Business Failure 6: Prolonged Successes Can Dull Decisions

This continues our series on factors that can cause your business to fail

You may consider that too much success can lead to business failure paradoxical. However, many businesses fail because of prolonged success. I consult with a lot of businesses each month. Many existed for 14 years or longer. They did well during the great economies during those same years. However, most had not developed a business or marketing plan. Their success had lulled them into a sense of security, which proved unsustainable when tough times came.

Reasons Too Much Success Dulls Decisions

Business owners crave success. They do everything they can to increase profits, revenues, and sales. They do not realize that too much success may lead to poor decisions. The success affects decision making for different reasons. Too much success may:

• Increase your confidence so that you assume you will always be right and do not analyze as deeply as you should
• Overwhelm your time management so that you do not have time to do sufficient research or study for decision making
• Create new product or seasonal cycles that make previous decisions inaccurate
• Move you into a market position that makes you the target for competitors that previously ignored your business
• Mistakes and small failures teach you new skills and problem-solving that you don’t learn with too much success
• Lock you into a strategy that does not adapt to changing markets (the success of Kodak film prevented them from foreseeing digital photography and inkjet printers)
• Prevent you from looking deeper into the unseen or hidden reasons for the success

How to Avoid Losing Perspective

You can avoid losing perspective or dulling your decision-making process by several methods:

• Analyze your processes and results for success as well as problems and failures
• Conduct an annual SWOT analysis using outside sources as well as inside sources
• Regularly read articles about new trends, inventions, and products in your industry
• Listen to your clients, your employees, and your competitors wisely
• Get outside advice during good and bad times

Tuesday we discuss what happens when your company adapts to change too slowly