Causes of Business Failure – Highly Personal Factors

We all want success but some want it more than others and are willing to put up the extra energy to reach goals despite the hassles, odds against, roadblocks, dangers, pitfalls, and/ or controversies that may cause failure of the business. Sometimes business people are their own worst enemies and the leading causes of their own business failure.

Failure, however distasteful, can be based on many factors that are within the direct control of every business owner. Here are some of the most important ways business people fail:

Real or Perceived Threats to the Self

Anyone on a mission – activist, reformer, leader, salesperson, etc. – will at some time feel threatened in some way. I remember writing a letter to the editor on a local cause and feeling rather shocked at receiving a direct phone call from a stranger about the issue – luckily he was a supporter. I didn’t write another letter for a while. Threats of any kind or intensity can cause people to back off, hesitate, or walk away from doing something important. The flames of passion and willpower to succeed at a business can be easily doused by threats. Remember, life is like licking honey from a rose.

Lack of Technical Skills

If anyone is going to run a business, it is important to know what one is doing. Watch the TV show “Kitchen Nightmares” to see how incompetent some people are in running restaurants. A lack of knowledge and technical abilities in running a business can very quickly cause failure. It becomes very expensive when machines can’t be adjusted, accounts can’t be handled properly, repairs can’t be made, the place becomes cluttered and unmanageable. There is a big difference between I know and I think I know.

Personality Factors

There are people that get into businesses that are just not suited to their personalities. Wanting something isn’t enough. Greed is often the wrong approach. Lack of patience and poor social skills can lead to poor relationships with employees who are then less motivated to work hard. Your personality can actually drive away customers and cause trades people to steer clear of your business. Square pegs are often hard to drive into round holes.

Inherent Tragic Flaw

In many cases, people have something intrinsically inside of them that causes failure. They aren’t aware enough or experienced enough or miss a key component in their business plan, product, or service. Despite imminent failure and recognized bad timing, they reinvest in a needless or obsolete technology. “Pride goeth before the fall” and so does arrogance. Some business people are too trusting, too laid back, poor handlers and investors of money, subconsciously failure oriented, poor communicators, weak leaders, and overly proud to get help. Tragic personal flaws – we all have them – can be a direct cause of business failure. Remember Shakespeare’s Shylock or Julius Caesar.

Irrational Fear

A sudden hesitancy and fear in business decisions can cause freezing and inaction. There is worry that despite all the positives, the project might still fail. Not now; do it at a better time. Some people are afraid of success as much as they are of failure. They fear the thought of potentially great success and all the work that will have to go with it. They would rather stick with the old and proven, a fear of being seen as weak leads to less than best business practices. Inventors, for example, may have one or two cherished inventions that are kept secret. It never gets into the marketplace because they are afraid someone will steal their idea. Whether you think you can or you think you can’t, you are always right.

Lack of Important Survival Skills

Some business people believe that because they want profit, gain and success that it has to happen if they just push more money at the problem. They fail to prepare themselves – financially, in attitude, physically – for economic down times, bad months, illness, and other unforeseen calamities. The following are missing survival skills that cause businesses to fail: lack of a reserve fund to help ride out a bad spell, inability to cut overhead quickly, reluctance to live and operate at a lower level of performance, lack of a cushion of financial and business success before buying luxury items, reluctance to reduce spending and consumption when necessary, failure to establish a diverse base for sale of goods or services so that income will not be devastated if a sector of clients/customers is lost, prideful reluctance to get desperately needed help from others. A phenomenally high percentage of Canadian trade is solely with the USA. Businesses and even countries can fail when important survival skills are ignored, missing or weak.

Lack of Someone to Look Up To

There are always people who have succeeded in the kind of business you run. Not learning from them is ridiculous. Why not find out who they are and how they succeeded. Don’t be a legend in your own mind, especially if you know you aren’t one. Lawyers never defend themselves because they would have a fool as a client. Heroes and go-to people are important, motivational and can help business people re-energize and avoid failure.

Perceived Personal Weaknesses

“I never was very creative.” “I’m not very good at marketing.” “I never knew how to do it and I’m too old to start now.” “I can’t learn computers at my age.” “I’m only good at a few things.” “It’s too hard to learn to do it. I work around it.” It is never too late to improve in many ways. These “words of losers” cause business people to fail.

Perceived Lack of Education

Some business owners work their way slowly up the ranks to power positions. Some may have missed out on formal education and feel somewhat inferior when in the company of people with all kinds of degrees. An education comes in many packages – school of hard knocks, street wisdom, formal book learning, experience. It is possible to go to all of these schools.

Emotional Immaturity

Businesses fail because there are people who do the following: blame others instead of taking ownership of failures, get arrogant and puffed up when confronted with errors, focus on the problem and laying blame instead of the solution and helping someone save face, nurture thin skin and fragile egos, believe that fate or others are the causes of their shortcomings and weaknesses.

Desire to Conform to the Norms of Society

There are business people in sales who will do things only by the book. There is no risk-taking or playful experimentation to do things differently. Businesses that are on the brink of failure often continue doing the same things that took them to the brink in the first place. Norms are just guidelines.

Lack of Insight

Despite all efforts, there are people who just don’t get it and never will. Failure is imminent. Despite countless people offering warnings and sound advice, some people still miss the message.

Misconceptions about Self, Others, Life

Here are a few sayings business people should pin up on a bulletin board as a reminder of realities: “If ever they discover the center of the universe, there will be many people who will be very disappointed that they aren’t in it.” “Thank God there are so many people on Earth. It gives us all more opportunities to blame others for our own shortcomings.” “If I can’t take it with me, I’m not going.” “We don’t own anything. We are just caretakers of the Earth.”

Inability to Manipulate or Bring about Change

If a business owner cannot bring about change in staff or procedures, the business is often doomed. Changes sometimes need to be made very quickly despite the stress. Apathetic employees, stagnant databases, continuing to use old and obsolete practices and equipment, and a lack of drive or initiative are leading causes of business failures.

Lack of Group Solidarity

A team gets more done than individuals. If people aren’t in the same frame of mind, there will be sabotage if new practices and approaches are introduced. Toxic people and cliques can cause a business great strife. Mavericks, loners and loose cannons produce resentment and lowered business productivity. Which of the following apply to your office? All for one. One for all. Everybody for themselves?

Influence of Others

When other people are jealous, ignorant, overly forceful or greedy, business owners can often get bad advice. Persistent urging, cajoling, repeated influential discussions, and arguing can cause business owners to give in and make bad decisions. Too much trust in customers/clients/suppliers can lead to financial difficulties, bad investments and bankruptcy. Over extending credit to people with sob stories can cause ruin. Companies lay out millions of dollars on TV advertising because IT WORKS.

Rigidity of Thought Processes

Some long-term business owners get very set in their ways. They don’t like anything new. They think back to the good old days when the business was great and fail to learn newer and perhaps better methods and procedures. Many older business owners can be very limited in their use of computers and the internet and therefore fail to see new ways of generating business using different kinds of technology.

Negative Thinking about the Self

When business people believe themselves to be incapable of whatever, there is a greater chance of failure. Consider these forms of negative thinking that can cause great business problems and failure: emphasis on limitations instead of strengths, lack of self-confidence, a feeling of unworthiness, a sense of gloom and doom about personal abilities, belief that one can’t do something because it is too difficult, whatever effort is made won’t be enough, everybody else can do it better, belief that a job can’t be done in a better or more efficient way, belief that one deserves only success, belief that anything attempted will probably fail anyway.

Fear of Rejection or Criticism

Holding oneself back from making important decisions because of what others might think will limit the growth and stability of a business. All business people should get a recording of an old Ricky Nelson song “Garden Party” and listen carefully to the chorus. “You can’t please everybody, so you got to please yourself.” Make the following words into a sign to post in key locations at work: “How to avoid criticism: Say nothing. Do nothing. Be nothing.”