Australian Business Coaching and Business Consulting

Business Failures Understanding Business Failures

I once read a statement that ‘revenue is vanity, profit is sanity’ and I think that it makes great sense. Revenue is important but profit is what really matters. It may seem like a very obvious statement but planning purely to sell without enough regard for your expenses and operating costs could put your business in danger. To be successful, you must know what profit your business is realistically capable of generating.

Undoubtedly there will be business owners whose plans have not come into fruition and perhaps they fear hard times ahead. If you are in this category it’s best to realise that you’re not the first, you won’t be the last and help is available – you just have to ask. I vividly remember learning that lesson, although it was the ocean that taught me, not business. I got caught in a rip on a beach on the east coast of Australia. Although I knew I was in trouble it took me thirty minutes to put my hand up and attract the lifesavers attention. I ended up being pulled out unharmed but I did wonder afterwards why I allowed myself to wait so long to ask for help!

A combination of pride and stubborn ego can sometimes make it hard for us to admit when we need assistance. But if business success is your goal then it is imperative that you shift your perspective. Know your strengths and weaknesses and be prepared to put your hand up and ask for help when required - otherwise your business will suffer.

Many business owners succeed or fail at the planning stage. As the adage goes if you fail to plan, you plan to fail. So be conservative about your projections and forecasts. Make realistic plans to be profitable. Talk to a professional about your objectives, outcomes, processes and assumptions. Keep your emotions in check and you are much more likely to succeed in your venture.

Summary of Key Points

  • Don’t believe all you hear about business failure – only 5 in every 1000 business ‘failures’ are due to bankruptcy.
  • Seek advice and have a plan before you start.
  • Always do due diligence.
  • Never be afraid to ask for help – don’t wait until it’s too late.
  • Be realistic.

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