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#1 Reason Businesses fail

Updated: Apr 24, 2023

You’ve heard the stats that 97% of businesses fail in the first five years right? According to Harvard business school the main reason is undercapitalization. Do you believe that? I mean it’s Harvard right?

I’m not afraid to say they’re wrong because they are! I know, big words right?

So you’re telling me that if you just had more money the business would succeed? Their reasoning makes it sound like any business that has enough cash will succeed. Is this starting to make sense?

Here’s the real reason businesses fail…

They don’t sell enough products at a high enough price.

Too simple? Think about it for a moment. Let it sink in

Makes sense doesn’t it? Or are you trying to make up excuses why you aren’t selling enough at a high enough price? People do it all the time; even Harvard! There are a lot of reasons people can come up with on why they can’t succeed in their business. When I first heard this It absolutely floored me… You don’t sell enough products at a high enough’s genius in its simplicity. I reflected back over the last thirty years of businesses I created and ran and applied that saying and you know what? It’s true, without exception.

I hear every excuse under the sun when talking and consulting with business owners about their struggling businesses. I listen for a while then drop this truth bomb right in the middle of the room and BAM total silence. They’re shifting uncomfortably in their seats looking at the ground or anywhere else except at me. There’s no rebuttal, conversation over. Now after those awkward couple of minutes we get back to their #1 reason why their business is failing. They accept it and actually realize maybe it’s not the end of the world after all.

I get that most people don’t like sales of any kind. The fact of the matter is 90% of all sales people actually really stink at sales. Don’t believe me? Look at these stats…

48% of salespeople NEVER follow up with a prospect

25% of all salespeople make a 2nd contact and stop

12% of sales people only make 3 contacts and stop

ONLY 10% of salespeople make more than 3 contacts

2% of sales are made on the first contact

3% of sales are made on 2nd contact

5% of all sales are made on 3rd contact

10% of sales are made on 4th contact

80% of sales are made on 5th to 12th contact

In a proverbial nutshell this is why people are awful at sales.

These stats should drive home the need for follow up in your sales staff and systems. 80% of all sales are made on the 5th to 12th contact! Amazing isn’t it? So only 10% of the salespeople make more than 3 attempts at follow up. So guess who gets all the money?

So what’s the solution? Sell more at the right price right? Easier said than done isn’t it? I mean you’ve already seen that 90% of all sales people are failures so how in the world are you going to get the best people to sell enough of your product at a high enough price?

Let’s look at those stats again for a moment. What’s the reason for failure? No follow up right? So naturally this is where you begin the process. You institute a mandatory follow up system and procedure policy. You drive home these stats to your sales team whoever that might be at the time. You have everyone in a CRM (Contact Resource Manager) and track their calls and follow ups in this system. This CRM has their entire pipeline of contacts, next actions required with dates and deals they are working on down to the penny.

You set high sales goals and push to hit those targets. You bring in additional sales training to help your people close more deals. You look at other weak points in your sales process and find the disconnects and breakdowns that are preventing customers from moving forward with your product or service.

This can be the delivery of the initial pitch. A poor presentation of the product or service. The value doesn’t exceed the price. No rapport building and skipping the Know, Like and Trust factor. You have to be a relentless professional never quitting until you have an absolute No and even then keep going if at all possible.

The #1 reason your business is failing is sales. To be fair there certainly can be numerous other factors in your business that can be causing problems. The reality is though that if you’re not selling enough products at a high enough price the rest won't matter because you’ll be closing your doors before you can address them.

The best time to start this is right now! Too many people delay and think they have to have everything in place just right and get more training before executing. In this case your training is picking up the phone and following up. You’ll learn really fast what to do and say just by starting the process.

So if you’re just starting a business or you have an existing one and it seems to be struggling, look at this question first “Am I selling enough product/service at a high enough price?” Always come back to this question first when things seem to be slowing down for your business then adjust from there

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