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Показаны сообщения с ярлыком failure factors. Показать все сообщения

суббота, 2 ноября 2024 г.

Why Do Companies Really Fail?

 


It’s not what you think.

Most people believe businesses fail because of things like:

↳ Lack of funds
↳ Poor marketing
↳ Economic downturns
↳ Competition

But here’s the truth:

These aren’t the real reasons.
The actual causes are far more internal and, most importantly, controllable.

Here’s what’s really going on:

1️⃣ Mismanagement of Cash Flow

Even profitable businesses will fail if they can’t manage cash flow.

Without forecasting, you will run out of cash when you need it most.

2️⃣ Lack of a Clear Value Proposition

If you can’t explain why your product or service matters, your customers won’t care.

Many companies lose out simply because their message is unclear.

3️⃣ Inadequate Business Planning

A strategic financial plan ties your business strategy with your business finances.

If you don't use one you're missing opportunities and gambling away your business valuation and its future.

4️⃣ Poor Leadership and Management

Strong leadership isn’t just about making decisions — it’s about execution and adaptability.

Businesses fail when leaders can’t or won’t pivot when needed.

5️⃣ Ignoring Customer Feedback

Customers are your best source of feedback.

Ignore them at your own risk.

6️⃣ Scaling Prematurely

Growth is exciting, but growing too fast without the infrastructure to support it is a silent killer.

Without solid operations, you’ll spend faster than you earn, create bottlenecks, and miss out on opportunities.

Here’s the takeaway:

↳ Cash flow is the foundation.
↳ Leadership sets the direction.
↳ Customer feedback drives improvement.
↳ Strategic business planning ensures sustainability.

It’s easy to blame external factors like competition or the economy.

But the real reasons businesses fail are within your control — and they start with your management decisions.

https://tinyurl.com/2fjau7jf

четверг, 28 марта 2024 г.

John Mullins and Randy Komisar. Getting to Plan B

 


The book Getting to Plan B: Breaking through to a better business model, written by John Mullins and Randy Komisar, contains several important lessons, primarily for start-up entrepreneurs, on developing successful business models. Though very repetitive around a few key ideas, the book is well worth reading especially for those who want to better understand how the business model is reflected in the different financial statements. with interesting examples from: Amazon, Apple, Celtel, Costco, Dow Jones & Company, eBay, GlobalGiving, GO airlines, Google, Oberoi Hotels, Pantaloon, Patagonia, Ryanair, Shanda, Silverglide, Skype, Southwest Airlines, Toyota, Walmart, Zara and ZoomSystems.

The book in three bullet points:

The business model concept is in the book defined as the pattern of economic activity comprising of five key elements that together determines the viability of any business. The five key elements being the revenue model, the gross margin model, the operating model, the working capital model and the investment model. Companies are successful when the five elements work together.

Getting to Plan B is about the process of discovering a business model that works, with the assumption that the initial plan is most often wrong. The discovering process can be made systematic by constantly formulating different hypothesis and measurements and continuously follow up and iterate the business model into a new Plan B.

The starting point for a new business model is to learn from successful examples worth mimicking in some way and examples to which you explicitly choose to do things differently, where the ultimate judge is the customers and the cash flow generated from your business model.

A brief summary of the different chapters:

1. Don't reinvent the wheel, make it better - the concepts of analogs (successful predecessors), antilogs (predecessors that you want to differ from), and Leaps of Faith (beliefs about answers with no evidence) is covered with the key take out to learn, mix and match to create your own business model, to experiment to test different hypothesis to prove or refute them.

2. Guiding your flight progress - the concept of dashboarding (a systematic way to guide experiments and track results) is presented with examples showing that measuring of specific parameters or results increases the focus of the company's activities, and that the dashboards, including parameters and goals, need to evolve over time based on the learnings they uncover.

3. Air, food and water - the chapter, focusing on revenue models, hits home two important points: the importance of resolving customer pain or providing customer delight, and the need for actual evidence of how customers are likely to respond. To develop a revenue model questions that need to be asked are: Who will buy? What will they buy? Why will they buy? How soon, how often, and how many will they buy? With what effort and cost on your part? At what price will they buy, and on what basis will they pay?

4. Avoiding rocks and hard places - the topic for the chapter is gross margin models; the spread between the price at which products and services are sold and the cost of selling those (COGS). The key messages with the chapter are that digital technology enables gross margin models in which COGS approaches zero, that a superior gross margin model creates leverage that can be applied differently depending on strategy, and finally the fact that pricing decisions should be value-based and not cost-based.

5. Trimming the fat - is a short chapter on operating costs; all the day-to-day costs that must be incurred in addition to COGS. Key ideas are that by doing things differently in relation to other actors in the industry, operating cost can be lowered or eliminated, and by starting the analysis at the most costly or scarcest resources in the industry areas for business model innovation might occur. Another key point is that adding costs might also enhance the customers' experiences and willingness to pay premium prices, so cost cutting is not always the answer to profitability.

6. Cash is king - is according to me one of the more important chapters in the book as the balance sheet, working capital and cash management is often forgotten in business model discussions. Different industries and business models requires different amount of working capital (the cash a company needs to keep the business running) and all elements in the business model have implications for the cash generated and the cash consumed. From page 139: "Failure to earn a profit won't put you out of business, as long as you still have cash. But if you run out of cash, even if you are profitable, you'll be gone in a heartbeat"

7. It takes money to make money - focus on the investment needed to get the business started and through the period until it can generate enough cash itself, and the general goal (there are exceptions) is to find a way to get to breakeven with as little investment as possible. The authors mention some of the many trade-offs involved with external funding from different sources, but primarily focus on venture capital. The conclusions are: Less investment means giving away less of the business, less credibility lost when leaving a business model for another, and fewer sleepless nights if you've mortgaged your house.

8. Can you balance a one-legged stool? - tries to summarize, at least on a conceptual level, the different elements of the authors' definition of a business model, and their implications on one another. The conclusion is that the revenue model, gross margin model and operating model directly affect the working capital model, and these four models directly affect the investment model.

9. Getting started on discovering your Plan B - ends the book where it started with a focus on the talented and visionary entrepreneur. In the beginning of the book there were statements such as "Intuitively, as is almost always the case for committed, passionate, entrepreneurs, they felt that the answers to all five questions were yes" (p29) and in the end "dreaming your entrepreneurial dream" (p214)...

A quick comparison with some other popular books on business models:

Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengersby Osterwalder and Pigneur, atempts to introduce a standard language and format for analyzing and innovating business models based on the business model canvas. Getting to Plan B define the business model concept in financial terms and is not overlapping with this book. See my review here

Seizing the White Space: Business Model Innovation for Growth and Renewalby Mark W. Johnson, explores the circumstances when a new business model might be needed from an incumbent perspective, with several classic examples. See my review here

Open Business Models: How to Thrive in the New Innovation Landscape by Henry Chesbrough has a heavier focus on technological innovation in the context of business models and also covers the important area of Intellectual Property in relation to open business models.

The Ultimate Competitive Advantage: Secrets of Continually Developing a More Profitable Business Model by Mitchel, Coles, Golisano and Knutson, has a heavier focus on marketing with some ideas and questions relating to one-sided business models, so if you are looking to "sell more" perhaps you like this book. See my review here

The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow's Profits by Slywotzky, Morrison and Andelman, has a heavier focus on profitability and the changing areas in which high profit is possible to keep, it is a quick read. See my review here

All in all, the book is somewhat repetitive and rather long for the ideas it delivers, but with many interesting examples and important chapters on gross margins, operating costs and cash flow, it is well worth reading and a good complement to other books on business models not going into the financial details.

https://bitly.ws/3gXYg

четверг, 19 октября 2023 г.

6 Reasons Why Teams Fail

 


Written By The EBW Global Team

Over the past couple of decades, a cult has grown up around teams.

There is a strong belief that working in teams makes us more creative and productive and it is so widespread that when faced with a challenging new task, leaders are quick to assume that teams are the best way to get the job done.

I bet as you are reading this you are thinking the same…

Yet research (Hackman et al etc.) has consistently shows that teams, especially disruptive teams (teams that are made up of strong personalities, expertise and experience) often fail to deliver on their potential.

Here are the 6 common failure points that stop teams reaching their potential:

No compelling vision (or goals)

It is not that teams don't start with a vision or even objectives, it is just that organisations change and teams often don't. The vision is often no longer compelling enough to focus and drive the behaviour of the team to meet its goals.

Absence of Identity

For many being part of a team is seen as an addition to their day job or their work passion. They don't feel the level of attachment or accountability to their team or its objectives to truly make it successful. Or they are part of multiple teams, so their loyality and resources are stretched. leaving them confused about which which team goals do they prioritise...

Lack of Commitment

Whilst team members often have a strong belief in their own abilities to succeed this does not necessarily translate into the conviction (and the extra discretionary effort) that everybody on the team has the right skills and commitment to help the team achieve its goals.

Levels of Distrust

When you ask team members if they trust their colleagues, they will often say “of course” but ask them if they think team members look out for their best interests or the teams or their own, then you get a true indication of the level of trust within the team. Teams can fail to reach their potential because of the uncertainty that people feel about their team members, especially their ability to focus on the team goals.

Inadequate Communication

It may seem obvious that if you are in a team you need to communicate and collaborate, but many teams do not deliver on their potential because the team focuses on priorities that close down discussion, which results in people not speaking out, listening and sharing their ideas.

A failure to work together (Working in silos)

Teams on paper that should produce outstanding results (they have successful people in them, with great experience and expertise) fail because when things are difficult they don’t pull together as a team.

So here the thing, do you recognise some or all of these failure points?

Are you interested in knowing how to build Emotional Intelligent teams that will not succumb to these issues?


https://www.ebwglobal.com/