Many great entrepreneurs have something in common. At one point they failed in business but then they later became smashing successes. Some of these entrepreneurs include Henry Ford, Walt Disney, Mary Kay, Bill Gates, and Richard Branson. The difference between these entrepreneurs and other business failures is that these individuals learned from their failures and used those lessons to build successful enterprises. Education is a short cut to experience.
Our present crisis reminds us of the risks of entrepreneurship. But an entrepreneur understands the risks. Failures occur and unexpected events do happen. How the entrepreneur reacts to these setbacks will determine future outcomes.
Several years ago, three of my colleagues and I shared some lessons learned from the front. You can avoid some of the mistakes which will lead to failure by taking note.
Q.When you develop a business plan why do you put it aside and forget it.
A. Many businesses put in the effort to develop a business plan but then fail to take action on the plan. The plan is a living document and it needs to result in the creation of goals, action steps and measurement of progress. If you have an organization the plan needs to be cascaded throughout. Everyone needs to have goals aligned with the business plan. In turbulent times the plan needs to be reevaluated. Adapt quickly to changes in business conditions. Many failures occur because the enterprise does not take “action steps” on the plan and their organization does not know about the plan. If everyone knows about the plan they can quickly provide guidance which will help re evaluating and created new goals.
Q. What is the right pace of growth?
A. The right pace of growth depends on your organization, your product or service, and your internal resources. Your organization needs to adapt to increased customers by having the processes in place. There have been many times that a business had explosive growth relating to one customer. If the business changes its structure to accommodate that one customer, it is putting itself in danger. Businesses have failed when they lose that customer. Manage your growth and don’t overextend because of one large customer.
Q. How do you stay in tune with your customer and not just your profit?
A.The bottom-line profit is important. However, profit is a lagging indicator. It tells you what happened. To remain profitable, you need to measure the voice of your customer. While profit is a lagging indicator customer loyalty is a leading indicator. One immensely powerful question to ask your customers is, “How likely are you to recommend us to your friends?” Remember the Peter Drucker has said the business exists to attract and retain customers.
Take a look at your business. Evaluate now and understand the changing landscape. Then take action. For a similar post on our website see ENTREPRENEURSHIP - FAILURE AND SETBACKS ARE TEMPORARY.
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