I have never seen or heard anybody precisely identify the key reasons for almost all business failures. To be honest I think the most misleading statistics are those published by university courses and the government. I could have called this blog, “What Nobody Teaches You About Business Failure at Harvard or MIT.” Here are the biggest causes of business failures that will stop you in your tracks from consistently knowing how to make money online. But more importantly precisely how to avoid them…well at least in my humble view:-)

1.Putting the emphasis on the product, with marketing a poor second.

Talk about “putting the cart before the horse”. If you want to make money, this scenario needs completely flipping on its head. Savvy and successful entrepreneurs identify the market first. Only then do they create the product.

Tip: To succeed, you must find out whether people actually want your product, can or will pay for it, and how much. The true proof is absolutely not a focus group or a survey – the true proof is a real life market test.

2. Overemphasis on being flashy or to be nice “image”.

A very expensive logo, swanky offices only contribute to ever increasing overheads and do very little if anything to deliver success. And what’s more this sort of approach can drive you out of business fast, as so many so called entrepreneur’s discover to their cost.

Tip: Keep overhead low. Operate from a home office or very modest one when you start out and you’ll find this is one little powerful secret to make money online. Most of your customers couldn’t care less, where you operate from and for me, most of my customers love the fact that I make a lot of money and still run my business from home. Carefully invest every available penny in marketing and you’ll find that this dramatically increases your chances of success.

3. Poor business partnerships.

Many entrepreneurs rush into relationships or partnerships with hardly any knowledge, communication, or due diligence. I am convinced that a business partnership is even tougher to make work than a marriage. The vast majority fail in misery. And and top of all that in bankruptcy. And if this isn’t nasty enough, lifelong friends often wind up despising each other and finding themselves estranged forever.

Tip: Avoid partnerships like the plague. But if you have strong business reasons to form a partnership, make sure right from the start you know your future partner’s strengths and weaknesses very well. And, most importantly, clearly define in detail exactly what you and your partner will be responsible for in the business.

4. Your business model is far too complex.

The best business models are simple, they focus on how to make money working on line, or they do if you want the most powerful return on investment. Employees, customers, even suppliers, should be able to immediately understand the nature and goals of the business. For example, “When it absolutely, positively has to be there overnight.”

5. The business attempts to be a pioneer.

Entrepreneurs are often attracted to businesses that are pioneering a brand new product or industry. (I personally must resist this tendency as well.) While a precious few are successful, most fail. Businesses that are radically different from existing known businesses can even scare off customers rather than attract them.

Tip: You can achieve extraordinary business success when, instead of being a pioneer, you simply do something far better, faster and/or cheaper than existing businesses.

6. You and the business are driven into bankruptcy by a lawsuit.

You can be fully and personally liable in the event of a lawsuit which goes against you. You could lose all your assets, including your home, savings, cars, etc.

Tip: Never operate a business without the protection of a corporation. Operating through a corporation gives you a “corporate shield.” You actually keep your personal liability limited to whatever assets you choose to put into your business. Worst case, in the event of a lawsuit simply fold your corporation and start another one. Talk with a good lawyer and accountant and discuss your personal situation including tax aspects. You can probably eliminate close to 100% of all potential legal threats which could go against your personal assets.

7. Divorce.

Untold businesses come to a halt each year when marriages fall apart. In many cases financial disagreements wind up in court.

Tip: Before getting married, and no matter how unlikely it may seem at the time, have a good attorney prepare a prenuptial agreement which spells out exactly what will happen in the event of a divorce.

Avoid the above pitfalls and the path to business success will become much smoother for you.

May your success be more than you can hold.

Kevin
http://www.CambridgeBusinessAcademy.com