MBA1907 Why Most Businesses Fail + Free Ride Friday

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Hey oh. Welcome to the 100 MBA Show. Delivering business truths on the daily every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Free Ride Friday. Every Friday we give away a lifetime membership to one of our programs. So we're giving away our Automated Webinar Challenge. This is a 30 day course to help launch your own automated webinars to automate your leads and sales. It retails for $99, but you can win it for free. Just leave us an Apple Podcast rating and review and you enter our weekly random draw. Listen in on Friday, just like today to see if you won that simple. In today's episode you will learn why most businesses fail. According to a study by Bloomberg, 8 out of 10 businesses fail in the first 18 months. As intimidating as that statistic is, is I believe most of the reason why people fail in business is because they lie to themselves. They don't know what to look out for. They think they're invincible. They think that their idea is the most fantastic thing in the world and of course it's going to be successful. So in today's episode, I'm going to outline according to my own studies and I'll reference some other studies that I've read. What are the top reasons why businesses fail? Some of them might surprise you because a lot of people don't talk about these things. But it's often the downfall of a lot of entrepreneurs. They think they have their bases covered, when in fact they're missing some really important things they need to consider. Arm yourself with this information. Be self aware so that you can give your business a fighting chance and be from the 20% that actually makes it. So let's get into it. Let's get down to business.

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I want to start today's episode by saying I've had failed businesses. Okay, I've been one of those statist. But the beauty of entrepreneurship is that you can learn from your failures. And this is what I want to share. I want to share what I've learned so you can prevent failure for yourself. The other great thing about the sport of business is that you only need to be right once. Right. You only need to be successful once. You need to have a successful business that you can fuel and build and grow throughout your life. So even if you have a plethora of failures, even if you have 30 failures, if you have one success, that's all you need. But obviously we don't have endless energy and endless resources to continually fail and fail and fail. So we want to prevent failure as much as we can. We want to be on the lookout. We want to arm ourselves with as much information to make sure that we're on the right path, the path to success. So here is my reasons for why businesses fail. Number one with a bullet is that the founder that the entrepreneur behind the business doesn't really understand their customers. This is the number one reason in my book why a lot of businesses fail. The founder, the business owner falls in love with their business idea. They think it's the best thing in the world. They say, I tell all my friends and family, they think it's a fabulous idea. What else are they going to tell you? They love you, right? They're not going to say it's a dud idea or I would never buy that. And even if they genuinely believe it's a good idea, that's not good enough. They may not be an ideal customer if they don't actually buy what you sell. They don't really think it's a good idea or their opinion really isn't relevant. You need actual customers, so you need to understand who you're serving. You need to understand their pain. You understand what they're going through, you understand what their current situation is or what they're doing to solve the pain they're in right now versus your own solution. The better you understand the customer, the better you'll understand how to create a solution for them. For example, if I was going to open up a bed and breakfast in Bulgaria, right, it'd be a good idea for me to understand Bulgarian people, right? Or Bulgarian culture so I can have a thriving business in the Bulgarian economy. Too many founders, I found, do not talk to their customers. They don't interview their customers, they don't survey them, they don't get to know them. In my company, and we weren't always like this, by the way, we learned the hard way. But in our company, we really value the opinion of our customers and our ideal customers and our potential customers. We will give out gift cards just to spend a few minutes and talk to them over the phone because that information is gold. That is information that's going to save me tons of money and time and effort and resources in the future because I'm not building something that people don't want. So reason number one, my businesses fail is the entrepreneur, the founder. The company does not understand the customer well enough. They build something without understanding who they're serving. Number two, second reason why businesses fail, they fail to communicate their value proposition in a clear and concise way. They have a good product and it serves the customers, but they just don't know how to communicate that on their website, in their marketing materials, in their conversations. They don't know how to speak in a clear and concise way to their ideal customer and show them, hey, this is the value I offer with my product or service. They go too much in the weeds. They get too technical. I've worked with so many entrepreneurs where they have had a lot of traffic to their website. They're like, I got a ton of traffic, but I don't get any customers. They don't convert. I go to their website and I'm like, I don't even understand what you do. What do you sell? Well, they're like, well, I do this, this, this. And I was like, so why don't you just say that on the website? Why do you make it so complicated? Why don't you put it in plain terms like you just did to me right now when you explained it to me verbally or when I asked you? So communication is super important. I say as a mother of all skills, if you can communicate clearly, you can sell, you can teach, you can write copy, you can be able to tell people, hey, this is what I offer. This is the problem. This is how I solve it. This is what a lot of entrepreneurs fail to do, and they have a great product and they wonder, why is nobody buying. I did all the research. People like this, they want this, and they just fail to communicate. Number three, money. Now, this is a big topic. A lot of people say a lot of businesses fail because they don't have enough money. They run out of Runway. They just don't have enough cash flow to be able to keep the business going. I'm going to challenge people on that. Okay? Money is a factor. You need money. You need oxygen to be able to live right? And money is the oxygen of business. But it's not just flat out, oh, they just don't have any money. No, it's actually more nuanced than that. Let's go into the details. Why. Why did you not have enough money to keep the business going past whatever period of time? Well, it's very simple, actually. It's actually not that complicated. Your business was spending more than it was making, period. Okay? This is, you know, finances 101. If you have a P and L, a profit and loss sheet, you know that you can't have a bigger number in the loss column than the profit column. That does not equal smart business. You're not profitable. A lot of businesses overspend, right? They build for the future, quote, unquote. They'll buy a bigger space than they need for their store, thinking, oh, I don't want to move in five years. This will be for the future. No, you can't afford that right now. You don't have the sales to support that expense. So many entrepreneurs find themselves going out of business because they spend too much. And I've seen so many businesses fail because of this. They spend more than they make. I also have seen some businesses where they got to that edge and they realized, uh, oh, I'm not able to pay some bills. And I've been there a couple times in my career, and I was lucky enough to kind of course, correct in time Where I said, huh? Hold the horses here. Let's cut some expenses, let's make some changes until we make more money. So in business, it doesn't matter if you're funded, if you have a loan from an uncle, if you have a loan from the bank, or if you're bootstrapped, you can't spend more than you're making on a regular basis. This is a disaster, okay? Many people hear the saying, you gotta spend money to make money. Not true, okay? This is an easy way to get into debt. Easy way for you to lose your business. Instead of spending money, spend what's called sweat equity, okay? Spend your time, spend your attention and your brain power to build your business. Even if it takes a little bit longer to get your revenue to a certain range so that you can spend a little bit more and upgrade your facilities or upgrade your equipment or upgrade your stock or whatever it is. Don't overspend, because that's a recipe for disasters. Because as long as you're spending less than you make, you can be in business for as long as you like. Reason number four, poor leadership. And we're going to go into the details of what I mean by poor leadership. The founder of the company, the CEO, the leader of the company needs to lead. They need to be the most enthusiastic and passionate person in the company because everybody's going to follow that lead. They need to skill up on their management skills and know how to lead a team of hard working people. Right now, poor leadership is not just skills, it's also a lot of attitude, okay? A lot of companies fail not because a leader is not a good leader in terms of skills, but just because the leader just lost interest. They got bored with their idea, they got bored with the business and therefore they stopped caring and they stopped showing the same enthusiasm, the same leadership in their company and in meetings. And that cascades down the line with the rest of the team. If you don't care, if you don't really show enthusiasm, sure as anything, your employees are not going to care, right? They're not going to give the effort. Leaders go first and you need to be in it to win it. Every moment of the day, every single day. This is why it's healthy for you as the founder, as the leader of your company, to have a mastermind group with other business builders, other business owners. Meet once a month and talk about your problems, talk about how you can help each other out. This is where you vent and you be vulnerable, okay? Not in front of your team, okay? You don't have that luxury. You have to be a shining example for people and be a motivation, an inspiration for them. But also your business will break down if you don't actually know how to manage your team. If you don't know how to lead, you don't know how to power people. If you micromanage people, if you don't empower people to have their own autonomy and make their own decisions in the realm of influence, that's the easy way for you to lose team members. This is why I highly encourage any business builder, any business owner to always up their skills. Read books on leadership, read biographies from other entrepreneurs. Get in the habit of making decisions big and small. The fifth and final reason why businesses fail, and this one's a really subtle one, but it does get a lot of businesses and that is no real differentiator between you and other competitors in your marketplace. Having competitors is a good thing. It means that people actually want what you're selling. But being a me too product is not a good thing. Okay? If you are no different in any way to your competition, in any meaningful way, I should say, than your competition, then you're just going to compete on price. And that is a race to the bottom, okay? You cannot compete on price forever. You don't have the resources of Walmart, okay? So you need to be different in some way. Even if it's your branding, even if it's just like, hey, you believe in such and such and this is how you approach the solution to the problem you solve is just a little bit different from your competition, people will gravitate to that. Even if your differentiator is better, customer service, people gravitate to that. A good example of this is WP Engine, which is a WordPress hosting platform. There are a lot of WordPress hosting platforms out there, but WP Engine is the most expensive one. Do they host your servers better? Maybe not that different from other web hosts, but really their differentiator is their customer service is top notch. People rave about it, it's incredible. So people are willing to pay more and that's their differentiator. There's a lot of webinar platforms out there, but my company, Webinar Ninja, we're focused on just focusing on teachers, trainers, coaches. We approach webinars from that angle to be a teaching tool, to be a way for you to spread your message, your knowledge, your information across the world. Other tools might be for meetings. Other tools are more focused on high pressure marketing tactics. We take a stand, we put a line in the sand. And say, no, this is what we believe in. We do things a little bit differently and we allow that to be permeated in our branding and everything we do in the articles we write in the webinars we do. And therefore we stand out from the competition. There's a differentiator. People come to us for those reasons and people that value that will pay what we charge, whether it's more expensive or less expensive than the competition. The point here is, is that people that value, that value it and are willing to pay for it.

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Expired in 2012. Dang it.

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It feels good to Geico. To wrap up today's lesson, I wanted to do today's topic. Not to have you worried or afraid that your business might fail, but just to keep your radar on and to consider the things I mentioned today. Be honest yourself when it comes to those five reasons why businesses fail. How are you doing with that? How would you score yourself on each of those topics or each of those reasons? What are some things you can do to improve that today? Not tomorrow, not next week. Because time is of the essence when it comes to your business is success or failure. What I love about business is that it is the ultimate teacher. The marketplace will teach you what you're doing right and wrong, but it can be costly if you're failing over and over. So it's good to learn from other people's experiences, other people's failures, so to speak. Thanks so much for listening. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is. Theme posk. ThemePask is the handle on Apple podcasts. They say great insights and grow. 5 stars. It's a great 15 minute listen every single day. Thanks so much for the review. Your mission is to email me over at Omar MBA Net so I can hook you up with the lifetime access to the automated Webinar challenge over@webinar ninja.com it retails for $99, but you just want it for free. If you want to win a free ride, just leave us an Apple podcast rating and review and you enter our weekly random draw. Listen in on Friday like today, See if you won. That simple. Before I go, I want to leave you with this from the 5 Reasons why Businesses fail that I mentioned today. I've done them all. I've actually done them all in my 20 years in business. And some of them, I did them pretty poorly. Like, I really screwed it up, and some of them not so bad, and I was able to recover. And that's the point. If you find yourself failing in one of these areas, it doesn't mean it's the end of your business. It means that you need to fix it. So go ahead and do that as fast as possible so you can have a healthy business. Have a fantastic day and I'll check you on Monday's episode. I'll see you then. Take care. Of.

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Dang it.

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