http://servantspouse.com/?p=174 In this article series, I have reflected on the 7 reasons why small businesses fail, according to ‘BusinessKnowHow.com’. In summary, the reasons cited for small business failures are as follows:
- Starting a small business for the wrong reasons
- Poor management of the business
- Lack of funds to finance the business
- Location (for a traditional business)
- Poor business planning and speculation
- Over-expansion of the business
- Lack of website to promote the business
Today I intent draw conclusions in the context of a Home Based Network Marketing business, such as my own, as well as offering further suggestions on how each of these barriers can be overcome.
Why Small Businesses Fail – Overcoming Challenges
It is important to note that there is only really one factor that will determine the success or failure of a small business and that is the mentality and personal attributes of its founder. If an individual gets started and decides that failure is not an option, then although success may not be experienced in the first instance, success will most likely come later once each emerging barrier has been overcome.
Determination, persistence and perseverance are all personal qualities which have been associated with successful individuals. It is commonly believed that the only way to succeed is to make mistakes and learn how to overcome them. Famous author, speaker and pastor John C. Maxwell coined the phrase ‘failing forward’ to describe this principle.
As another example, Thomas Edison was famously quoted prior to the invention of the light bulb, where he stated “I have not failed. I’ve just found 10,000 ways that don’t work.” Imagine how different the world would have been if he had given up on the first, second, seventh or 9000th failed attempt! Often a trial and error, or test and refine approach is required.
Why Small Businesses Fail – Guidance and Mentoring
Starting a small business from scratch, with no support or guidance would be a challenge for most individuals. This may explain why 8 out of 10 small businesses close within the first 18 months. Hitting barrier after barrier before you have had a chance to develop the personal qualities and traits of a successful person is enough to test anyone’s commitment. So what impact could a coach or mentoring have?
As I mentioned in an earlier article, one of the benefits of Network Marketing is that it cultivates a culture of support. When you succeed your team and sponsor succeed, as well as any leaders in your upline. The term ‘upline’ refers to anyone who has you in their organisation. If you think of this in the context of a job, then your line manager would be equivalent to your sponsor and whoever they are accountable to would be equivalent to your upline (senior leaders, stakeholders, etc).
Your productivity and growth affects the growth of other people’s businesses, so do you think they will do whatever they can to help you? Absolutely!
In my opinion, this alone will help to eliminate a number of the reasons why small businesses fail (1, 2 and 5 specifically). You upline (or the company that you choose to represent) can provide you with a business plan and business management tools and they can also help you to focus on adding value and giving customers what they want.
Why Small Businesses Fail – Business Without Boundaries
Any business that isn’t tied to a premise has a global reach. A home business, particularly when conducted primarily on the internet, therefore has no boundaries. There is no additional rent to pay for premises, there is no need to staff a shop from 9 to 5 every day and you don’t even have to work from 9 to 5 if you chose to build your business part time (eliminating reason 4!).
I also explained why your marketing efforts are unlikely to ever surpass the production capability of the company that you represent in an earlier article. This is certainly the case with USANA, who are one of the Fortune 500 companies in the US (reason 6 – gone!):
In addition, I spoke at length about the benefits of building an effective website in my previous post (see below):
Most Network Marketing companies provide you with a website which they host, but I still recommend building your own. It is important to retain control of your leads, as well as how the content is managed on your site for SEO purposes. This is something that I have experience of and teach to my new business partners (no more reason 7!).
For details of my business partnership proposal please click below:
Why Small Businesses Fail – Risk Vs. Reward
The only issue left to discuss is funding for a business (reason 3). When I started in Network Marketing back in 2006, the most common objection that potential partners had was not having the money to get started. This was followed closely by not having the time to commit to building a business.
I appreciate that starting a home business costs somewhere in the region of £500. You could probably buy a new TV or gadget for the home with that money, but the important thing to remember is that if you start a home business you are investing in an asset. An asset is something that has the potential to generate income.
If you were to invest £500 in a savings account with current interest rates, you would be lucky to get a return of 3%. That’s £15 per year, or £1.25 per month! You wouldn’t need to generate many sales in a business to return a profit significantly higher than that!
To be clear, I am not trying to convince anyone to start a home business. My aim is to put things into context, as there is a big difference between investing in an asset and buying a liability. There will also be running costs, but when compared to a traditional business these are very low and the potential upside is truly uncapped.
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