millions of dollars by making the wrong decisions for your business. If you don’t believe me, just look at how Zappos lost $100 million.
10. You don’t have a good lawyer
Lawyers are worth every penny. A good lawyer can save your ass from a lawsuit or protect you when a customer refuses to pay.
Never skimp on legal fees and make sure you are working with a partner at a good law firm. If you can’t afford their fees, you can always bargain with them or come up with a payment plan.
11. You hate to delegate
If you try to do everything yourself, you’ll be limiting the true potential of your business. If you can’t trust your team to help out, then things will never get done quickly.
Plus I don’t care how smart you are, you’re not a jack of all traits. So you might as well delegate tasks to people who are better at doing them than you.
And if you don’t know how to delegate, read this.
12. You keep on making the same mistakes
There is nothing wrong with making mistakes, you just can’t keep on making the same ones over again. If you learn from your mistakes, you’ll save a ton of money and time.
And if you really want to learn from mistakes, you should learn from other people’s mistakes. Everyone makes them, so might as well learn from them and try to avoid them.
For example, you could always learn from my million-dollar mistake.
13. You hate taking risks
Sometimes you just have to roll the dice and take risks. Playing things conservatively works sometimes, but it doesn’t always work.
Switching up business models, laying off a whole department, or even moving your company location are just a few risky things that you may have to do. It’s too hard to predict what these risks will be for you, but when the time comes you have to be willing to take them.
If you hate taking risks, there’s actually a risk associated with not taking risks.
14. You’re on your first business
If this is your first business, you’re likely to fumble a lot. I hate to say it, but 78% of first time entrepreneurs fail. The odds just aren’t with you because you are stepping into a new territory.
And even if you are on your second business, your odds won’t increase drastically. Instead of having a 22% chance of succeeding, you’ll have a 34% chance of succeeding.
15. You can’t focus
It’s better to do one thing really well instead of doing 100 things at a mediocre level. Google, Amazon, Microsoft, Skype, and 37Signals are just a few examples of companies that did one thing really well.
Yes, later on they did start expanding their business, but at first they just did one thing really well.
You too need to focus your business and just do one thing really well. Don’t expand until you’re really good at doing that one thing. If you lose laser focus you can jeopardize your business like Legal Zoom almost did.
I wish I could tell you that everything is going to be ok and you’re going to do well, but I can’t. The odds aren’t in your favor so you have to look for the warning signs above and avoid them.
Best of luck with your business and if you have any other warning signs that you want to share leave a comment.