It is one thing to have a business idea, and another to ensure that the idea works. This means the business has to generate revenue consistently to remain resilient. If a business does not survive, it is often because some serious mistakes were made or the owner did not take some necessary precautions. Below are some classic reasons why businesses fail:
• Ignoring competition
• Failure to compel customers with products and/or service
• Setting vague goals
• Unethical conduct resulting to severe legal implications
• Prioritizing profit-making and investors’ interest before customers
• Inefficient cash flow management
• Refusing to implement change and innovation critical to company’s progress
• Repeating past mistakes and not learning from the mistakes of others
In a bit-by-bit analysis of some of these problems and how to avoid them, Peter Bryant, a professor of entrepreneurship, IE Business School, Spain, spoke at a KPMG Alumni Breakfast Seminar held in Lagos, Nigeria. Below are some of the tips he gave:
Understand Consumer Behaviour
He indicated that entrepreneurs must go out of their way to reach out to current and potential customers as often as possible, understand their needs and pay close attention to their feedback. This will help the entrepreneur to have a better understanding of consumer behavior and as a result strategize on how to improve products or services to better suit needs of the customers.
Embrace Change
“Some entrepreneurs commit to a plan and refuse to change it” Bryan said. In a dynamic market, change is inevitable and thus it is imperative for an entrepreneur to acclimatize to innovation to remain competitive in the market. They must look for easy signs of change and threats, and then get ready to pivot. Entrepreneurs must remain flexible in their decision-making and must be willing to acknowledge their mistakes and then grow from them.
Focus on Market Niche
He also added that entrepreneurs usually aim for 1 percent of any large market share, instead of otherwise focusing on a niche for their product or service. Business owners must recognize that it is difficult to gain share of an attractive market and must take necessary steps to understand market niches and focus on gaining a large market share of small niches.
Be Ethical
According to Bryant, some entrepreneurs make unethical decisions, hoping that no one would discover them. They compromise their values because of pressure and blind ambition to make profit. To avoid this mistake, core ethical values must be clear, understood and emphasized across the firm. Employees must understand that these values are important assets to the company.
Apply Innovative Marketing Techniques
Entrepreneurs must make customer acquisition a strong part of their founding strategy by driving marketing and sales through diverse channels and by maintaining customer relationships. Examples of simply marketing strategies to adapt include the use of buzz events, social networks and free media.
