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Pinellas Park, Florida, United States
I founded Core Business Solutions with the goal of helping business owners improve operating results, add value, and recapture the energy and passion that was present when the business was new. We also have the expertise to assist start-up companies create the foundational structure needed to provide the best opportunity for the business to grow and prosper in uncertain economic times. Our goal is to help the business entrepreneur/owner, through mentoring and coaching, develop or enhance managerial skills while providing that independent and objective advice and expertise usually provided by a board of directors.
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Friday, August 28, 2009

Top 7 Reasons Businesses Fail...Part Seven

Finally we've reached the last of the 'Top 7 Reasons Businesses Fail'.

So far I've touched on:
1-A Lack of Planning(No business plan), 2- Starting a Business for the Wrong Reasons, 3- Insufficient Capital, #4-"No Website" , # 5 Poor Management and #6 Location. So here we go- the last of the top seven reasons businesses fail is: Overexpansion


A leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies.

If a company expands too fast:
  1. Cash flow can be severely limited which can hinder daily operations
  2. Additional debt and the accompanying debt service can severely reduce daily financial needs
  3. The new focus on growth(new products, increased production) can negatively impact the culture of the company
  4. Employees feel the pressure of change and morale can suffer and then quality and customer service begins to drop
  5. In the rush to expand, overall profit margins become secondary, or worse, ignored and the money disappears to handle the required growth in payroll, equipment and the other expenses
  6. Taking on a new product line or new business and focus could be lost on the core business that brought you to success in the first place
However, I'm not talking about wanting to repress growth. Once a business has an established and solid customer base and a reliable cash flow, one can then allow the success to help you set a measured pace for your growth.

Some indications that an expansion may be warranted may include:
  • the inability to fill customer needs in a timely basis
  • the employees are having difficulty keeping up with production demands
  • the demand in new markets is obvious
  • a real synergistic companion business is possible without a large capital outlay for equipment or manpower

If Expansion Is Warranted, how should you proceed? It's all about due diligence!

Here are the steps:

  1. Review your current business plan with a trusted objective business advisor to see exactly where you are with your current business financial objectives
  2. Bring in your CPA, your banker and other objective trusted business advisors to review your growth plans (Get a second opinion!)
  3. Create a business plan for your business growth especially if it is a new product line or new service you are adding to your current ones
  4. Carefully research, analyze and review what equipment you will need to grow the business
  5. Completely understand what the financial risks are in terms of upside and downside(be brutally honest with yourself)
  6. Carefully review and identify exactly who you will need (managers, line employees, etc.) in place to grow the business
  7. Write down each step and proceed forward steadily step by step

With the correct systems and the correct people in place you can focus on the growth of your business.

Remember- Focus on growing your business, not on doing everything in it yourself.

So, there you have it! The Top 7 Reasons Businesses Fail:

1-A Lack of Planning(No business plan)

2- Starting a Business for the Wrong Reasons

3- Insufficient Capital

4-"No Website"

5- Poor Management

6- Location

7- Overexpansion

As I mentioned at the beginning of this series a significant percentage of new businesses do fail. Expert opinions abound about what a business owner should and shouldn't do to keep a new business afloat in the perilous waters of the entrepreneurial sea, especially in the economic uncertainties that surround us all.

However, if the seven key factors listed above and discussed in this Core Business Solutions blog series are considered, reviewed and properly positioned, a new business or even an expanding business has a much better chance at success.

Remember- "Well done is better than well said" ~Ben Franklin~

"To get your business to the top, you have to get off your bottom" ~Walt Morey~

Get out there and make things happen!


In 2 weeks or so I'll cover another subject designed to provide business owners with information they can use to help them work "on" their business.

Until Then Please:

Live Simply.

Speak Kindly.

Care Deeply.

Love Generously.

All The Very Best...Always,

Walt Morey - Executive Business Advisor- Accredited by the Institute for Independent Business


Terry Sanchez said...

Great Information Walt! Thanks for your knowledge and keeping us all on track with the basics of business!

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