As market trends become more defined this year and companies start tackling advanced technological developments, the number of successful enterprises will decline. The world is full of ambitious entrepreneurs but being innovative and growing a successful venture in such a demanding age of digital challenges is not easy. While running a business seems glamorous at best when it comes to large valuations and popular economic trends that make innovative players stand out, the truth of the matter remains that the majority of businesses with employees fail within 10 years.
20% of small businesses fail in their first year, 30% of small businesses fail in their second year, and 50% of small businesses fail after five years in business. Finally, 70% of small business owners fail in their 10th year in business. (Fundera)
The problem is not simply related to the complexity of innovation – businesses fail for many reasons. In many cases, they fail because they ignore the proper market validation and fail to deliver any value to their customers, but running a business, in general, is a complex endeavor assembled of many strategic and other human decision-based elements. For example, someone might build a great product that serves a growing customer base but they might fail to optimize their conversions and in the end face failure due to a high burn rate. Regardless of the size of your business, the success of your company is dependent on your ability to navigate the challenges, surround yourself with winners and make crucial decisions at the right time. In order to understand the entire scope of the aforementioned statement, here are five ways your business might fail in 2020:
1) Absence of actual leadership
Leadership means having a vision and creating a purpose for your team members around certain values. Therefore, in order to succeed, you need to be able to motivate your team members to perform at the full potential and support you on your journey. The inability to do so in the current or any other economy will ruin your business. Many businesses have had a great business model and a product that customers loved but their company failed. The issue is that their leadership was distracted and laid back. As a result, this created an unstable environment where team members can relax and become distracted and even the best of the talent end up giving sub-par performances. Furthermore, poor leadership will:
- Seriously affect employee morale and break the foundation of your company’s culture.
- Demotivate your key team members, causing them to be much less productive.
- Result in poor employee retention and damage your growth in new markets.
- Damage your reputation and send a wrong message to your customers.
If you analyze the history of most successful businesses, you will find that besides a good idea, all of these businesses had leaders with the right vision and the ability to inspire others and pursue large dreams. Therefore, in order to build a thriving venture, you need to focus on being a great leader and pushing your team members to achieve their full potential.
Create an environment where everyone shares a common purpose will help your team understand your vision and your business will keep growing and tackling new challenges.
2) Failure to create an effective sales funnel
There is no business without revenue and there is no revenue without products or services and customers who are willing to pay for them. In a nutshell, a sales funnel demonstrates the ideal journey that your prospects go through on their way to becoming your customers. It is a form of strategy that defines how you sell your products and get customers to buy them. If you are not able to sell your product or your sales team does not have a tested sales strategy in place, there is a good chance your business will fail.
Competing in today’s market requires financial and human resources hence a company needs to sell products and generate revenue in order to have the money that can be invested in hiring more people, promoting your brand and building better products. Sales are not just about selling a product; sales are about creating a brand around your offering, identifying your customer’s problems and selling them a branded solution. At the end of the day, if you do not make your customers happy, your competitors will.
“Approach each customer with the idea of helping him or her to solve a problem or achieve a goal, not of selling a product or service.” – Brian Tracy, author of Earn What You’re Really Worth
Effective marketing is also a key segment of successful sales. In order to sell some services or a product, you have to build a positive perception of their values. Nonetheless, in the current market where users are switching platforms and connecting to new social movements, your marketing strategy also has to evolve. Some businesses might have a good promotional campaign but they might ignore social media promotion and that decision can doom their business. If you want to grow and tackle big opportunities in 2020, you need to focus on establishing good sales funnel and using marketing to capture the interest of potential customers.
3) Inability to adapt to new market trends
Global trends are changing all the time and markets keep evolving around produced changes. One day your customers might enjoy their ride to your brick-and-mortar store, the other day they might think it is not worth the hassle and look for mobile applications through which they can purchase similar products and services. This was just an example. If you do not observe your market and the way customers shift their habits, you will start losing sales and, as a result, your business will suffer.
Industries across the globe are changing – AI, VR, robotics, blockchain, and so on, are just a few technology trends that are shaping the markets of tomorrow. But these trends are not just technological developments; they are also current consumer interests. To give you an example, many companies today have great products that they won’t be able to sell to their customers in the future since their offering is generic and most shoppers today are seeking personalization. Why are we making this assumption? Alright, let’s look at the statistics:
- 88% of consumers say they’re more likely to shop with retailers that deliver personalized and connected cross-channel experiences (Optimizely).
- Personalized emails deliver 6x higher transaction rates (Campaign Monitor).
- 75% of consumers are more likely to buy from a retailer that recognizes them by name, recommends options based on past purchases, OR knows their purchase history (Accenture).
The inability to adapt to new market trends means failure and the inability to satisfy your customers. You can avoid all this by analyzing your market, talking to your customers about their needs and expectations and working on technologies that are yet to come in order to establish yourself as some sort of visionary. And guess what? Good visionaries rarely fail in the end.
4) Failure to build an employee “tribe”
Great companies are built by talented people working together and pushing each other to achieve some form of greatness. This might be a strong term but there is no satisfaction and progress without great work. In order to be successful, you need to establish a great company culture that will motivate your team members, help them grow and keep your company together. In a way, you need to create your second family, your own tribe. Otherwise, you will just have a group of people without a clear purpose. Your work will not be structured, your employees will start fighting and be less productive, and your business will slowly start to lose market share.
What is more, great company culture will help you engage your employees and spark their interest to learn and grow. According to Denison Consulting, companies with winning cultures have 72% higher employee engagement ratings than organizations with weak cultures. If you ignore this and think that your employees will naturally get along, failure will not be an unknown term for your company this year. Finding the right employees has never been more difficult, half of the world is exploring remote work, hence lack of effort to make people happy in their environment and stay within your company will most likely destroy you. People need to work as a team.
“Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” – Andrew Carnegie, a Scottish-American industrialist, and philanthropist.
5) Shortage of developers
The entire world is facing a global shortage of developers. This problem will be a significant issue for many tech businesses in 2020. If you do not have the right workforce on board, you are not able to build new products, run your company or compete against other enterprises. Some companies might start exploring new hiring practices such as outsourcing just to learn that such solutions will mostly result in them wasting money without direct control over the development or predictable long-term costs.
Some businesses are not using technology or selling tech-related products and they still need developers. Let’s say you are a business that wants to build an online presence because all your customers are going digital today. You need to launch your own mobile app, build your eCommerce platform, establish your online management system, etc. Sure, there are some easy solutions available out there, but do you really want to base the future of your business on third party infrastructures? No, you want to build your own framework and evolve within the market.
If you are a business interested in growing your existing team with developers, save time and money and add tremendous value to your growth in 2020, outstaffing is an ideal solution for your problems. Regardless of the size of your company or the industry that you are operating in, outstaffing can help you identify the right development partners with international experience in thriving markets that will work with you on turning your vision into operating reality. Furthermore, your partner will join your existing team under your management structure, help you establish a great company culture, and support you with leading your team towards new triumphs.
If you are interested in growing your team with outstaffing and tackling new opportunities this year with strong development support, make sure to send us a message and we will schedule a free call to learn more about your needs and help you achieve your goals. Send us a message: email@example.com
As a business owner, you will face many challenges that will impact you as a person and influence the direction of your company’s development. The most important part of running a business is to keep your eyes open and welcome new ideas with open hands. Being ignorant in such a challenging decade ahead of us can only crush your dreams. This is the time of new generations, digital technologies, and brave entrepreneurs. Whatever happens, the key is to keep changing and growing and never give up on trying new things. Every right decision you make might give you an advantage in the market or take your business to the next level. And any mistake you make is just a lesson that will help you grow. You will never be sorry for trying to do something great. As Jeff Bezos, founder of Amazon, once stated, “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”