First it was a taco joint with a giant sombrero on top. Then it was an ice-cream stand. And after that it became a local Starbucks competitor — losing the round until its next metamorphosis. You don’t usually stop into the flavor of the day, partly because you’re just not so sure about it but also because you don’t want to like it and have it go away like its predecessors. But is your hesitancy — and perhaps that of others — really the reason it would ever go under again? That might play a part, but these failures are more likely the result of preventable mistakes. Leaders heed and learn lest you also go the way of the giant sombrero.
Poor leadership.
As much as we hate to admit it, poor leadership is the top killer of businesses everywhere. Whether it’s through ignorance, lack of foresight, or just plain laziness, leaders with poor management skills can cause a business to plummet nearly overnight if just the “right” mistake is made. Lessen your risk of poor leadership through a more rigorous hiring process, increasing accountability among managers and regular peer and self-evaluations.
The blame game.
One of the first steps to stopping a downward spiral is to first recognize and admit the problem. However, many companies today play the “blame game” and make excuses or try to cover up after mistakes are made. The best thing businesses can do — especially those in the public eye — is to openly admit their faults as well as their plan to make things right. According to Jim Collins, author of “Built To Last” and “Good to Great” the presence or absence of this kind of behavior a type of litmus test. He says that companies often come to a “pivot point” and they can either choose to explain away the hard stuff or confront the facts with boldness. Choose the former and go down or choose the latter and go up.
Success/Growth.
Ironical yes, but it’s true. Companies who succeed or grow too fast are more vulnerable to failure than others. The reason is two-fold. First, they could be unprepared for such growth from the beginning and be short-staffed or ill-equipped to meet the demand. Second, the success could give owners an illusion of safety, encouraging a complacency that fails them when competition becomes too stiff to handle. Combat this phenomenon by always planning ahead, avoiding taking on too much for your business size and by always keeping an eye out on the competition.
Turtle syndrome.
A fast-paced, ever-changing world means every company should be prepared to not just change along with it, but to be ahead of the game. Once the epitome of success, both Xerox and Polaroid are now examples of the turtle syndrome. Rather than innovating along with culture, they took a huge hit when their products became obsolete. Emulate Apple and always seek to create the next best thing. Business coach Grant Cardone has it right when he says businesses should seek to dominate — not just compete.
Playing it safe.
While a number of companies have certainly failed by taking risks too big, an even larger number have failed for playing it too safe. A rule of thumb to remember when making financial decisions is that as a business leader, your top goal is to make money, not save it.
Logistics.
Sometimes all the cards are just stacked against a business. Poor location, lack of demand or plain old bad economy. Make sure your cards look good before starting a business and you’ll reduce your risk of failure.