Why Businesses Fail

Dexx Williams
A free video tutorial from Dexx Williams
Profit System Specialist
4.6 instructor rating • 1 course • 1,874 students

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Advanced Business Strategy: The Profit System Masterclass

Discover The Powerful Business Model Strategy for Attracting New Leads and Sales Without Expensive Advertising Costs

02:03:28 of on-demand video • Updated September 2018

  • Implement a business strategy to attract high quality leads interested in your products and services
  • Understand business fundamentals to convert more leads into paying clients without high pressure sales tactics
  • Leverage a digital strategy to increase existing profit margins dramatically to provide more peace of mind for future growth
  • Realize the business strategy to stimulate additional sales and word of mouth about your business
  • Explain the business fundamentals behind why your current advertising will bankrupt you
  • The 5 key business model elements of a profitable marketing strategy
  • How to identify profitable business models everywhere any apply their strategies
  • Why it's important to avoid a business model that competes based on having the lowest prices
  • Master the digital strategy to scale even the smallest business into a dominant market presence
English [Auto] All right welcome back. And in this video we'll be discussing common reasons why businesses fail. Now you are probably already aware of the fact that businesses fail most companies and most marketers and just everyone in general has usually been told that over 50 percent of businesses will fail in their first five years. But you might not know the full details of that. So based on sources from entrepreneur weekly Small Business Development Center from Bradley University and the University of Tennessee research all from February of 2015 I compiled some stats here and according to the research in the first year of operating most businesses that do fail Soyer me rephrase that 25 percent of businesses will fail in their first year in year two. That number rises up to 36 percent in year 3. 44 50. And then in year 5 over half of the businesses will have failed by their fifth year. Now the reason why I bring this up is because it does not mean that you are in the clear or the minute that your business has lasted five years because as we continue going we still see that 60 percent 63 66 69 and 71. So by the 10th year of operating 71 percent of businesses will have failed which means only one in three businesses make it past their tenth year of operations. Now what are some of the primary pitfalls that cause these failures. Why is it that these businesses aren't making the majority of businesses aren't making it. Well first off we have unaccountable advertising that is the desire the need to be creative and entertaining and typically it's just it's it's it's poor implementation of marketing messaging and I will talk about what marketing means to me coming up and what it should mean to you if you want to be successful but that's basically it. We got you know the silly billboard ads and bus bench ads and the Flyers and the advertisements where they think they're doing what they need to to be successful but it's just costing them money and not making them money on the second hand or the a point I should say is a poor pricing strategy. Now typically when it comes to poor pricing strategies the major pitfall in this is the attempt to be the lowest provider of whatever it is with the lowest cost provider of what it is. These companies offer they're trying to be the cheapest. You know no one beats us at pricing coming to us and we'll beat whatever competitors price is. You name it. Now unfortunately that leaves them with razor thin margins. Not much room to grow and expand on. And essentially they just suffocate and die because there can only be one lowest cost provider in a market. And even the giants like Wal-Mart have realized that over the last decade since the early 2000s in fact were Wal-Mart for the first time saw a decline in their profits and actually started panicking. Why. Because Amazon Dot Com showed up on the scene and they were able to cut the prices that Wal-Mart was offering. Even though Wal-Mart already had really low operating costs or low product tainment costs. Unfortunately they still had an overhead such as stores and stuff things that Amazon was able to undercut them on. They had giant warehouses that shipped direct so poor pricing strategy that's another pitfall marketing -- was this manual just means that people are getting their ideas from other come pitting businesses in their markets. Right. So very similar to the unaccountable advertising. No one's really being creative no or I should say creative no one's looking outside of their market for finding new successful ways to grow their business. They just look around and see what everyone else is doing and so they do the exact same thing which leads to all of those companies in the same industry suffering the same fate as soon as things don't work out well. So that's another major pitfall. They have industry impacting changes. These are the changes that government regulation and changes in supply or the industry chain in general has an impact. So that usually is outside of your control but the ability to adapt is within your control. And that ties into the last pitfall. Lacking a proven system a system that is able to provide you with accountable advertising and marketing one that doesn't rely on you having the lowest price. In fact you can actually charge more than your competitors and still do amazingly well at generating new leads and new. But you have to do it properly in terms of marketing and says it allows you to think outside the box industry impacting changes. It makes you adaptable it gives you multiple legs to stand on when changes happen. All of that is tied into having a proven system a system for surviving. And like I said just because a business makes it past year five doesn't mean they're in the clear. And just because a business makes it past year 10 also doesn't make it in the clear. As you can see and as we see on a regular basis I mean companies that have been around for years RadioShack. That was a company that was a giant. Everyone knew who RadioShack is. You know you hear these marketers talk about branding and you have to brand your business to get your name out there. Everyone knew who RadioShack is certainly didn't help them stave off bankruptcy. What about Circuit City in business for 60 years. Giant crushed. What about Kodak for a time being. It was the number one provider of all film cameras. And once again it went bankrupt. And then you got a blockbuster a company that had paid millions and millions of dollars to have primetime viewing at the Super Bowl had a one had won awards even for their advertising and their marketing. But guess what they also failed. These companies have failed. All were global giants internationally recognized dominant players in their respective industries for decades thought to be unstoppable until they weren't. I mean it seems like every month another longtime giant in an industry announces that it's struggling and is either drastically eliminating locations or going out of business altogether. And the majority of the time it's due to lack of having a proven profitable marketing system for sustained growth. So why do I bring this up because that is why youre here. You are going to be the one who breaks away from that mold that that that circle of failure that will haunt most of your competitors who continue to do the same old things and it will eventually plug their names into somewhere on that previous chart. Instead you are going to have a system that will continue to provide you with that growth. The new leads the new business that you need. So what is a profit system. Well I guess the easiest way to define it is a system of integrated strategies which consistently and predictably lowers the cost of new business acquisition while simultaneously increasing immediate and well lifetime customer value. And I know that's a whole bunch of jibber jabber and some of it might not make sense but essentially a solid profit system helps you get new customers much more affordably than you are right now and will help you increase the amount of money those customers bring to you at the time of that first transaction and to get them spending more money continuously over the lifetime that they remain your customer so the best way to try to describe it I guess would be to draw it out. Theres three elements of a profitable marketing system. You have the generation of new clients you have the average transaction value that those clients provide. And then you have the transaction frequency How often do they come back and purchase again. Now the key to truly growing your business bassed in an exponential manner that allows you to dominate your market lies right in the center. I call that the profit Diamant because if you can hit all three of those Venn diagram circles you will win you will win. Most companies will only focus on one of those three. And typically it's on new clients. This is where we know that the search engine marketer is the yellow page advertisers in the Basically any advertising called coller that a business gets is promising new leads new clients new leads new clients but thats only one of the three ways. If you master a truly profitable marketing system you will grow your business not only in that first circle but in the other two as well which right now most businesses are losing out on. So that again gives you a huge advantage. So a solid business growth strategy focuses on all three ways to grow profits and not just one. So in the next video will talk about the growth formula and how you can apply it to grow your own business.