How to Fail in Business: The Top Ten on the Road to Ruin

Posted: March 29, 1999 by Chuck Matthews in Planning, Startup

Classic Cincinnati Post column from 1999

When it comes to succeeding in business, there are no magic answers to the timeless question, “How can I make my small business a success?” Sometimes, however, it is easier to see the error of our ways than to adhere to the best path.

The following list of interrelated common mistakes that business owners make aren’ necessarily show stoppers by themselves, but when taken together, can lead you on the road to ruin. See which ones you may have committed in your business and think of ways to turn them around to an advantage for your business.

1. Lack of overall strategic planning. It may be a trite saying, but it is stunningly accurate in its simplicity, “Failing to plan is planning to fail.” A plan doesn’ have to be long and sophisticated to be valuable. Rather, it needs to be grounded in actionable steps.

2. “Low-price leader” myopia. This is an easy trap to fall into, especially given the strong, sustained barrage of low-price tactics used by large national retailers. It is important to remember that just because national discount stores sell on price doesn’ mean you should.

3. Lack of focus and direction. Stemming largely from a lack of planning and resulting in a general lack of organization, the outcome is a lack of focus and direction regarding both the business and the customer. The saying goes, “I don’ know the key to success, but I know the key to failure — be all things to all people.”

4. Failure to follow up on leads. This tends to be the result of a failure to plan (see number 1) and the inevitable need to delegate as your business grows (see number 5). When there is not a clear plan, there is a tendency to be frozen into inaction and as a result there is a lack of follow-up to viable business leads. Likewise, as the firm grows, and duties expand, it is easy for once covered tasks to fall by the wayside.

5. The “I can do it all” syndrome. This is not a problem while the firm is small enough for one person to get his or her arms around. As your firm grows, however, it is hard to let go, even when you know you can no longer do it all. If the business is to grow, tough decisions regarding delegation and direction will need to be made.

6. Inaccurate planning assumptions. Avoid the use of hyperbole when it comes to estimating your market, as in “the market is huge” or “this market has incredible potential.” Try to be as specific as possible.

7. Lack of implementation plans. Interestingly enough, in those firms with which I have worked where planning does occur, the weakness generally is a lack of implementation plans, especially with regard to tasks, timetables, budgets, and responsibilities. Again, simplicity is an ally — who is responsible for what, when, and at what cost.

8. Failure to match strategy and objectives. Unfortunately, the word strategy has become the most overused and abused word in the business lexicon today. The result is confusion with what is truly strategic with firm objectives. For example, when I asked one firm what their strategy was, they replied that their short-term strategy was to by a computer, while their long-term strategy was to buy 12 computers, one for each employee. Try to match your objectives with implementation of your strategy.

9. Inadequate capitalization. While capital is not always easy to get, getting the right amount (both too little and too much) is a challenge as well. Even more perplexing, once the funding is achieved, many firms fail to fully integrate a payback plan into the firmÕs operations.

10. Lack of contingency plans. It never hurts to have a back-up plan, while it generally does hurt not to have one.

While success can be elusive, success in business is generally a function of strategy, planning, and luck. Adhering to the first two will bring you more of the latter, however. It will also help you avoid the road to ruin and stay on the road to success.

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