I was reading some articles recently about the top reasons why businesses fail and when I couple that with what I’ve learned from all my interviews with experts I would say without a doubt the 2 biggest factors to success in business are;
1) They don’t front load and only use as needed.
The biggest failures in business are restaurants and contractors. The reason is simple. Much of what they do relies on market forces beyond their control. When times get tough they still have huge overhead to carry and major impediments to scaling down quickly. Especially in the case of restaurants. They have to carry the overhead constantly whereas at least a contractor can start to back away from capital intensive projects when he or she senses a need to do so. Of course this depends completely on what type of contractor they are. Manufacturing missiles during a cold war isn’t near as lucrative as it is during actual war. Being halfway through a hi-rise condo project when the economy falls apart however could cripple any entrepreneur no matter how revered they are – can you say Donald Trump.
It seems so much of the success in business these days is had by the 1 or 2 entrepreneurs that got together and shoe horned and outsourced their way to profit. Only taking on new debt when they had no choice. Being resourceful would seem the motto of today’s entrepreneur.
2) They like what they are doing and feel it matters in the grand scheme of things.
This is the wild card component, the human side of business. Without getting some worth out of what you do, you will make the other dozen mistakes cited as reasons for business failure.
As I see it here today, these are the 2 biggest reasons businesses fail to make it in the long run. Sure, there are a bunch of off shoots but these really seem to be the main 2 components that dance closely to both success and failure.