Why 90% of Startups Die, and How to Be the 10% Who Scale

If you have a startup, you need to hear this video right now. In this video I want to discuss major reasons why actual startups fail. After 30 plus years of building businesses from scratch, several of them generating high revenues including excess of nine figures. I've learned a great deal about building and successful companies as well as teams, and they all have a lot of things in common. I did a previous video that I wanted to invite you to check out as well about what the real reasons business fail is when you get some time. So in this video I want to expand upon why I see businesses making so many mistakes that are actually costing them catastrophic failure. I'm going to give you five major principles and fundamentals in hopes that they can prevent you from making the same mistakes that myself and other entrepreneurs did that cost us lots of money, lots of time and lots of energy. So here we go. Alright, Principle and fundamental one has to do with vision casting. Most visionaries don't actually communicate a clear vision. They don't put enough five senses philosophy around everything. In other words, when you go to cast a vision and you're sitting with your team, you want the vision to be so clear that they can see the vision already done in their mind. As a result, when you use the five senses approach, you're going to talk about how it would feel if this vision comes to life. What are the smells you're going to smell if this vision comes? Life. I know it sounds silly, but it works, right? You then take that methodology and you drive home a very succinct vision. For example, at Scoggins International, we believe in encouraging people to their best achievable goals through excellence, empowerment and education. That is a vision. Everything that we do around that actually helps us win the day and actually helps you in your own business by actually giving you the empowerment, the education and the inspiration you need to get the job done. But what it started is, is what would it look like if. Insert your name. Alright, I'm going to use insert your name because we obviously serve a lot of entrepreneurs. Insert your name. Call your James, Jimmy, whatever, whatever your name is. Like whatever your names. What it would look like if we gave you the unique tools and tactics and strategies that you could use to legitimately drive home another 500,000, another million, another 2 million, $3 million in revenue, build a great team, see your family more often, do more fun stuff, have the lifestyle you desire. That's going to be a win. So if we're going to use the five senses philosophy, we can easily begin to talk about that vacation. You know what it's going to be like to feel the sand on your toes and the ocean water rushing on your ankles. How at peace you're going to feel while you're sitting there as you watch your family off in the distance play, or while you lean over and kiss your significant other. Like we have the ability to shape and shift and grow this thing in such a way that is actually genuine and real. Right? If we can do that, then we can plant the seeds in a heart and a mind with our team. So that when you call in and you need help with something, they show up for you the way they should. How is important. Do you see vision casting? How much effort are you putting forth in vision casting? How much time are you spending really clarifying your vision? How much time are you sitting with a notepad and a pen and just in a quiet space to clarify your vision? These are all different methodologies you can use to actually clarify and shape the vision with more consistency and more successful behaviors. In the future, we're going to actually do a formal training on what it means to actually cast a vision and develop a vision. So stay tuned to the channel for that one. Alright? Our next principle and fundamental is lack of executable strategy. Most entrepreneurs that go to build a business, they don't actually build a strategy to begin with. They're literally shooting from the hip, gun slinging everywhere like, problem over here, bang. Problem over here, bang. Problem over here, bang. Fire. Okay, fireman hat. They're going at it from reaction rather than responding. And they're reacting because they have no strategy. They don't know how they're drive revenue. They don't know how they're going to drive sales. They don't know how they're gonna drive customer acquisition. They don't know how they're going to drive customer success. These types of things are super important. So the clearer you get on developing your actual vision. And as you know, if you've been following this channel any length of time, we believe in the five ideation, sales, fulfillment, finance, raving, fan retention, ideation, vision, mission, core values, statements, roles, responsibilities, team. All that kind of stuff. In that bucket, sales. Who, what, when, where, how? In that bucket, fulfillment. Who, what, when, where, how, how often. And in that bucket, finance. Who, what, when, where, how. Rating, fan retention. Who, what, when, where, how. If you use that simple framework in each of those buckets, you will actually develop a baseline strategy to actually get you going. Now strategies can be super complex or super easy. The trick is making sure that whatever strategy you're using is effective. Some organizations need a very comprehensive and very sophisticated strategy, other businesses don't. So the more you spend time in developing a strategy, the more clear you're going to be on on what that strategy needs to include and not include. Right. If you can communicate a vision to a team, the strategy to the team. Now everybody knows where we're going, why we're going there, and what the direction is. So now everybody can actually join in the pool and actually get going. So when you begin to look at your business, I want you to really consider am I operating from a strategy or am I operating just by osmosis? Meaning you're just doing good work or trying to do good work and just hoping something sticks and hoping something lands. That's how a six and seven figure business operate. It's all about creating revenue. Eight, nine figure business, don't do that. It's all about compounding. It's all about processes, it's all about sophistication, it's all about duplication. In order for you to get to the nine figure and eight figure category, you've got to start thinking in compounding terms. Compounding, sophistication, processes, team members, all of that. Like delegation, like there's so many different things that you do at that level.

Right. When you're building businesses, you got to start where you're good at. So go ahead and consider the strategy you need to do right now to go ahead and build your business and think about those five drivers I mentioned, who, what, when, where and how and how often, many times you can answer those with each of the five drivers and understand more and more about your business. The next fundamental is not doing your homework and actually understanding your real market fit. A lot of times we believe because we can do the thing our competitors doing, that we're going to be much better at it. Without actually studying the marketplace, studying the competitive landscape, and actually taking the time to study what is actually investigated or invested in the business. You've got to study the marketplace. You got to understand your competitors. You don't want to copy your competitors, you don't want to necessarily like compare yourself to your competitors. But you do need to understand your unique value proposition. You need to understand what you bring to the marketplace in a genuine way. Because if your market fit isn't right, you're going to have a hard time selling your products, your goods or your services. And which means you're not going to create revenue, which means you won't create money, which means you won't create profitability, which means your business will go out of business. It's literally that simple. So instead, what I want you to do is I want you to begin to really think about looking at the marketplace with an open set of eyes without any bias, without anything that's like tinting your lenses, if you will, and properly evaluate your opportunity, properly evaluate your risk tolerance and your risk and then really come together. Say, hey, look, you know what if we do this, this, this, and this really well. We tweak this, this, and this really well. We price ourselves this, this, this, and this way. We associate with customers this, this, and this way. When you take all that together now, you're starting to build a bit of a proven framework. And I know you can do this. I legitimately know you've got this in the tank. The problem is not focusing on it. So let's make it a core focus. Let's make it an initiative for this month. Like, let's really think through the marketplace and what you bring in the marketplace and what you don't bring in the marketplace. Are you priced effectively or not priced effectively? Like, there's so many different little things that you can do to graduate to the next level of business. And the crazy part is, as I'm adequately saying around all of our videos, it's always in the fundamentals. The fortune is always in the fundamentals. Anytime you break away from the fundamentals, we cause problems. Anytime you learn and execute on the fundamentals, next thing you know, you've got growth. That's an executable strategy, is knowing where you need to go, when you need to go there, and what you need to do when you get there. Simple strategy in its most simplest form. Our next fundamental is this. Focusing way too much on the product or service rather than the people and the systems you need to make the product and service deliverable with excellence. You see, each and every business is required to sell a service or a product of some kind of. Could be coaching, could be lawn maintenance, could be painting, could be, I don't know, selling glasses. Like, it's, it's, it's all the same thing, okay? There's something being sold, there's a problem being solved. The difficulty between the great companies and the not so great companies or the poor companies is the way in which you conduct business itself. There's two specific things that drive business behavior when conducting business itself. The system that you use and you operate in and the people you hire to operate that system.

If you have a great system filled with Great people. You're going to have great growth as long as there's a market demand for your product. Which is why we just spent some time on marketing or in the marketplace. Think about that for a second. If your system is disjointed, you and your team members are frustrated. Your customers are likely not being satisfied and served with excellence that took the time to understand what the system needed to be to operate in and around excellence. Seriously, take some time. Consider these types of things. They're super important. Which takes me to my next fundamental thought, which is ignoring customer feedback. The worst thing you can do is ignore customer feedback. If a customer tells you there's a problem in your business, they're not being served properly, then you want to investigate it. And maybe you investigate and find out that they're wrong. Maybe you have done everything within your power and maybe you have delivered excellence and maybe they have just unrealistic expectations or which does happen from time to time. But unless you investigate, you're not going to know. And I promise you, you want to know about problems that are affecting your business. Team member dysfunction, system breakdowns, payment gateway issues. Like anything under the sun that's preventing you from being successful, you want to know about it because you can't correct what you don't know about. So you always want to have a tool or resource or some way to actually pull in customer feedback and data that you can review in real time to the best of your ability, or with your management team in real time so you can make adjustments to the business. I'm not talking about making emotional decisions here. I'm talking about getting data from the customers, from the clients and looking for patterns. If you have five clients and they're all saying all the same stuff, you need to pay attention. If you have one client out of five that's saying something and everybody else is super happy, you need to listen to the concern, but probably needs to just focus on actually just maybe doing a little bit of damage control with that client. At any rate, the goal is to have a great customer experience. And you can't have a great customer experience if you're not willing to listen to your customers. So that's another major reason that businesses go out of business, because they end up creating a transaction, but not a transformation. You've got to have a transformational result to have lifetime value with a client, period. You can do this and I believe in you and I want you to put that into practice as quickly as possible. Alright? Next fundamental lacking proper financial discipline. Guys, this happens all the freaking time. Especially when a company has rapid success really quickly. Right? There's lacking financial discipline of understanding cash flow and payroll and making sure you're taking account for your needs over your wants. That is Financial Principle 101 in personal life and in business. Needs before wants, needs before wants, needs before wants. And by the way, your brain is going to try to trick you that something is a D when it's actually a want. Does your business actually need it to function? That's a need, not your brain saying, well, you know, if we had this, we would do it better. That's an assumption. What data do you have to support the assumption? Huh? Yeah, exactly. That's my point. You've got to think through this stuff. Financial discipline isn't the key of making a business work. It's the key of actually growing profitability. Another major mistake I see in the financial level is I see entrepreneurs all the time. They have a bit of success, they feel like they've made it. There are one or two years into their business and they make bank on one year not realizing next year you got a Covid around the corner. There's no retained earnings, there's no savings, there's no surplus. And you know what happens? They get burned. They go out of business and they go out of business because honestly didn't prepare. You should always be setting aside a portion of your earnings and to retain earnings or cash so you can grow off the cash. We say all the time on the channel we want you to grow as fast as cash. Fastest cash is approach. We don't want you borrowing money, we don't want you spending money. You shouldn't go out and buy the sports car until after you have literally, I don't know, it's 1% of your income. Then you go buy the sports car. You shouldn't be upgrading your house two years in because, well, you want a new house and because last year you made a million bucks, next year you might only make 600,000. Business is cyclical. It goes through seasons, goes through life cycles. And you got to make sure you have a cushion. You got to make sure you don't go through, burn through all your cash. At some point in time, you literally have to have like a bit of a tightrope. It's like when you cross over this line, we stop.

But unless you define what that line is, you don't know where to stop. And then your business runs out of cash. Then it runs out the ability to operate and then it goes out of business. I don't want that for you. You work too hard to get where you're at. I want you to become a strategical planner. Not analysis paralysis, but a strategical planner. If this, then that right? If I make a million bucks this year, I'm gonna take 30% of that money. I'm gonna set it over here in cash. I'm gonna pay the government their 20%, 25% depending on what tax bracket you're in. 25, 30%, it varies based on state. I'm gonna pay all my money to the government for their taxes. I have this amount of money left over. I'm gonna use that as growth capital. And this over here is my rainy day fund. That's financial Stewardship, Financial Planning 101. If you're not doing that right now, then you're putting your business and yourself at risk. Especially if you've just earned a bunch of money really quickly, thinking you're gonna be able to continue to do that over and over and over again. It's not a matter if your business is gonna go through a setback. It's a matter of when. All businesses go through setbacks. All businesses go through ups and downs. In marketplaces. It's entirely possible to have a five year run and a six year just tank six year. But something out of your control. Supply and demand issues. Getting products and goods and services from other areas of the country in the world, getting delayed, that would hinder your cash flow. That causes prices to rise and inflation to happen. Do you see what I'm saying? Like there's all these different external things that can actually prevent you from being successful. I don't want that for you. You work too hard. So let's make sure we put proper financial discipline down in the right way. The final thing I want to share with you is underestimating your competition. I used to tell my company all the time that there was another Steven Scoggins out there waiting to dominate the marketplace. I used to say that all the time. Because Steven Scoggins that started his first business, her first major business, that the one I just exited that business when I created it. I started with an absolute hunger. Hunger. I was hungry. I'll never forget this. I want a. What's called an incentive trip with a competitor. Which means the people we were buying products and goods and services from, basically every dollar we spent, we got credit for. It was a trip. And this trip had to be Hawaii. It was my first trip to Hawaii ever. It was a beautiful trip, but I went on a fishing vessel with One of my competitors. He spent the entire time on that fishing vessel telling me about all of his trucks, about all of his equipment, about all how big his business is. He looked like Mr. T. He had gold chains everywhere. Little guy from Jersey or born and raised in Jersey, was bragging and all this kind of stuff. He was thinking he was like either suppressing me or somehow holding me back. What he actually did was fire me up. It took me 18 months to take his business.

18 months.

Because I was hungry and I wasn't overconfident. I was willing to do the hard work first. I was willing to work longer hours. I was willing to grind it out. I was willing to do better deals. I was willing to make sure the clients felt valued and seen and heard. I was dropping off little gift baskets, I was dropping off little Rubik's cubes that said, puzzled about your siding needs. Great, here's a great company. I was doing everything under the sun.

To grow my business and he didn't like it. Twelve months later, he's calling me, tell me he's going to bury me. I said, awesome, thank you for that. Gave me six more months of fire and he was out of business. 18 months later.

The reason I say that is because if you underestimate your competitors and their willingness to dominate the marketplace and their hungerness, they're going to eat your lunch and it's not going to feel very good. After building a business over, I don't know, 20 years, and then all of a sudden you go out of business because you got overconfident, you got cocky, you got arrogant. Those things destroy entrepreneurial endeavors. And I don't want that for you. I want you to pay attention. You can do this. You can build a great business, you can, you can do great things, but you've got to pay attention. Diligence is nothing more than paying attention to the right places at the right time, doing the right things. And I know you can do this. I hope this video brought you value. In the meantime, I want to go and check out one of our free resources called the eight figure Mindset Makeover. It was something we just redid just for you. And it controls the assets of the mind. It talks about the ways that entrepreneurs that perform at the eight, nine figure levels think versus the one that perform at the six and seven figure levels. Why is that important? Well, the greatest reason it's important is because it's going to give you an edge over your competition and it's going to help you become the eight figure entrepreneur. That I know you can be. And guess what comes after eight figures, baby? Nine figures. You got it. Alright, I'll see you next video. Take care. Peace, Sam.