Many entrepreneurs, people who were very successful in their field prior to starting their own business can't help but wonder why their business didn't succeed and why it's happening to them.
"I did months and months of market research" said the owner of a can't-miss café/coffee shop in northern New Jersey, "Everyone I spoke with in town said it was a great idea, something that we really needed." The venture lasted approximately seven months before the doors were closed and the equipment, fixtures and everything else was liquidated at auction. "I don't know what happened, this was a sure thing," he continued.
There are some statistics that say 50% of businesses fail in the first year of operation and that 95% of new businesses fail within the first five years. According to the Small Business Administration, a more reliable number is that approximately two thirds of new businesses will fail within the first four years.
There are a number of theories out there as to why this occurs including lack of available capital, slow growth, rapid growth, not keeping up with current trends, etc.
Business Success Can Hinge on Asking The Right Questions in a Business Plan
What people don't consider is the following paradox created by asking two similar but different questions: Entrepreneurs need to ask themselves what it is that they are selling before starting their business. Yes, this does seem like a silly question that perhaps borders on being a stupid question. Of course every entrepreneur knows what it is that they are selling.
Or do they?
- "I went into the bridal business to sell wedding dresses"
- "I went into the insurance business to sell insurance."
- "I went into the restaurant business to sell food."
- "I went into the café/coffee shop business to sell coffee, pastries, candy and ice cream."
The list of people who went into business apparently knowing what they were selling goes on and on seemingly forever. If they knew what they were selling, why then did their businesses fall apart?
This leads to the second question, the question that most entrepreneurs (and sales people) don't ask and this is the question that creates the paradox and the disconnect: Entrepreneurs need to ask themselves what it is that their customers are buying before starting their business.
Many would-be entrepreneurs would answer this question the same way they answered the first question.
- "Brides are buying a wedding dress."
- "Customers are buying insurance"
- "Restaurant patrons are buying food."
- "Coffee shop patrons are buying coffee, pastries, candy and ice cream."
Does a bride want a wedding dress or do they really want to be waited on? What they really might want is to feel special or they might be buying expert advice. Does someone buying a life insurance policy really just want insurance? They really want to buy piece of mind and financial protection for their family. Does a restaurant patron really just want to buy food? Most likely they are buying convenience, quality, comfort or perhaps prestige and ambience.
Entrepreneurs Increase Sales By Planning & Delivering what Customers Really Want
Did the people who claimed that their town needed a café/coffee shop really want a place to buy coffee, pastries, candy and ice cream? It sounds as if they wanted a place to meet friends and socialize. The young moms were looking for a comfortable place to talk with other moms over a cup of coffee while their toddlers listened to a story or played with some toys.
The telecommuters really just wanted a place with Wi-Fi to meet with clients and business associates over a latte. How about the weekend patrons; these folks may have really just wanted to enjoy their coffee while reading the paper or a good book in a comfortable setting.
The café/coffee shop owner was not misled by the townspeople; he was stuck with the incorrect notion that he was offering what people said they wanted. In reality, he devoted far too much space to the backend of his operation-food preparation, ice cream, pick-your-own candy displays etc. and didn't have nearly enough space to offer his customers what they really wanted which was a comfortable place to hang out, enjoy his offerings and socialize.
What are entrepreneurs selling? What are their customers buying? If the answers to these two questions differ in anyway, entrepreneurs might want to consider re-thinking theirr strategy until the two are in complete alignment. Better yet, skip the first question entirely, properly answer the second question and deliver the answer to customers and see what happens. Most likely, sales will go through the roof.
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