Larry on Business: Business Failure 13: The Familiar Stuff of Human Folly

Tuesday, December 11, 2012

Business Failure 13: The Familiar Stuff of Human Folly

This continues our series outlining reasons businesses fail so that you can avoid failure

Business owners are human. They are not perfect. They don’t possess super hero powers. Sometimes they make mistakes or suffer from common human frailties and follies. Frequently, these human errors can result in problems with the business. These errors can result in business failure. They may lead you to invest in product lines that will not give a good return on investment. They may cause you to ignore good advice from others. You may chase a dream that cannot deliver results.

Familiar Stuff of Human Folly

First, let’s examine what might be considered the familiar stuff o human folly:

Denial: I coached business owners who denied all the good advice they received. They denied clear evidence that their business idea lacked sufficient earning power. Others denied poor sales figures and lack of client response and continued pouring money into poor quality products.
Hubris: The dictionary defines hubris as “excessive pride or self-confidence; arrogance” It can lead you to proceed on the assumption you can do no wrong.
Ego: Your ego may prevent you from seeing mistakes or challenges arising in your business. Conceit can taint your perception of things.
Wishful thinking: I’ve seen businesses fail because the owner’s wishful thinking caused him or her to chase fanciful or ill-conceived products, advertising, or plans.
Poor communication: Owners may miscommunicate product guarantees or miscommunicate instructions to employees that result in costly errors or lawsuits.
Lax oversight: Running your business may dull you to employee theft, overcharging from vendors, and corporate information hacking.
Greed: Taking money out of the business that you should reinvest can ruin your business. Raising prices to satisfy your greed can lose your clients. So can paying wages so low that you can’t keep good employees.
Deceit: You lose trust with your employees, clients, or suppliers when you cheat or lie to them. I mentioned earlier a dishonest boss who lost his business because of his deceit.