The statistics for Black entrepreneurs starting a new venture are not good. Now don’t get me wrong, I’m not trying to put a damper on your dreams; I just want you to understand what you are up against. I am one of the strongest proponents for Black entrepreneurship and this article is written to give you important information that can help you become successful. Statistics show that over 80% of all new businesses fail within the first five years and the number for Black owned businesses is about 88% according to recent statistics.
What does that mean to you? It means that now more than ever, we need to be more prepared if our business is going to succeed. It means that we are going to have to do more planning and strategizing to become one of the 12% that do succeed. Based on my experience as a serial entrepreneur and business coach; here are the 8 top reasons Black businesses fail:
1. The inability to develop a profitable business model with a proven revenue stream
You must have the correct product/market fit. Your product/service must fit into the market and you must have these components in your business model:
• Revenue Model
• Gross Margin Model
• Operating Model
• Working Capital Model
• Financing Model
2. Failure to adapt and pivot if necessary
You must be flexible and be able to make the necessary changes in your business to stay profitable. These changes may include enhancing your product or service, changing your product or service, or reinventing your entire company just to name a few.
3. Failure to track and measure your marketing efforts
You must learn the “5 M’s of Marketing”.
• Right MESSAGE
• To the right MARKET
• Via the right MEDIUM
• With the right MOTIVATION
• That must be MEASURED
4. Failure to Market online
You must have a presence online in today’s world. There is no excuse not to have at least an informational website. If you are smart, your website will do more than provide information. A good website will gather names of visitors that are interested in your product or service; you are building your database.
5. Lack of Leadership
You must be the right person to steer your business and provide the vision and execution necessary to be successful; or you must hire the right people who can.
6. Failure to convey your value proposition
• Be clear about who you are and what value you bring
• Be concise and keep it to the point
• Be compelling, do your words and actions persuade customers to do what you want to do
7. Not being in touch with your customers
You must know what your customers actually want. The best way to do this is by communicating and surveying your customers and prospective customers.
8. Insufficient capital
You need to have money to not just start your business, but to stay in business.
Based on my entrepreneurial experience and business consulting firm, these are the top eight reasons why our Black businesses fail. For more information listen to podcast # 32 The Top 8 Reasons Black Businesses Fail. Leave a comment and let me know what you think.