Why Businesses Fail


going out of business

Ever see those local businesses pop up in your neighborhood and say to yourself, “They’re never going to make it”?

I do all the time.

It’s not because I’m a negative person.

It’s also not because I’m a retail business expert.

And, it’s not because I have a crystal ball.

It’s because I know my community.

I’ve lived in it for 20 years. And, I know my community likely won’t support the business. Not because it’s a bad business. It’s just not a good fit.

In the past couple of years I’ve “called” these local business failures at a 100% accuracy rate. I don’t say that to brag, but rather to raise a question and make a point. If I can see the writing on the wall even before the doors are opening, why can’t these business owners?

I believe it’s because they’re blinded by passion.

They’re in love with their business idea and while they may have done some cursory market research to better understand the market—and my guess is that sadly, some don’t even take this prudent step before investing all their time and money into their business venture—they don’t do enough to understand their target audience and the neighborhood they’re locating in.

They also likely haven’t spent enough time analyzing the other established, and sometimes big name stores, that are already serving the community. While competition doesn’t always have to be a deciding factor, if you’re opening an independent business that no one’s ever heard of, and there’s already a well-known, respected, and successful business offering the same product or service right down the street, you better dig a little deeper to make sure the community can, and will, support both.

You also better have a significant brand difference that your target audience highly values.

You better do some pretty strong marketing to get them in the door the first time so they can experience that brand difference.

And you better have a solid marketing plan in place to keep them coming back.

Opening up shop on the Internet as a coach or consultant isn’t all that different.

While you don’t have to compete with the big box stores, you are operating in a huge marketplace where it can be difficult to be found. And, you’re also likely one of many, many consultants or coaches in your area of specialty.

For these reasons, it’s paramount that you select a targeted niche and differentiate yourself with a strong brand positioning if you want to stand out and attract clients. That, along with a marketing plan designed to generate awareness, attract your ideal clients and convert them into paying clients.

Opening up your own business is not something you do on a whim.

It’s also not something you do based solely on passion.

For a business to succeed, whether it’s a local retail shop or an Internet-based service business, there must be a market need. And not only a need, a want. There must be an audience that wants what you have and for whom it’s a high enough priority that they’ll buy.

If they’re out there, and you can reach them effectively with the right message, at the right time, in the right place, at the right price (the 4Ps of Marketing) you may just have a shot.

I’m not saying you shouldn’t be passionate about what you do.

You do need to love it. Because you’re going to be spending a lot of time doing it. But you also need to make sure you understand your audience and commit to branding and marketing. There’s nothing more satisfying than being in a successful business you love. Make sure you take the right steps before you open up shop so you can enjoy that satisfaction.

photo credit: cseeman via photopin cc

About Debbie

Debbie worked in marketing for 32 years and ran a successful coaching and consulting business for 19. Now she helps people find greater happiness and success by learning how to Follow Inspiration.

6 comments on “Why Businesses Fail

  1. Excellent article, Debbie!

    I do the same thing in our city. When I see a new business I usually tell my wife the approximate time period it will disappear by (usually within two years) and am usually right. Unfortunately the community I live in does not support local businesses, does not understand the premium pricing that goes along with a small business and therefore continues to flock to the big box stores. But businesses don’t get it and they keep cropping up.

    Have always enjoyed your words of wisdom.


  2. Thanks Brian. I agree the big box stores often crowd out the smaller mom & pop shops. But I also see it frequently when there’s no big box competitor. For example, a live theater business opened down the street from my house, in a strip mall with a grocery store as the main anchor. It was such an odd fit for our community and the location, I just knew it wouldn’t last. Sad because I read an article in our Chamber magazine about the people who started the business and it was a true passion business. They had been turned down by several of suburban cities here in San Diego (should have been a clue!). But our mayor championed it, which I never got.

  3. You are spot on Debbie! I chuckled to myself because evidently I do exactly the same as you, with a near 100 % rate of sureness I know when I see a retail business if it´s gonna fail…and it´s seems there are quite a few of us who does this. I´ve even once almost went into one shop to offer my advice but then thought the better of it.

    Greetings from

  4. Good Morning! I do the same thing. My Husband calls it the fickled-finger. I will see the reasons for why also. The other day I wanted to go into the Real Estate office and tell them that their wording on their sign needs to be changed – no one can read it when they drive by and the same thing for a brick-and-mortar business – gosh darn if you can’t read the font or the size of the words or the name makes no since for what you do – you will lose at the starting gate. It seems so clear to me for “them” and I wish that I could do it for myself…..LOL

  5. It’s always easier to see it in someone’s else’s business, isn’t it? What is it they say about the cobbler’s child never having shoes? That’s why it’s not a bad idea to have someone who can be that objective person in your own business. Whether it’s a trusted friend, colleague, family member, or paid coach or consultant.

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