The #1 reason why MOST small-businesses fail
The entrepreneur factor
So, here’s the thing more than 50% of small businesses fail after the 5th year and over 80% shut their doors after 10 years. And that’s only if they survive the first 2 years in business, which are widely considered as the most difficult ones. Why is that? Is there something specific that could be identified as a common issue that causes this terrible statistic to occur?
In fact there is. And it’s probably not what you think.
After conducting a survey among small-business owners on what they believe are the main reasons for SMB-s to struggle to grow, expand and lead their respective markets, we’ve concluded that the most influential thing that limits every business is .. the entrepreneur behind the business.
You see, most of the responses we got from SMB owners pointed to issues with the business vehicle they chose, the opportunity they thought existed, the access to capital they didn’t have etc. as the biggest culprits to the failure of small businesses in general. However, we had a rather small group of business owners who gave a completely different answer, talking about things like the skills of the entrepreneur, the character traits of the entrepreneur and the belief system that drives the person behind the business suggesting that they are actually the biggest roadblocks that have stopped them in achieving better results for their own businesses.
What was fascinating is that very few people were actually willing to hold themselves accountable for the lack of success in their business and instead chose to blame externalities, which they had no control over. Usually, people who are unwilling to accept the responsibility of the completion of a certain task, project or business are also unwilling to put in the time, hard work and sacrifices to make it work. Instead of taking a step back, evaluating their mistakes and doing things better the next time, such individuals get stuck playing the “blame game” for the rest of their lives always complaining that life isn’t fair to them and that they just don’t have any luck. Let me tell you something about luck though.. Luck is when the right opportunity meets the right preparation. Thus, those that are unwilling to learn, grow, develop and improve will never have “luck” in their lives.
But back to the findings of our study, what was even more interesting was that the group that acknowledged the presence of certain entrepreneurial deficiencies in themselves as the main reason for them not achieving better results was actually generating on average 3-5x more revenue than the group focused on searching for the problem in the external environment.
So, what does that mean and what does it show?
It is there to show that the single most important factor for the success of small businesses is the combination of the entrepreneur’s skillset, the traits of his character, and his framework of beliefs about life and business.
So let’s look at each one of these categories one by one.
What are skills and how do we acquire them?
A skill is the achievement of a certain level of mastery over a specific action, tool, platform, or software that allows you to repeat that action over and over again with little to no difference in the quality of your output. For example, your business might need a better marketing strategy and/or execution .. so as a business owner you could spend 50-100 hours of reading, watching, and listening to lectures, seminars or podcasts from experienced marketers and learn how to help your own business succeed. The truth is that very few, almost none SMB owners end up doing that and they continue relying on outdated business development strategies and approaches instead.
Next, we have character traits. In my personal opinion, this is the category with the biggest influence over the entrepreneur’s capacity to elevate his business as things like discipline, focus, persistence, integrity, work ethic, empathy, and patience are the core ingredients to success in any field, industry, or profession. If you lack any of these.. you’re doomed. They are your everyday fuel to keep putting one foot in front of the other and keep moving forward in the face of the guaranteed adversity that you are going to encounter as an entrepreneur.
Last but not least we have the framework of beliefs that an SMB owner has and how that could make or break any business. The 2 key questions that define that framework for any business owner are:
1) What do they believe about the world to be true?
2) What do they believe about the world to be true that isn’t?
In many instances, the beliefs we hold about a certain topic become so deeply entrenched in our souls that we can go to the ends of the earth in order to protect them, regardless of whether these beliefs are an accurate representation of reality or not. One of the best ways to solve and remove any self-limiting beliefs is by seeing someone doing something you thought was not possible. For example, for years everyone thought that building a machine that will be able to fly people from one part of the country to another was impossible until the Wright brothers did it. Everyone believed that it was scientifically impossible for a human being to run a sub-4 minute mile, until Roger Banister did it. And these are just to name a few examples that almost everyone has heard about.. However, the history of the world is filled with countless examples just like that where people’s self-limiting beliefs were stopping them from realizing their full potential and achieving great things.
How does that translate into the business you might ask. Well, let’s go back to our marketing example. Let’s say you are a business owner of a local real estate agency that has been in business for over 20 years and you simply do not believe that any type of digital marketing could end up helping you find, close, and retain more clients. As we already discussed, you do not have any marketing-related experience or knowledge, you are unwilling to invest 50-100 hours of your time in order to really find out if this could be the missing piece to your business but yet you are 100% “confident” that this would not work. This self-limiting belief and lack of willingness to learn and explore all possible options for growing your business will result in you slowly but surely losing market share over the years to other more flexible, dynamic, and adaptable competitors of yours until one day you wake up and you are out of business. And all of that could have been avoided by either investing time in learning and getting better as an entrepreneur or by simply partnering with other professionals who have already mastered the marketing skill.
At the end of the day, it all boils down to who is the man running the business? How competent and skilled is he? How committed is he to going outside of his comfort zone in order to learn and get better, accept his entrepreneurial deficiencies, surround himself with the right team and have the patience to let things play out?
Becoming a better and more aware entrepreneur is the only thing that can guarantee the future success of your business. We’ve developed a robust and proven marketing and sales framework specifically designed for local small businesses that helps them not only find, close, and retain more clients but to also boost their online presence and become the leaders in their market. You can BOOK a FREE Strategy Call with one of our experts and see how we can help you double your revenue and free up at least 15 hours a week for your business in 90 days or less. Don’t let your framework of beliefs and/or lack of knowledge or experience endanger the future success of your business. You are literally one step and one new partnership away from fulfilling the true potential of your business.