HBSA

The Home Business Success Academy (HBSA) is officially declaring war on business failure.

Why?

For a few reasons:

1. Declaring War Is Popular

As a society, we have declared war on drugs, war on poverty, war on terror, war on obesity, war on cancer, war on domestic violence, war on recession…even a war on Christmas!  Always fashion-conscious, the HBSA has decided to wage war on one of the most crushing opponents entrepreneurs face today – business failure.

2.  Business Failure Is Popular

I don’t mean popular in a “likeable” sense, but rather in an “all-too-common” sense.  Did you know that:

• Nearly 40% of ALL business start from the owners home
• Between 90% – 95% of all network marketers fail?
• 66% of all business startups are out of business in 4 years

This is unacceptable!  The HBSA cannot sit idly by and watch their fellow entrepreneurs tank their businesses.

Which brings up an interesting question:  Why is the failure rate so high?

Here are some of the common reasons we see:

1.  Starting a business for the wrong reasons

Unfortunately, way to many would-be entrepreneurs for the wrong reasons.

The read a Robert Kiyosaki book, get inspired to fire their boss, and just jump into some sort of venture just to make tons of cash as fast as they can.

Being in business means that you provide value.  If you don’t provide value first, and continually provide more value, your business goes out of business.  Yes, you can make lots of money with your own business, but if the focus is just on money-making and money-taking and not on providing value, then your business will eventually fail.

2.  No Understanding Of Marketing

Marketing is, without a doubt, THE most important aspect of your business.

Now, I can already hear the accountants, technicians, administrative staff, and other professionals howling protests, saying how important and critical their occupations are to the operations of their employer.

There are lots of important pieces to putting together a successful business, and yes, with poor money management, administrative support, etc., a business will undoubtedly go under.

But the most critical aspect of your business success hinges on your marketing.

To illustrate, I’m going to use a quote from Red Mottley:

“Nothing Happens Until Somebody Sells Something”

And this is true – without sales, there is nothing to count, nothing to administrate, nothing to manage, nothing to support.

Without good, effective, consistent marketing – nothing else happens.

Marketing drives cashflow.

Marketing gives all the other occupations reasons for existence.

Marketing allows expansion of operations.

Marketing creates the need to hire more staff to help with all the other things that go with expansion.

The reasons that employers have to layoff employees is when there is a lack of sales.  No employer loves firing their employees – and if they have plenty of sales, good margins, and manage their money well, they don’t have to.  But if they have insufficient sales, then it doesn’t matter how accurate their accounting is, how effective their followup systems are, how technically proficient their R&D might be – they are sunk.

3.  Lack Of Capitalization

Most entrepreneurs are, by nature, optimists.

That’s great – except when it comes to planning for expenditures.

Most entrepreneurs minimize and underestimate the cost and effort of starting a business, and maximize and overestimate their reward and results of starting a business.

The result is that many businesses go out of business because they think they can just hand out some business cards, put up a sign, and watch their bank account explode with new cash.

Not so.

Many businesses just run out of money.  And when they run out of money, their options are very limited.

Just look at the rash of recent bailouts and bankruptcies with very large businesses. This doesn’t happen to a business that is well capitalized, and has a reserve in case of a downturn.

As a rule of thumb, when you do your business planning and running the numbers of a business or business opportunity, come up with an estimate of the capital investment needed, and the time it will need to get it moving.  Then, multiply the capital investment by 3, and the time and effort needed by 4.  That number will be more realistic.

There are other reasons for failure but these are some of the most common.  If you want to stay in business and become successful, make sure you:

• Start your business for the right reasons – provide value!
• Know how to reach your clients – understand marketing!
• Manage your money well – have reserves!