by Sharif
Khan
http://www.herosoul.com
© 2005
Business rises and falls on leadership. According
to business guru, Brian Tracy, "Leadership is the most important single factor
in determining business success or failure in our competitive, turbulent, fast-moving
economy." Still not convinced? Based on a study by the US Bank, here are
the main reasons why businesses fail:
- Poor Business Planning
- Poor
Financial Planning
- Poor Marketing
- Poor Management
Proper
application of these key factors is a function of good leadership. Let's look
at some of the conclusions of the US Bank report. According to the study, in the
Business Planning category, 78% of businesses fail due to lack of a well-developed
business plan. It boggles my mind that so many people go into business without
a plan, as if it were the ice cream flavor-of-the- month! Is it any wonder that
when I came across the DEA Police & Government auction site of confiscated
property, there is a gleeful statement that declares, "Most businesses fail
within their first two years, so chances are, you will come across some relatively
new merchandise. At (our) auction, get what you need without paying full price."
If
you just rolled out of bed with `a great business idea' and don't want to be a
part of this grim statistic, run to your nearest bank, get a free business plan
template, and write your plan now! Honor the time-proven cliché, "If
you fail to plan, you plan to fail." Leadership is about planning for success
before it happens. Sun Tzu, the 6th century Chinese philosopher, in his epic work
The Art of War, gave some sound business advice that still applies today: "When
your strategy is deep and far-reaching, then what you gain by your calculations
is much, so you can win before you even fight. When your strategic thinking is
shallow and near-sighted, then what you gain by your calculations is little, so
you lose before you do battle."
In the Financial Planning
category, a whopping 82% of businesses failed due to poor cash flow management
skills followed closely by starting out with too little money. Business leadership
is about taking financial responsibility, conducting sound financial planning
and research, and understanding the unique financial dynamics of one's business.
Before even starting a business, show your plan to your accountant and get their
counsel. What a concept! Asking for the advice of someone who sees the bottom-line
realities of business day in and day out; someone who sees the birth certificates,
successions, and autopsy reports of thousands of business entities. It just makes
good business sense. But many people will ignore this advice and eventually meet
with business disaster. [Word of caution: don't rely on just one opinion. Get
at least two or three opinions from different accountants to get a more informed
view].
The third business failure factor profiled in the
report, and a critical one, was Marketing. Over 64% of the businesses surveyed
in the Marketing category failed because of owners minimizing the importance of
properly promoting their business followed by ignoring their competition. Again,
as a business leader, you must be able to effectively communicate your idea to
the right people and understand their unique needs and wants. Leadership is all
about taking initiative, taking action, getting things done, and making decisions.
If you're not doing anything of significance to market and promote your business,
you are most likely headed for business failure. I recommend every time you get
up in the morning, jot down 5 new things you can do to promote your business and
go DO them! If you can't think of anything to jot down, I highly recommend reading
Jay Conrad Levinson's book, Guerrilla Marketing, which has oodles of useful information
and tips on promoting for small business.
Know your competition.
Leadership is also about providing value to people. If your main competitors are
all providing a better quality and lower priced product than yours, how can you
possibly create any value? Either you harness your strengths to provide different
benefits such as speed, convenience, better service; lower your price and improve
quality; create a different product for an unmet demand; or get out of the game.
Finally,
one of the most important reasons why businesses fail is due to poor management.
In the Management category, 70% of businesses failed due to owners not recognizing
what they don't do well and not seeking help, followed by insufficient relevant
business experience. Not delegating properly and hiring the wrong people were
major contributing factors to business failure in the Management category.
Leadership
is about knowing yourself – understanding your strengths and weaknesses.
Leaders are aware of their potential. Losers ignore their potential. Leadership
is ultimately about influence and delegation. As a leader, you must have the humility
to be able to surround yourself with people who are brighter than you and who
can make up for your weaknesses and limitations so you can do what you do best:
seize the day and lead!
editorial note - study credit name
removed at request of named person 11-07-06
