1. Do not plan
Why bother with a plan? Jump straight in and sort out problems as they occur. Planning is for wimps!
These appear to be the attitudes of a significant number of business leaders in both new companies and well established companies. Planning does take time and energy and often poses questions that are difficult to answer. It is also possible to go to the other extreme and spend so much time on planning that you never implement any of the plans.
A balance needs to be struck between no planning and excessive planning. The amount and detail of planning will vary depending on the stage of development of the company and the degree of volatility of the business environment.
If no planning is carried out, there are two main risks:-
a.) An opportunity occurs but your company does not have sufficient resources to gain from the opportunity.
b.) A threat occurs and again your company does not have sufficient resources to cope with the threat.
2. Choose an activity that interests only you
Some people start a business based on a favourite hobby or pastime. Similarly, leaders of some existing businesses diversify into a business sector they find interesting.
Just because you find something interesting does not mean anyone else agrees with you or is prepared to pay you to do something they enjoy doing themselves.
Some, even very simple, market research may help you identify market niches that no one else is servicing. The reason no one else is servicing this market niche could be there is no demand. For example, as far as I am aware, there are no companies making steam powered televisions. If you diversify into this sector, you will probably have little competition but you may be disappointed about the level of sales.
3. Choose a business with low profit margins
Some businesses operate in sectors that are regulated, have significant competition or have few potential clients. This tends to limit the ability to charge a high price and to increase prices.
Quite often, this type of business also has high costs. The combination of high costs with limited selling prices produces low profit margins.
Having low profit margins means, less can be re-invested in the company to help it grow and develop. Time spent in low margin business sectors reduces the time that could be spent in high margin sectors.
4. Enter a declining market
Some organisations make a lot of money from declining markets but have very specific and ruthless business models that they rigorously pursue.
So forget about that and just go into a declining market because, who knows, the market may reverse. Maybe there will be a demand for mechanical calculators and typewriters again or fashions may change and people will wear powdered wigs again. Perhaps if you spend enough on marketing you will make the market change direction.
5. Combination strategies
Some companies appear to:-
a) Not plan
b) Do not survey a potential market
c) Choose a low profit business
d) Enter a declining market
e) Appear surprised when they fail
Now it is up to you. Follow these simple five steps to ensure you fail in business – it is not as difficult as it looks.
