When I started my own business, I had no idea what I was going to do. I knew I had no idea; what attracted me was lifestyle. I wanted freedom to live my life as I chose. I was at the earliest stage of business development.
So, I started as a website designer. It’s been a journey, working out what I do – what I offer that people value.
As I grew in understanding of website design, I worked out websites are always about marketing something, if not a business, a cause. As I read about marketing I found much of it familiar from my time in community development. We didn’t call it marketing. When you have no funds and little influence, you need to communicate your message and respond to objections.
The next phase was to position myself amongst others who sell marketing. Any viable business encounters competition. I chose storytelling in marketing as a key area based on my experience in community development and my observations about how marketing is itself marketed.
It has been a long journey and a journey every business owner takes.
Why do most things fail? The most likely reason is covered in this post. It is important to understand the stage of business development you are at. Not every technical fix works for businesses at every stage of development.
A common problem is using methods that work for businesses at later stages. It is also possible to be stuck with a method that worked when your business was at an earlier stage.
Five Stages of Business Development
Let’s review five stages of business development. Five is not a magic number. Five offers a helpful rule of thumb. It is always possible to go deeper if you need to.
Stage 1: Dreaming
At this stage, you work out your business purpose. Why are you in business? Use trial and error. Try things until you find something that works.
This stage can be swift or slow (years slow). Sometimes it takes a while to work out not just your strengths but what you can meet from your market’s needs.
You can make money at this stage and indeed you must be in business. How else can you test an idea to see whether it is viable?
Once you turn over a few thousand a year, you are ready to move to stage 2.
Stage 2: Marketing and Selling
At this stage you work out how to market and sell products and services. If you cannot sell over a cup of coffee, you cannot sell online. You need to know, through conversations with potential customers, what sells; work out how to get them to sit down with you over coffee.
Move to stage 3 when you feel under pressure to meet the demands of your customers. By then you may be turning over a few tens of thousands.
Stage 3: Capacity Building
This is the stage most successful businesses reach. Some pass through this stage with an eye to stages 4 and 5. Others are content at stage 2 but wish to perhaps find more time by becoming more efficient. This is not the place to go into detail but the main ways to build capacity are:
- Automation – now you can sell online!
- Increased prices
- Buying in services
- Employment of staff
Many use all four and so likely turnover is intermediate tens of thousands, up to the UK VAT threshold, perhaps.
Stage 4: Mass Market
This is where you move out of your niche and build a mass market. Whilst you must remain faithful to your business purpose (success is a frequent reason businesses lose their way) now you sell something with mass appeal. You offer any flavour so long as it is vanilla.
This stage does not appeal to everyone.
Stage 5: Guru Status
Now you sell more than one line to a mass market. You are recognised by other businesses as the leader in the market.
Reasons for Failure
Stage of business development is a frequent reason for failure because there are many ways of losing track of where you are. Here are a few.
First, you leapfrog to a later stage. This is a frequent issue for people starting out. They are new to the marketplace and watch what others do. Everyone’s going to a workshop about Facebook marketing and so you tag along. It’ll work if you have something to sell and Facebook is right for your market. If you don’t, maybe you are getting into Facebook too early.
Another common problem is early success. You can leapfrog stages 1 and 2 and go directly to 3. This might happen where someone stumbles on something easy to sell. They set up a business and it does well, requires loads of staff and shows great growth. But what happens when demand falls? Now you have the responsibility of employing staff but no clear business purpose and no idea how to market or sell anything else.
It is also possible to forget stages 1 and 2, if you are contemplating a move to stage 4. The temptation at this stage is to compromise on quality. Does compromise further your business purpose?
My purpose in this series of posts is to identify likely reasons for failure. It is not to suggest solutions. Why? Every business is different. What works for one business is a disaster for another.
What can you do? It helps to begin with two questions:
- How well do you know your own business?
- Do you know the stage of development your business is at? Whatever the reason for failure, it is coloured by the stage of business development.
Get a coach or non-directive consultant. A good coach not only boosts your brain power (two heads are better than one!) but sees your business from a different perspective. It is easy to get locked into one way of seeing things. Tell yourself a story and the story enchants you. Sometimes the perspective you take has obvious flaws; obvious when they are pointed out!
A coach helps you find the perspective to move your work on. For this reason, the coach need not be an expert in the business you occupy. You need to be nudged, you don’t need someone to do the work for you!
Technical solutions are great so long as you choose the right ones. For example, Facebook marketing might be the solution you seek. It’s a proven method. Go to a workshop on this topic and you find other business owners there too. They’re there because it is a good, proven method.
Spend no more time on Facebook marketing than you need to eliminate it from your enquiries. Putting time, money and energy into the wrong solution destroys your business. If Facebook marketing destroys your business, it is not the fault of Facebook marketing.
Most likely, it is not appropriate to your stage of business development. There may be other reasons it does not work. But consider whether what you are trying to do right now is best helped by marketing through Facebook.
Stage of business development is an important element in the context of failure. But businesses fail for other reasons and it is important to understand how context influences the solutions we bring to our business.