Five Top Reasons for Business Failure

So I asked ChatGPT today, "What are the five most common reasons for the failure of small businesses?"

Here they are.

The AI platform strikes me as being much like a lot of consulting firms I know: It knows what all the problems are, but has no idea how to fix them.

Also, it spelled "differentiation" wrong.

Five Top Reasons for Business Failure

1. Lack of capital: Many small businesses fail because they do not have enough money to cover their expenses, especially during the early stages of the business. This can be due to a lack of investors, loans, or savings.

2. Poor management: Small business owners often lack the experience or knowledge needed to effectively manage their operations, which can lead to poor decision-making, lack of organization, and financial mismanagement.

3. Insufficient market research: Starting a business without conducting proper market research can lead to a lack of understanding of the target audience and competition, resulting in poor sales and ultimately, failure.

4. Poor cash flow management: Small businesses often struggle to keep track of their cash flow, resulting in unexpected expenses, such as unpaid bills, that can lead to financial collapse.

5. Lack of differentiation: Many small businesses fail because they are not able to differentiate themselves from their competitors, resulting in a lack of customers and revenue. This could be due to a lack of unique products or services, or poor branding and marketing.

7 communication habits every business leader should be working on

1.    Active listening: This means giving your full attention to the person speaking, asking clarifying questions, and providing feedback to ensure that you fully understand their message. Active listening helps to build trust and respect, as it shows that you value the other person's perspective.

2. Clarity and conciseness: Being able to articulate your ideas and thoughts clearly and concisely. This means being able to express yourself in a way that is easy for others to understand, and being able to convey your message in a way that is appropriate for the audience.

3. Adaptability: Being able to adapt your communication style to different situations and audiences. This is important as it ensures that your message is received effectively.

4. Nonverbal communication: Being aware of the nonverbal cues that you are sending, including body language, tone of voice, and facial expressions. Nonverbal cues can have a significant impact on how your message is received, so it is important to be aware of them and to use them effectively.

5. Conflict management: Being able to manage conflicts and disagreements in a constructive way. This means being able to identify and understand the underlying issues, and to find a solution that is acceptable to all parties involved.

6. Empathy: Being able to put yourself in the shoes of the person you are communicating with. This helps you to understand their perspective and to tailor your message accordingly.

7. Leadership: Being able to lead a team effectively. This requires the ability to clearly communicate goals and expectations, and to provide feedback and support to team members. Good leaders also need to be able to create a positive work environment, where team members feel valued and respected.

(Note: I did not write this blogpost. I asked ChatGPT the question, "What 7 habits should business leaders develop in order to communicate more effectively?" The AI algorithm did the rest.)

(I find this article written, in a dull, simplistic Grade 4 style. Some people will tell you that's the best way to communicate. but I disagree. Yes, clarity is important, but sharing information effectively and memorably requires more than simple declarative sentences: e.g., vary your sentence structure and rhythm; use more vivid, direct language; and share examples of the issues you are talking about.)

The AI platform fails my first rule of communication: "Never Write a Dull Sentence." 

Still, I'd give the program a grade of B- for this article. What would you give it?

Entrepreneurship is not a job or a business, but a way of seeing...

Quora.com, the crowdsourced question-and-answer website, asked me to take a crack at answering their question, "What are the signs that indicate that entrepreneurship is the best way of living for us?"

I don't know where that question came from, but I took a crack at it. 

What do you think? What would you add? 

Rick Spence

Former Editor and Publisher at PROFIT Magazine (1990–2002)Just now

Entrepreneurship is about living life in service to others, using tools such as hard work, innovation and personal expression. It takes passion to be an entrepreneur - there is no 37-hour workweek, no consistent quitting time. But you get to solve the problems you want - for the people (market) you serve - in whatever way best fits your education, skills and values. In other words, when you do what you love to do, it rarely feels like work!

Not every day will be perfect. You’ll face problems, setbacks and heartaches. People will let you down. But this can happen to anyone, especially those who work for other people or big corporations. Of all the ways there are of making a living, entrepreneurship is the one that most insulates you from having to work with people you don’t like or in conditions you abhor.

As you become successful in one area, you will see other problems to solve and spot new business opportunities. Entrepreneurship is not a job or a business, but a way of seeing… a way of life. Your challenge will be to manage all of your ideas. But when you put your heart into our work, you attract like-minded people, with similar values. And they will help you meet the challenges you have set for yourself - and give you the strength and resources to tackle new ones.

Entrepreneurship is hard work. But it offers choices, rewards creativity, and will take you places you can’t imagine yet.

If you enjoy dreaming up new ideas, finding new solutions, helping other people, working very hard, and being your own boss, you’ll find entrepreneurship provides everything you need for a creative, prosperous and rewarding life. 

New Year, New Words

Happy New Year 2023!

To ensure this year doesn't ski into the mediocrity of the past few years, I have adopted three words to guide my priorities in 2023:

Care.

Dare.

Share. 

In longer words: 

* Work with passion. Do what matters to you. Change something for the better.

* Think bigger. Take more (smarter) risks.

* Invite more people into your sphere, and ensure that all share the resulting benefits and impact. 

Former Toronto-based entrepreneur Kunal Gupta (Polar Mobile, etc., now living and working in Portugal) has gone me one better. He chooses just one word a year to serve as his North Star and guide the ways he approaches life. Last year, his word was "Open." (You can read here how that worked out for him.) For Kunal, this year's word is "Build."

Kunal has also asked cavassed other entrepreneurs and leaders to identify the words most meaningful to them. If you're looking for a Word of the Year, (or maybe even three), you're bound to find your North Star on this list. 

Acceptance
Action

Authentic

Awareness

Balance

Bold

Breathe

Care

Change

Commitment

Communication

Compassion

Confidence

Connection

Control

Courage

Create

Discipline

Equilibrium

Explore

Faith

Fearless

Fit

Focus

Form

Fortitude

Freedom

Fun

Generosity

Giving

Grace

Gratitude

Grounded

Growth

Harmony

Heart

Humility

Integrity

Joy

Learn

Lightness

Love

Mastery

Open

Ownership

Partnership

Play

Positive

Presence

Relationships

Relax

Respect

Responsibility

Self Love

Serve

Sincerity

Simplify

Surrender

Thoughtful

Truth

Trust

Understanding

Union

Which word is your favourite?