Causes of Business Failure – Highly Personal Factors
We all want success but some want it more than others and are willing to put up the extra energy to reach goals despite the hassles, odds against, roadblocks, dangers, pitfalls, and/ or controversies that may cause failure of the business. Sometimes business people are their own worst enemies and the leading causes of their own business failure.
Failure, however distasteful, can be based on many factors that are within the direct control of every business owner. Here are some of the most important ways business people fail:
Real or Perceived Threats to the Self
Anyone on a mission – activist, reformer, leader, salesperson, etc. – will at some time feel threatened in some way. I remember writing a letter to the editor on a local cause and feeling rather shocked at receiving a direct phone call from a stranger about the issue – luckily he was a supporter. I didn’t write another letter for a while. Threats of any kind or intensity can cause people to back off, hesitate, or walk away from doing something important. The flames of passion and willpower to succeed at a business can be easily doused by threats. Remember, life is like licking honey from a rose.
Lack of Technical Skills
If anyone is going to run a business, it is important to know what one is doing. Watch the TV show “Kitchen Nightmares” to see how incompetent some people are in running restaurants. A lack of knowledge and technical abilities in running a business can very quickly cause failure. It becomes very expensive when machines can’t be adjusted, accounts can’t be handled properly, repairs can’t be made, the place becomes cluttered and unmanageable. There is a big difference between I know and I think I know.
There are people that get into businesses that are just not suited to their personalities. Wanting something isn’t enough. Greed is often the wrong approach. Lack of patience and poor social skills can lead to poor relationships with employees who are then less motivated to work hard. Your personality can actually drive away customers and cause trades people to steer clear of your business. Square pegs are often hard to drive into round holes.
Inherent Tragic Flaw
In many cases, people have something intrinsically inside of them that causes failure. They aren’t aware enough or experienced enough or miss a key component in their business plan, product, or service. Despite imminent failure and recognized bad timing, they reinvest in a needless or obsolete technology. “Pride goeth before the fall” and so does arrogance. Some business people are too trusting, too laid back, poor handlers and investors of money, subconsciously failure oriented, poor communicators, weak leaders, and overly proud to get help. Tragic personal flaws – we all have them – can be a direct cause of business failure. Remember Shakespeare’s Shylock or Julius Caesar.
A sudden hesitancy and fear in business decisions can cause freezing and inaction. There is worry that despite all the positives, the project might still fail. Not now; do it at a better time. Some people are afraid of success as much as they are of failure. They fear the thought of potentially great success and all the work that will have to go with it. They would rather stick with the old and proven, a fear of being seen as weak leads to less than best business practices. Inventors, for example, may have one or two cherished inventions that are kept secret. It never gets into the marketplace because they are afraid someone will steal their idea. Whether you think you can or you think you can’t, you are always right.
Lack of Important Survival Skills
Some business people believe that because they want profit, gain and success that it has to happen if they just push more money at the problem. They fail to prepare themselves – financially, in attitude, physically – for economic down times, bad months, illness, and other unforeseen calamities. The following are missing survival skills that cause businesses to fail: lack of a reserve fund to help ride out a bad spell, inability to cut overhead quickly, reluctance to live and operate at a lower level of performance, lack of a cushion of financial and business success before buying luxury items, reluctance to reduce spending and consumption when necessary, failure to establish a diverse base for sale of goods or services so that income will not be devastated if a sector of clients/customers is lost, prideful reluctance to get desperately needed help from others. A phenomenally high percentage of Canadian trade is solely with the USA. Businesses and even countries can fail when important survival skills are ignored, missing or weak.
Lack of Someone to Look Up To
There are always people who have succeeded in the kind of business you run. Not learning from them is ridiculous. Why not find out who they are and how they succeeded. Don’t be a legend in your own mind, especially if you know you aren’t one. Lawyers never defend themselves because they would have a fool as a client. Heroes and go-to people are important, motivational and can help business people re-energize and avoid failure.
Perceived Personal Weaknesses
“I never was very creative.” “I’m not very good at marketing.” “I never knew how to do it and I’m too old to start now.” “I can’t learn computers at my age.” “I’m only good at a few things.” “It’s too hard to learn to do it. I work around it.” It is never too late to improve in many ways. These “words of losers” cause business people to fail.
Perceived Lack of Education
Some business owners work their way slowly up the ranks to power positions. Some may have missed out on formal education and feel somewhat inferior when in the company of people with all kinds of degrees. An education comes in many packages – school of hard knocks, street wisdom, formal book learning, experience. It is possible to go to all of these schools.
Businesses fail because there are people who do the following: blame others instead of taking ownership of failures, get arrogant and puffed up when confronted with errors, focus on the problem and laying blame instead of the solution and helping someone save face, nurture thin skin and fragile egos, believe that fate or others are the causes of their shortcomings and weaknesses.