Why businesses fail to launch

Why businesses fail to launch


Many businesses fail to launch. The statistics are there that state that majority of businesses fail. Sometimes it is because of presenting the wrong product to the wrong market. Many have faulted access to capital and these reasons definitely play a huge role but they are not the sole reason. Some businesses actually achieve some level of success and then collapse. Why? Because of the error of the Founder building a business around themselves. That is fully dependent on their own time, strength, ideas, networks, resources. This may even work out in the beginning but later on, it comes to bite them. A lot of businesses fail because they cannot run without the founder. There are no structures that elevate the business or even support potential growth. Even raising money to grow the business when needed is very difficult if it operates like this. The business is and continues to be a one man/woman show. Let’s see some of the signs through Wendy’s story.

  • You can’t take a break without closing the shop

Wendy* literally has a clothes shop. She fell pregnant and at some point had to go on maternity leave. She closed the shop for two months until she could somewhat return to work. This meant she was not generating revenue because she was away for that time. Additionally, she still had to pay rent for the shop, which then came from her personal resources. Even when she did return, the financial position she found herself in was a stressful. Many people cannot go on holiday without closing the business. Some of us cannot take a week off and many cannot even take a day. Even when they do take a break they are constantly on the phone. You can operate like this if the intention for the business is simply to generate some additional income for you. Like a side hustle. This is not sustainable if you intend to grow and create real wealth.

  • Fear of hiring

Wendy needed to have hired a capable assistant to run the shop while she was on leave. However, when I spoke to her, she was actually scared of hiring at least hiring the right person for this job. She said that kind of person would steal her idea, customers, business contacts and start their own shop. She was afraid of getting to find there’s no business to run. Now there have been some horror stories out there that have happened to people. There is a risk. However, in business your vision has to be bigger than the risk (Click to Tweet this thought). This is small thinking and small thinking leads to small results. Many times we only hear the negative. We have to start looking at all the other shops and businesses that have grown because of having the right people and learn how to give ourselves the best chances of hiring the right people. Wendy not only lost money from not having somebody at the shop, she lost customers who would have kept coming back to her. All businesses need people to grow.  Hire and empower people.

  • Not Managing Money

Wendy was also scared of someone stealing money, which indicated that she did not have a proper financial management system. On speaking further to Wendy she really did not have a good grasp of how much money comes in and how much money goes out. This is what really would enable and almost encourage theft in a business. She did not really know how much stock she had, its value, when she needs to replace it, what moves quickly and hence be replaced quickly, proper receipting and invoices from suppliers etc. This is what is meant by structures. If this had been in place, she would probably have had more confidence in leaving somebody at the shop. Especially in this day and age when money can be received through mobile money and automatically moved into an account, this is definitely a risk that can be managed. Wendy would not be able to raise money to grow the business without all the above in place.

  • You don’t pay yourself

Wendy’s personal life was mixed-up with the business. She claimed that she did not pay herself.  However, she used to use receipts from customers to fund personal expenses. She just did not keep track of it. The business will not grow because financial resources are being depleted to fund personal expenditure. Wendy needs to separate herself from the business. Decide on an amount, that the business can afford, that she would pay herself every month. This would allow her to plan as well as understand the true cost of running her business (which includes her). Many businesses underestimate their expenses because the owner neglects to include himself or herself as a cost.  They make the business operate on free labour. One day when it is time for them to leave the business or even just take a holiday they find that they cannot afford the kind of person who can run the business professionally in their absence. Wendy also mentioned that she did not pay herself because she did not want to pay taxes. Once again, the vision has to be bigger than the tax you need to pay.  Businesses do not grow by evading tax. In addition, the spending indiscipline is costing the business a lot more than the taxes needed from her income.

If you focus only on survival, you will get survival (Click to Tweet this thought). Wendy was only doing survival though she had dreams of expanding her business.  However, she cannot do it without changing the way she operates. We all need to progressively stop just working in our business. This is doing the day to day things by ourselves. This eventually leads to fatigue.  We need to spend time working in the business.  Putting together the resources that enable the business to grow. At some point we need to stop being the doctor and build the hospital.

Waceke runs an Entrepreneurship Program that teaches you how to grow your business.  For details email Waceke on waceken@centonomy.com | Facebook/WacekeNduati| Twitter@cekenduati


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  • priscilla mweru

    Nice peace of advise there, especially the part of paying oneself which is normally avoided by many me included.