Initially, this post was titled “the problem with most businesses.” After some consideration, I realized I couldn’t limit this post to just one problem.
Most businesses have endless problems. Challenges are a normal part of life (and businesses). It’s our ability to overcome these problems and challenges that determine whether we (or our business) succeed.
Starting a business is exciting. But growing, managing, and running your business is an entirely different matter. It is more art than science.
The major problem with most businesses is NO MARKETING PLAN. This means there is no formal, strategic marketing plan to sell the company’s products and services.
After I share my thoughts on the marketing plan problem, I will share my thoughts on the other common business problems.
The Problem with Most Businesses
The problem with most businesses (the biggest problem I believe) is that they don’t have a solid marketing plan in place. They think their product or service is their business. They think their product is so good it will sell itself.
What they don’t understand is that “how they sell their products and services” is their real business. For example, if you own a restaurant, cooking food is not your business. Instead, filling the seats in your restaurant is your real business, as the owner. Of course, you still need to cook tasty food. But if no one knows about your restaurant, it doesn’t matter how delicious your food is. You won’t have anyone to sell your food to. Does that make sense?
Many new business owners fall in love with their product or service. They’re enthusiastic about it, and rightfully so. It’s like a “baby” to them, their baby. As a result, they start a business around that product or service. They open shop and wait for the customers to swarm in.
In many cases, no one comes in. The owner is dumbfounded as to why he isn’t making sales. He knows his product is great, but it’s not selling. The cash register is empty.
This normally happens because of a bad marketing plan, or not having a marketing plan. To succeed in business, you must have a solid plan to SELL YOUR PRODUCT. That should be your biggest focus. No sales means no money, which means you won’t be in business long.
Here are some additional problems you might experience as a business owner.
No Exit Plan
Most business owners are like a hamster stuck on a hamster wheel. They put in long hours, week after week, year after year. Many do this for decades. At some point, and it’s different for everyone, they get burnt out.
They are the business. Their business is just a job. If they stop working or lose their ability to work, their income dries up. Therefore, many small business owners don’t take time off. They don’t take vacations and they rarely miss a day at work, because they must make that money!
A genuine business can operate without the owner. Let me rephrase it so it sinks in. A real business runs on SYSTEMS, has employees, and does not require the owner to do 100% of the tasks.
If you own a business, it’s vital to have an exit strategy. In other words, what is your end goal? Do you eventually want to sell the business, close it when you retire, or work until you are 100-years old? There is no right or wrong answer, but if you’re going to spend DECADES building a business, why not create something you can sell one day for a substantial profit?
Why not create something you can pass down to future generations in your bloodline? Or worst-case scenario, why not create something that doesn’t need you to be there 100% of the time?
Poor Cash Flow
Cash Flow is king. Business is not just about making money. Yes, you need to make sales and make money. But you also need steady cash flow coming in your business.
For example, if you made several sales, but your client has 90-days to pay their bill, what are you going to do between now and then?
You must watch your cash flow like a hawk. Keep extra money in your business account. Forecast your income and expenses, so you always have enough cash on hand to keep your business afloat during lean times.
Another problem with most businesses is undercapitalization. In other words, they don’t have quick access to additional capital if needed. If something catastrophic happens in their business (injury, lawsuit, natural disaster, product shortage, etc.) their business will fail.
If you’re starting your own business, of any kind, you must have access to some cash reserves. There will be lean times. You must be prepared for it, so you can continue to keep your business afloat and pay your own bills.
Another problem with most businesses is NO SYSTEMS. Most businesses are owner operated. The owner knows what must be done, and how to do it, but no one else knows. Nothing they do is documented or systematized. This means their business is people dependent, not system dependent.
Successful businesses have systems. That’s why franchises are so popular and successful. They have systems in place for every aspect of their business, so the owner, or employee, doesn’t have to guess and figure it out.
If your business does not have systems in place, create them. Document them. Create an “operations manual” so other employees and new hires can figure out what to do and how to do it. Systems save you time, money, energy, and stress.
In conclusion, the problem with most businesses is no marketing plan. That is the biggest challenge. Of course, there are other challenges too, such as undercapitalization, poor cash flow, and no systems. As the business owner, the buck stops with you. It’s your job to fix these things problems before they become an issue and take down your business.
What are your thoughts? What do you think is the problem with most businesses? Leave a comment below to share your thoughts. I look forward to hearing from you.
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2 thoughts on “The Major Problem with Most Businesses”
These are very wise words Chuck.
I think that the majority of entrepreneurs do not even consider this. Personally, I would look at many options, but the biggest 2 are training a child to take over or to sell it for a big profit.
I also suggest that it is smart to have an up-to-date will at all times, because at any given time, we could die and it would be sad if the business just went down after building it to the success you have.
Yes, I believe that having an exit plan is of great importance. Thank you for reminding us of this.
Without an exit plan you leave it to Big Brother to figure out how it will be liquidated. Not how I want my businesses to turn out.