Why 95% of Business Fail within 10 Years

Summary

In this video, the presenter explores the reasons why 95% of businesses fail to reach their 10-year mark and offers insights on how to join the successful 5%. They emphasize the importance of self-improvement, choosing the right business model, managing customer concentration, ensuring steady cash flow, understanding funding options, constant innovation, mastering direct response marketing, focusing on growth over operations, leveraging personal branding to attract opportunities, maintaining frugality in costs, and investing in growth. The speaker also humorously encourages subscribing to their channel as part of continuous learning.

Takeaways

• 💼 Most businesses don't survive past their 10-year anniversary, with only 5% making it, so improving entrepreneurial skills is crucial.
• 📊 Many business models are inherently more profitable; choosing the right model and constantly tweaking it can significantly increase success.
• 🔍 Avoid customer concentration by ensuring no single customer accounts for more than 10% of your revenue to reduce risk.
• 💰 Managing cash flow is critical; businesses should create ecosystems with regular cash flow and avoid relying solely on large contracts.
• 📚 Knowledge of funding sources, like private equity, venture capital, and alternative lending, is essential for overcoming financial challenges.
• 🚀 Continuous innovation is key to staying competitive; resting on past successes can lead to being overtaken by competitors.
• 🎯 Direct response marketing, focusing on generating immediate action from customers, is vital for driving business growth.
• 🛠 Entrepreneurs should focus on growing their business rather than getting bogged down in day-to-day operations.
• 🌟 Creating an environment where opportunities are pulled towards the business through strong branding and networking is more effective than constantly pushing for them.
• 💸 Being frugal with day-to-day costs allows for generous investment in growth opportunities, contributing to long-term success.

Q & A

What is the harsh reality that the speaker mentions about the survival of businesses?

The harsh reality mentioned is that most businesses do not survive past their 10-year anniversary, with only 5% making it, indicating that 95% of businesses fail within this timeframe.

According to the speaker, what is the first step towards becoming part of the successful 5% of businesses?

The first step is to become the best version of yourself, as the better you are, the better your business can be.

Why is it important to revel in difficulties according to the speaker?

Reveling in difficulties is important because it is through overcoming challenges and learning from failures that one can grow and improve, which is essential for business success.

What is the issue with holding on to a business model that is not performing well?

Holding on to a poor-performing business model can be detrimental because it may not be set up for profitability, and continuing with it could lead to business failure.

What is the speaker's advice on dealing with a business model that is not generating serious profits?

The speaker suggests tweaking the business model to improve profitability, such as finding multiple revenue streams and sweating the asset.

What does the speaker mean by 'customer concentration' and why is it a problem?

Customer concentration refers to having a significant portion of a business's revenue coming from a single customer. It's a problem because it creates a dependency that can lead to business failure if that customer stops doing business with the company.

What is the speaker's rule regarding the percentage of revenue that should come from any one customer?

The speaker's rule is that no more than 10% of a business's revenue should come from any one customer to mitigate the risk of customer concentration.

Why is cash flow considered the biggest killer of businesses according to the speaker?

Cash flow is considered the biggest killer of businesses because even profitable companies can fail if they do not have enough cash on hand to meet their immediate financial obligations.

What is the importance of having regular cash flow in a business as mentioned by the speaker?

Regular cash flow is important because it provides financial stability and allows the business to operate smoothly without relying on large, infrequent payments.

What does the speaker suggest as a solution to improve cash flow in a business?

The speaker suggests employing an accountant to manage the numbers, which can also make the business more attractive to lenders, thus helping to improve cash flow.

Why is having knowledge of funding important for business owners according to the speaker?

Having knowledge of funding is important because it allows business owners to access the necessary capital to weather financial storms, seize opportunities, and grow their businesses.

What is the speaker's view on innovation in business?

The speaker believes that innovation is crucial in business and should not be neglected, even when the business is doing well. Constant innovation helps to stay ahead of the competition and prevent stagnation.

What is the significance of direct response marketing in business success as per the speaker?

Direct response marketing is significant for business success because it focuses on getting immediate responses from potential customers, which can effectively generate leads, sales, and revenue.

Why should business owners focus on marketing rather than just operating their business?

Business owners should focus on marketing to bring in customers and create cash flow, which is essential for business growth. Spending too much time on operations can distract from the critical task of revenue generation.

What does the speaker mean by 'pulling for opportunities' instead of 'pushing for opportunities'?

Pulling for opportunities refers to creating a personal brand and reputation that attracts opportunities naturally, rather than actively seeking them out. This approach is more effective and efficient in the long run.

What is the importance of frugality in business costs and generosity in investments according to the speaker?

Frugality in business costs helps to maintain a lean operation and generate savings, which can then be invested generously in areas that will grow the business, such as infrastructure, acquisitions, or other investments.

Why does the speaker emphasize the importance of self-improvement for business success?

The speaker emphasizes self-improvement because successful people are constantly learning and growing. Reading, attending seminars, and seeking knowledge are ways to sharpen one's skills and mindset, which are crucial for business success.