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David FullerI had a video meeting last week with woman whom we will call Sally. Sally was meeting to talk about her business, which she had started a couple of years ago.

At one point in the conversation, Sally said she was making $2,000 a month but needed to make $5,000 from the business. Luckily for Sally, her husband was supporting her in her venture from other income and so she wasn’t in dire straits.

The more we talked, the clearer it became that Sally was suffering from one of the five reasons that many organizations fail. These five reasons are:

Lack of planning

It’s amazing to me, after working with hundreds of businesses and their leaders, how many fail to plan. Some businesses are conceived on the back of a napkin over a coffee and that seems to be the extent of planning.

However, successful businesses that outperform their competitors plan on a regular basis. When contractors build a house, they’re continuously looking at the detailed plans to ensure they get it right.

Most entrepreneurs, however, build a business without a clear concept of what they’re building and their employees flounder because they, too, are unsure of the purpose of the business.

Annual planning supplemented with quarterly planning can work wonders for floundering businesses.

Leaders are caught up in busy work

Many leaders are overwhelmed with a flood of interruptions because they don’t schedule their week. As a result, they get caught up in the weeds of the business and are constantly doing work that doesn’t have a high value for the organization.

When we can block time every week for doing highly important work that moves our company forward, we have a much higher chance of being successful.

Lack of profitability

Sally’s business is marginally profitable. She could make more money doing something else. Luckily for Sally, it isn’t just about the money. She loves what she’s doing and is passionate that her income will eventually rise to the necessary level.

However, most businesses don’t have the luxury of not having to be profitable.

Having lost $272,000 in 1999 in the startup of a business, I understand clearly the need to make a profit to ensure the longevity of a business. Without profits, businesses can’t pay their employees, serve their customers or give back to the community. Without profits, business owners have nothing to show for their efforts when they want to retire.

There are seven areas in any business that contribute to profits and profitability and without a clear understanding of these areas, and knowing which part of your business is bringing in the money, business leaders are bound to fail.

Lack of value to customers

When businesses fail to deliver value to their customers, they’re on a slippery slope heading for disaster. We need to constantly ask ourselves and our customers if what we’re doing is important enough to justify our stakeholders’ support.

Unfortunately, we’re so focused on worrying about ourselves that we forget about the most important part of our business: our customers.

Too few systems

When everything in the business revolves around a single person or just a few people, that organization has a shaky future.

When we build systems into the business that ensure things always get done exactly as expected by the leader, the business doesn’t need leadership to approve every decision. Systems ensure accountability to meet objectives, allowing leaders to focus on the big picture and the future success.

In my discussion with Sally, we were able to get some clarity about her challenges. While it may take her some time to adjust her business so she can get a decent income, she understands what she needs to do to achieve her desired outcome.

Dave Fuller, MBA, is an award winning business coach and a partner in the firm Pivotleader Inc. Struggling to succeed? Email [email protected]

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