Three Reasons Businesses Fail My Personal Experiences with Shutting Businesses Down
There are many reasons businesses fail. I have found that if the leadership of an organization is healthy, if the customers are flocking in, and if the finances and accounting are tended well, then there is little worry that the organization will advance.
As you lead a team, an organization, or own a business, I encourage you to be laser-focused on the three areas below.
For the past thirteen years I have been involved in several ventures mostly centered around providing medical services. I want to highlight three of them that failed. I presided over closing them, and I’d like to share what we learned from the failures.
In 2010, we had to shut down a clinic I was in charge of and part owner of. The reason? The leader we had positioned there was not up to par. While the leadership team contributed to our decline, the real people responsible for our demise were the ones who trusted the team we had put in place. I was one of those responsible for the failure of that clinic. When you, or I, or a leader we trust, does not have the necessary skills to make things happen, more often than not, our efforts will result in failure.
Bottom line: Your business will likely fail if the leadership is not strong. Do not ignore poor leadership.
In 2009, we opened a Wellness Center, a state of the art weight loss center staffed by two trainers, a nurse practitioner, and a registered dietician. The brand was beautiful. The facility was first class. But clients did not flock to it, so we had to shut down. It turned out that patients did not want to pay out-of-pocket for the services we offered. They were accustomed to paying with their medical insurance, but at the time, insurance would not cover weight loss services. (It has since changed in the US.)
You can have amazing leadership, an appealing brand, and breathtaking services. But at the end of the day, your clients have to believe the same and value it with their resources of time and money.
Bottom line: When opening or running a business, we have to make sure clients are coming in the doors. If they are not, we must take immediate and drastic action. Many times leaders ignore the painful fact that people are not coming in. They immerse themselves in projects related to growing the business without acknowledging the lack of interest. Don’t fall into that trap. Face the challenge head on.
The leadership may be healthy and the customers coming in, but the billing cycle is inconsistent and receivables are neglected. I have also had an experience with a Physical Therapy business we opened where all was well. Later I discovered there was a failure in billing. Invoices were not being sent, therefore, the income did not match our expenses. I did not know this was happening until we performed an audit after we shut down the business. Painful discovery.
Bottom line: Whether starting a business or taking one over, we must personally make sure we are collecting money in the bank for our business.
I wish you great success in your next business challenge.
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