It always starts and ends with management.
]Being a great owner and manager is the rarest of people. Many owners have an understanding of their core products, but
far less understand the business of business. There are many reasons for this in business. It is especially true of startups. If you do an internet search you will find lots of articles on why businesses fail and a few articles on why businesses succeed. Ironically, the lists are very similar.
In my experience, many businesses fail to grow due to lack of capital. They simply don’t have the money to purchase the inventory needed to continuously grow the business. They are too dependent on the business for their own livelihood and need to take most of the profits out to maintain their lifestyle. They want growth, but never seem to rise above the level they achieve in the early years. If you want to have a 10% growth year over year you need to increase your inventory purchasing by at least 10% year over year.
If you are going to start a business or you want to jump start your business you will need to limit what you spend money on other than inventory. Inventory is everything. It expands your market better than advertisement and better than an outside salesperson. Nothing against outside sales, but if you don’t have an increasing amount of inventory your outside salesperson is just another deliverer of donuts or breakfast tacos and not a deliverer of more sales.
All too common are owners who do not understand what the performance numbers are that indicate success or failure. It can be as basic as reading financial reports, running and interpreting their inventory management system reports, etc. Having good data and interpreting the data are two vastly different things. But, if you don’t have or use either then you are DOA.
Being a successful business requires an abundance of energy, perseverance and long hours. You cannot run a business in a 40-hour week – possibly not even in a 60-hour week. You should be the first person to arrive and the last to leave. You will be there in mind, if not in body, most of your waking hours.
Thomas Edison said:
“The reason a lot of people do not recognize opportunity is because it usually goes around wearing overalls looking like hard work.”
Just substitute the word “success” for the word “opportunity” and that captures what I have been saying.
Some owners are just not good managers. They find it difficult to communicate their vision and their expectations. They expect their employees to be as focused, dedicated and as result-driven as they are. They become frustrated and then they take that frustration out on any and every one. They drive away good employees or they drive their employees into a defensive posture and end up with employees who have little or no self-esteem and thus little or no drive.
Some take credit for all the success and blame their employees for all the failures. In the book “Extreme Ownership” the authors make the point that there are no bad teams just bad leadership. Teams fail because they are under-resourced, under-trained or do not have the requisite skills to do the job. All of this is the responsibility of leaders and managers.
These are just a few of what I consider the most important aspects of why companies succeed or fail. However, if you can excel at these you most certainly will succeed.
Understanding Financials & IMS
Hard Work, Longer Hours
Vision & Expectations
Lack of Capital
Lack of Leadership
Lack of Understanding Financials & IMS
Come in Late, Leave Early
Lack of Vision & Expectations