- [Dan] Why most businesses fail.
(techno music)
So why most businesses fail.
I'll share a story with you.
Many years ago when I first met my mentor
I was telling him
about all of these businesses that I started.
I said, "hey, you know Alan
"I started all of these businesses and somehow
"I don't know man I'm not making that money.
"I'm struggling.
"I don't know why.
"My customers, are they cheap, very difficult to deal with.
"And I don't know man.
"The economy.
"And it kinda sucks and I think I paid too much in taxes."
I was rambling on and complaining
and bitching about all these things.
And he said "stop".
I said "what"?
He said "stop".
I said "what do you mean"?
He said "stop".
He said "it's very simple, Dan."
"Let me teach you something."
He said, "if your business sucks,
"it's because as a business person, you suck."
I said "What, no I work hard."
I was very defensive I was like I learned,
and I tried to do my best,
and try to serve my customers.
He said "no, you suck as a business person.
"If you've got sales problem,
"it means you suck as a salesperson.
"If you've got employee problems,
"it sucks that you are a manager and a business leader.
"It's very, very simple.
"Remember this:
"Your business is always a reflection of you.
"Your business always a reflection of you,
"nothing more."
If you think about it, why most businesses fail.
I think why most business fail is because
the reason, the intent,
most people they start the businesses
for the wrong reason.
They start the business
because they want to get out of a job.
They start a business because they want to make money.
Of course, nothing wrong with that.
They start a business because they think maybe
there's an opportunity.
It sounds like an easy way to make money and it's not.
And they start it for the wrong reason.
Versus they see a need in the marketplace.
There's a skill, there's a expertise,
there's some value they could bring
to that particular industry.
There's something could bring.
So think about it.
Think about starting a business like flying a plane.
And you can't just say, well I'm passionate.
I have a great idea.
Let me fly that plane.
Well have you fly a plane before?
No.
Do you know how to fly a plane?
No.
Do you know where you're going?
No.
But it looks like fun.
Let me get a plane.
What are the chances of you crashing?
Very high.
And that's why statistic shows,
90% of small businesses fail in the first five years.
Even the ones who survive after five years,
most of them don't pass the million dollar mark.
It's just kind of surviving and that's why.
People go into business for the wrong reason.
They go into business without the proper training,
without the skills.
I could tell you when I had all those failures,
when I started all these crazy businesses,
and why they failed it's not because the vehicle.
It's because of me as a business person
that I didn't have the business acumen.
I didn't have the business experience.
I didn't know anything about leadership,
marketing, sales, negotiation, raising capital,
any of these skills I have today.
So everything I did it didn't work
because I was a lousy business person.
I sucked as a business person.
But I learned from my mistakes.
And that's the good thing about business.
You can suck many, many, many years.
When you get better you learn from it.
You suck less.
And when you practice, and you dust yourself off
learn from your mistakes you suck even a little less.
And one day you wake up.
You say "you know what, I don't suck no more".
And one win in business can make up a lot of losses.
One win can make up for all your losses.
You pay off all your debt and you can make a lot of money
with just the right idea, the right time, the right people.
So, that's why.
You have to have business training.
You cannot just say I'm going to fly a plane.
Of course that's dangerous.
Of course the failure rate is high.
Of course you're going to crash.
But if you go in with the proper mindset,
and you get proper training.
If you're going to fly a plane,
well learn how to read the dials.
How to read those financial statements.
How do you work with people.
How do you take off?
How do you land safely?
How do you do all these things?
How do you control?
What kind of, like all these things you learn,
all the business skill that you learned.
Once you develop that,
then what happens is whatever skills that you learn
as a business person,
you would get transfer to another industry.
You would get transfer.
And that's why now I could start one business
in whatever industry I can start in another business
in a totally different sector.
They would be successful not because of just the industry,
because my skill as a businessman.
It gets transferred.
The same skill that can get transfer.
Once I know how to quote unquote like,
fly a plane or drive a car.
Well yeah I can drive a Bentley.
I can drive a SUV.
I can drive a sport car.
Maybe there's some differences.
Maybe it's a little bit different,
the look, the feel of driving.
But pretty much where you turn the engine,
maybe is a little bit different.
But most of those driving skill, it would be applied.
That's the best word of thought I give you.
Once you know how to drive,
once you know how to build a company, it's kind of same.
A little bit difference.
Maybe the chairs are bit different.
Maybe, you know,
little bit different from different things.
But most of time that skill gets transfer.
The last reason why I believe most businesses fail
is the business owner himself or herself.
They don't know how to close.
They don't know how to sell.
They may be very passionate about an idea.
They might be very creative, and they may be an inventor.
Or they maybe they have some relationships
that could start the business.
But they don't have a skill.
They don't have the ability to close,
to persuade and convince.
The ability to close is the number one
skill that you need in business.
And that's what I teach.
The number one skill you need in business,
because everything you want in terms of resources,
capital, employee,
every single day you're closing.
You're talking with a vendor.
You're negotiating, you're closing.
You are motivating employees trying
to sell them your vision, you're closing.
You are talking with customers, you're closing.
You're closing, every single day you're closing.
Without that ability the business won't work.
They don't know how to produce revenue.
When you don't know how to close,
you don't know how to produce revenue.
Remember this, whoever can make it rain controls the game.
Whoever can make it rain controls the game.
So if you don't know how to make it rain,
you don't know how to bring in revenue,
you don't know how to generate sales,
your business will struggle.
I've never seen a company go out of business
because of too much revenue.
I'll say it again.
I've never seen a company that goes out of business
because of too much revenue.
It's always a lack of revenue, that the owners
very good at what they do.
They're very talented.
They're very passionate.
They might even have expertise and experience.
But they can't close worth a shit.
They can't close.
They don't know how to generate revenue.
You know how to generate revenue your business is fine.
Then you can bring on the people.
Then you can bring on talents.
Then you can bring the team.
So the number one thing you've gotta figure out
in your business, the number one key,
is you gotta figure out your optimal selling strategy.
What is optimal selling strategy?
It means, how can you make the first profitable sale?
That's the number one focus you need.
Not how do I make the greatest gadget?
How do I make the greatest thing?
how to deliver the greatest program?
No.
How can you make the first profitable sale?
How can you make that first profitable sale?
When you can do that you can make that first sale profitably
meaning let's say the sale is a $10,000 sale
and you make that sale by spending 1,000 or 2,000 dollars
to and acquire that customer,
you've got a business.
Predictably.
Until you figure out a way to consistently
and predictably make that first profitable sale,
you don't have a fucking business.
You have a hobby.
You have a dream.
Maybe someone will send me a referral.
Maybe someone would hire me.
Maybe when I put my name out there,
someday someone would call me.
That's not a business.
You must have a predictable and consistent way
of making that first profitable sale.
You look at most businesses that fail.
You look at most people out there.
You ask them this question,
do you have a predictable way
of making your first profitable sale?
They'll look at you blank.
Like, what?
What, huh, what?
They cannot even answer that question.
If you can answer the question,
and you can execute it and you can do it,
your success rate just goes through the roof.
Now then the next question is only,
once you can make that first profitable sale,
now is how you scale it.
Where can I advertise more?
Where can I market more?
How can I bring on better people
to help me sell more of this and close more?
That first profitable sale.
But most people don't think about that.
They think about how can I make this better?
Who cares about making this better?
No one's buying your shit.
How can I be better?
Yeah, be better.
But here's the thing.
If you just focus on being better,
you're not working with client,
how are you going to get better?
If you're a coach, if you're not coaching,
how are you going to get better?
You first gotta work with clients.
So get experience, get real world experience.
That's how you get better, right?
So first profitable sale.
The optimal selling strategy is the most important thing.
And that's why most businesses fail.
They have no clarity.
The owner has no skill.
They don't know how to close.
Can't sell worth a shit.
They don't have an optimal selling strategy.
They only focus on the thing, the gadget,
whatever the thing is.
And that's why they fail.
They are lousy business people.
And you have no right.
You can't blame.
You can't say "oh yeah, I tried my best".
That doesn't matter.
You don't know how to drive
and you try to drive a car you're going to crash.
But when you learn that when you know that skill,
when you can master the business skill,
and you have the optimal selling strategy,
when you have clarity, now you can deliver value.
Now you can build something beyond yourself.
You can extend just the value that you deliver
beyond it just one person.
Because now you're a business owner.
You're thinking like a business owner.
A true business owner.
That's how you make a business successful.
So, any other questions about business,
love the question.
Call me below.
If it's a good question,
I'll answer it next time on my way to somewhere.
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Check on my other videos on the right as well.
A lot of videos for you, a lot of business videos.
And I want you to watch those videos,
because chances are they questions that you have,
they're in those videos.
Check on those videos.
It's fucking free, it's free.
I'm doing this to help your business.
I don't make money from this.
Watch those videos, learn something, and help yourself,
and hopefully your success rate is higher.
Until next time, I'll see you in my Bentley.