Why Businesses Fail and How You Can Prevent it

You woke up one morning and had a brilliant business idea. You can’t stop thinking about it, you’re confident it would be AMAZING. You talk to people around you – they also think it’s a fantastic idea.

However, it’s not because your immediate circle approves that you’re golden – 22.5% of businesses fail during their first year (source).

I have 4 questions for you to make sure your business is part of the almost 80% that don’t.

1. Who is your target market

This is probably the question you hate the most but is the #1 thing you need to validate. A business without a market has no one to sell to and therefore no future.

Think about it this way: who is your dream client? Don’t be afraid to really go into details about this one – the more the better.

The logic is simple – you’re better off casting a net for the people who are REALLY interested in your product instead of trying to please everyone.

You can start with easy questions such as what is their gender, what is their age, are they part of a specific profession/occupation, do they practice a certain hobby, shop at certain places, have a particular routine or habit, etc.

2. Where do you find them

Also known as how do you market to them. If you have done a good job of identifying who your product is for, this next question should be fairly easy.

For instance, if you market to a specific profession or individuals practicing a certain hobby, find where they work, find events they attend, find social media groups or hashtags they’re involved in, etc. Where can you communicate with them?

Depending on your product, you might want to focus on meeting people in person or focus on online networking.

One thing is always true – networking is key. Therefore, your goal is to know where and how to start the conversation with these people.

3. What is your competitive advantage

It’s easy to bullsh*t this one. If you’ve made it this far and are seriously considering starting a business, you’re probably thinking – of course everyone wants this thing I’ll sell.

Perhaps that’s true. However, you still need to do a bit of research.

Really dig into what is already out there that is similar to what you’re doing. If you can’t find ANYTHING else like what you have in mind, either you aren’t digging deep enough or it genuinely hasn’t been done before. If it’s the latter, it might be worth asking yourself why. You would also be in the dark as to how to sell your product, how to market it, the strategies that have or haven’t worked, etc.

If similar products exist, you can probably look into how others are packaging and selling their stuff, who has been really successful and others not so much. However, this means you might have competitors. It is absolutely crucial that you define what your competitive advantage is. In other words, why should people buy your product and not someone else’s.

A competitive advantage can mean many things – a feature that only your product has, a better price, a service only you offer, how you get your product to your customer, a customizable option, etc. You need at least one. It doesn’t really matter what it is, but that’s the one thing you’ll want to make REALLY obvious for people.

This is where most consultants would stop but I like to take it one step further.

4. What is your purpose/mission?

I know it sounds cheesy but having a goal or a mission really is critical. This is what makes you passionate about what you do, about your business, about what you sell. People can tell when you genuinely care about what you do and making them as excited as you are about your product is key to turning them into customers.

Plus, it helps you keep the big picture in mind and make better long term decisions.

To summarize, you need to know what you’re selling and who you’re selling to. As amazing as your business idea sounds, not everyone will want a piece of it. You need to know who is and how to initiate the conversation with them – otherwise you’ll just waste your time and resources trying to convert people who have zero interest in what you’re doing. And that, can mean killing your business before it even starts.

Not sure what questions to ask? Not sure what info you should be gathering to absolutely NAIL your ideal client? I have just the thing for you! I created a workbook for my clients just for this!

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