Who wins? – Why Some Businesses Fail While Others Succeed

Two manufacturing companies ‘A’ and ‘B’ sell the same product. 

Both companies have good profit margins, employees are happy and the management is satisfied. 

Despite being in the same product, none of them pose a threat to each other as they have independent customers and more or less fixed revenues. 

Now that’s not the entire story.

In time, their market opens up, demand increases and owing to customer requirements, changing business strategy becomes inevitable, right? 

Here’s what “A” does:

1. Focuses on reducing the price for customers.

2. Hires fewer people but expands capacity through technology solutions.

3. Gathers real-time information using tech systems and improves the response speed.

4. Team members spend time building strong relationships with clients and vendors.

Here’s what “B does:

1. Focuses on increasing the price for customers.

2. Hires more and more people to expand capacity, prefers manual work, creates 5 levels of hierarchy.

3. Gathers information through day-long meetings, phone calls, emails, hires secretaries to create reports.

4. Team members spend most of their time managing essential workflows, checking or correcting data in reports.

8 years passed. One of the two survived.

Who is likely to have survived? “A” or “B”

In the last 15 years, 52% of fortune 500 companies have vanished. This is not a hypothetical brain teaser. If you can guess who survived, you are already a genius, because 52% of fortune 500 companies couldn’t see it coming, isn’t it?

As said by Dr. Graeme Edwards – “It’s not the plan that is important, it’s the planning.” 

Why some businesses fail?

The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.

In Conclusion –

Yes, it is true that most businesses fail. It is also true that many of them succeed. Those that succeed are not the result of miracles. Entrepreneurs who lead businesses to success understand that it takes a carefully planned and executed strategy. A little luck also helps.

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