When businesses fail, is it always because they run out of money? Or does failure more likely come about because certain precautions were ignored long before funds started to dry up?
The reasons behind the decline of many companies can be attributed to what Brian Moran, CEO of Brian Moran & Associates, calls the Five Poors. In a post for Open Forum, Moran offers a diagnosis and treatment for each of these common business shortfalls:
Poor Vision
Many start-ups and other fledgling businesses attempt to move forward without a clear vision of what lies ahead. The result? “Eventually, they hit something that they should have seen coming,” Moran notes, “and it causes major damage.”
Such easily-foreseen calamities might include “a client representing 70 percent of your revenue” suddenly pulling their business,” or when a superstar salesperson “jumps to a competitor and takes several big accounts with them.”
Poor vision is what happens when you work in the weeds of your business “and never see two or three feet in front of you.”
Solution: Go beyond conventional thinking. Work “in the clouds” of your business, taking a big-picture, high-level view that encompasses “opportunities and obstacles to growth in the next three, six and 12 months.”
Poor Execution
According to Moran, many people who start companies with a passion for what they do “are also horrible at sales.” These entrepreneurs “tend to focus on the product-development side of the business and put their heads in the sand” when the time comes for marketing and sales efforts. No product, however ingenious, “will magically sell itself.”
Solution: Acknowledge your weaknesses and take corrective action. That's how you'll really shine as a leader. “If you hate selling, outsource it to a person or company” that can handle this vital task.
Poor Market Information
Businesses need a “Doppler radar system” for navigating the treacherous shoals of the marketplace. Without such a system, you and other similarly handicapped businesses risk “bumping into each other or capsizing your boats.”
Solution: A warning system alerts you to “specific economic indicators that affect your market and company.” It’s imperative to create a detection system that offers “warning signals to alert you when changes occur that will have a direct impact on your company.”
Poor Timing
You can have a great idea, a flawless plan of execution, and even a contingency plan if things go wrong. But sometimes “[failure] is just a case of bad luck.”
Solution: If you haven’t done so already, look at your plan for 2015 and draw some conclusions based on the past year. How well did you react to market forces? What could conceivably be coming this year that you have yet to take into account? “The best way to combat poor timing is to get out in front of it and make proactive decisions.”
Poor Reflexes
Regardless of how well you’ve developed a vision for your business and followed through on various strategies, you and your business “still need great reflexes.” Changing market conditions (and natural disasters) can never be completely foreseen and businesses lacking the ability to respond are the ones that most frequently go under.
Solution: Moran advises running “practice drills” with your company. Come up with a few creative “what-if” scenarios “and see how your company and employees respond.” Closely examine your current cash flow (both receivables and expenses) “and start an emergency cash fund if you don’t already have one.”
Starting and running a business today offers less margin for error than in the recent past. Position your business for whatever lies ahead and don’t succumb to the Five Poors.
How are you preparing your business for what lies ahead in 2015?
