Protective Steps for Avoiding Failure

Why do failing businesses fail in the first place? Is it typically bad luck, unfortunate timing, lack of capital, an inferior product or service, incompetent management or some sour combination of all of those factors? Could better marketing make a difference?

I recently had the opportunity to meet and work with Bill Rancic, a successful entrepreneur several times over. You might know Bill as the first-season winner of Donald Trump’s “The Apprentice” show on NBC. He founded Cigars Around the World in a 400-SF studio apartment years before entering The Donald’s universe. Among other ventures, he is now national spokesman for a financial-makeover initiative, Gradient Gives Back. As part of this program a very deserving Little Rock family was announced as the second national winner and will work with local financial adviser Gary Garrison to get back on its feet.

Bill also hosts “We Mean Business,” a weekly show on the A&E cable network, in which he and a small cadre of experts essentially take over struggling small businesses for a few days and attempt to keep them from failing. I asked Bill his view about the telltale signs of failing businesses – given what he has learned from the thousands of struggling entrepreneurs his team screens for the show – and any advice he could offer.

Bill told me there are three characteristics that tend to describe these failing businesses.  First, he said, these businesses are reactive rather than proactive. They can’t seem to get ahead of problems and instead spend substantial time and energy putting out fires. Sometimes the business leaders seem to feed off the adrenaline that accompanies crises – but you and I know that’s no way to run a business over the long haul.

The second characteristic of failing businesses is that the leaders fail to set goals. It isn’t that the entrepreneurs aren’t working hard – many of them put in 60, 70 or even more hours every week trying to get ahead – but there is often no sense of direction. Over time, everyone becomes frustrated, because there is little sense of accomplishment despite all of the effort that is going into the business.

The third characteristic is that the entrepreneurs aren’t thinking big enough. They might have a good product idea but aren’t thinking about ways to scale the idea or solve additional customer needs over time. These businesses won’t ever be big successes because the owners are failing to create the environment for home runs.

Not surprisingly, I believe that marketing research and sound marketing planning can substantially help to cure each of these three ills. An objective view of the marketplace can help you and your team become more proactive, for example, because you can see weaknesses in your offerings (the way consumers do) and anticipate competitors’ moves.

Goal-setting is at the heart of a good marketing plan. So are the tactics, resources and accountabilities that support those goals. If your business doesn’t have a detailed marketing plan in place – one that supports and enables the overall business plan – then you might be setting yourself up for Bad Characteristic No. 2. With a marketing plan, however, everyone will understand the big objectives as well as the intermediate goals that let you know you are on the right track.

Good marketing research can also help you avoid the thinking-small trap. By truly understanding your customers, and the benefits they perceive to follow from doing business with you, a business can be agile and exploit big opportunities in the marketplace. Without that understanding, a business is likely to get stuck doing the same things in the same ways.

So, business leader, don’t fall into the false belief that research and planning somehow dampen the entrepreneurial spirit. Instead, learn from the problems of other businesses. You can marry your energy and propensity to act with good information and a clear plan. Then maybe your business will be on national TV someday – for the right reasons.