We get mail: Questions and Answers

A friend in England has sent a few questions for her publication, reprinted here with permission...

What do you believe are the main or most common reasons for small business failures?

The typical answer is "lack of capital", but the real reason is because the business did not get the Sales it needed to offset expenditures. It's really that simple. The essence of success in business is success in Sales. Of course, there are many other reasons why a business might fail even if Sales are good (embezzlement, fraud, partner disputes, poor management, lack of financial controls, and more). Another major reason for failure is giving up too soon. Success requires perseverance. Another major reason for failure in business is lack of planning. (See Commandment #4)

Is the customer always right, or are there times he is plain wrong, and should you tell him?

Yes to all 3 questions. The customer is almost always right because what they are telling you is how they want to do business with you, and it's always a good idea to listen to customers with an open mind. However, on rare occasions a customer will be absolutely wrong, but if their attitude is good and the amount is (relatively) small, you write it off as goodwill. However, sometimes you get a customer who is so wrong (chronic complainer, rip-off artist, etc) that they should be terminated. Firing a bad customer is some of the most fun you can have in business. It's theraputic! (See Commandment #3)

What does the word 'change' mean to you?

It is eternal and omnipresent in all aspects of Life, and that includes Business. It is Newton's second law (Entropy). Basically, it means that everything is always falling apart. Ignore it at your peril, but more importantly, embrace it for the Opportunity it contains! (See Commanment #10)

What are the main traits that all successful businesses share?

Continuous sales increases. Motivated employees (See Commandment #6). Financial controls (See Commandment #8).

What are theearly warning signs that all is not well in your business, and what can you do to avoid the point of no return?

The really bad news is usually delivered in a phone call by the bank manager. That's when things start to get desperate. But before that happens, you should have seen it coming, in your monthly financial statements. However, if you focus on increasing Sales, and focus like a junk yard dog, the only call you will get from your bank manager will be to take you to lunch, his treat.

What is the most effective form of lead generation when a business has limited funds for marketing?

Use the internet for networking, search for customers and new markets, email broadcasting, newsletters via email, website content creation, free offers (white papers, e-books, etc).

Many business owners find it hard to measure success, what advice would you give?

The true purpose of the business is to support the owner's chosen lifestyle. Unfortunately, many owners find themselves slaves to their own business. You are not your business! It is a separate entity which you control from the top of the pyramid rather than buried under it. Delegation is essential for success in business.

For more on these topics, please refer to
The Ten Commandments of Managing a Young, Growing Business