5 BIG Reasons Why Entrepreneurs Fail And How To Avoid Them
Companies fail when their leaders fail to execute. But why do entrepreneurs fail to execute in the first place? What are the habits of high-performing CEOs that anyone running a business should incorporate into their own routines and growth strategies?
From my 20-plus years of asking businesses these provocative questions, and using the answers to guide top firms to exponential growth, I’ve identified the top five reasons why entrepreneurs fail, and some exercises that will keep you from making the same mistakes.
- No vision.
Where do you want your company to go? If the CEO can’t answer that question, no one working for you will be able to either.
Try this: imagine you’re looking into a crystal ball. You can see three years into the future. You’re at a huge beach party with your whole company and all your friends and family celebrating … what? What’s that one thing your company achieved that has the champagne (or Bordeaux wine) flowing? It should be something specific, measurable, and BIG, like, “We hit $100 million in revenue!” Vague ideas like, “My business grew a lot,” can’t be measured, can’t be tracked, and can’t be hit. If your vision is foggy, you’re setting yourself up to fail.
- No plan.
So how are you going to hit that $100 million in revenue? What’s the plan? What are the specific, measurable steps you are going to put into place that will move your company closer to that target every single day? Even CEOs who nail the Crystal Ball Exercise™ usually fail at this step. They come up with themes, or generic ideas that aren’t specific, and aren’t measurable.
One of CEO Coaching’s biggest success stories, Rich Balot, set a goal for his Verizon Wireless business to hit a billion dollars in revenue in ten years. That might have sounded crazy … until he broke it down: to hit that goal, Rich had to achieve a growth rate around 23% per year. So he put the steps in place to hit that smaller annual number, all the while building up to his bigger goal – which he hit five years ahead of schedule.
- No top talent.
The single biggest difference between top-performing companies and the ones that fail is that the best companies hire the best talent. They don’t accept on-going excuses from under-performers, they don’t cut longtime workplace favorites any slack, and they don’t stick with employees who aren’t capable of bringing the company to the next level.
Look at Bryce Maddock and Jaspar Weir at TaskUs. Continuous upgrades of their organizational talent have resulted in a world-class team that’s led the business from $5 million in annual revenue a few years ago to a projected $120 million in the very near future. Don’t ask yourself if you can afford to hire the best – ask yourself if you can afford NOT to hire the best and miss out on the kind of exponential growth top talent can help your business achieve.
- No accountability.
Firms that operate with strong accountability systems in place far surpass firms that do not. Does your office have a big scoreboard posted where everyone can see it? Or computer screens? Or a spreadsheet system where every employee can track their activities and the outcomes day by day, month by month, quarter by quarter?
Having these systems in place creates a culture of accountability that keeps every employee focused on the big picture. Sheldon Wolitski at the Select Group has done such an outstanding job of determining and measuring lead activities in a way that’s visible to all employees that over the last six years they’ve gone from $18 million in revenue to $140 million.
But what about you? Who holds you accountable for the top tasks that only the CEO can execute? Do you have a trusted partner, mentor, or coach keeping you focused on your big goals, and making sure you’re not getting bogged down in every minor detail?
If you’re not tracking and measuring your activities, you’re going to fail to hit your goals. Period.
- No focus or discipline.
Making a plan is one thing. Following through is another.
Lots of struggling companies get distracted from their big goals chasing shiny new trends or ideas. Others panic when the going gets tough and try throwing a whole bunch of stuff at the wall to see what sticks.
If you feel like your company’s focus has gone scattershot, try holding an annual planning session.
Grasshopper used these sessions to drill down on what it was that they wanted, and what were the specific and measurable activities that would get them there. They asked, “What do we need to do? Who on our team is going to do it? When are they going to do it?” Then, most importantly, Grasshopper stuck to their plan, and followed through. As a result of their discipline, the company sold big to Citrix in 2015.
Get your management team together offsite for a couple of days and really drill down on what the company needs to achieve each quarter that’s aligned with the big goal in the annual plan. Follow up with regular communications to your direct reports, and leadership team meetings focused on the goals and activities laid out at the planning session.
Steer clear of these pitfalls, put the right people and processes in place, and you’ll be well on your way to making BIG happen.