I’m sure you can google “reasons why women fail in business” and find way more than 3 and honestly I don’t even like to write somber articles however, I believe it is important to address these issues head on so that more women are aware and able to adjust if they are facing any of these challenges in their business. And since, I know there are more than 3, I’m going to just share some of the observations I’ve made as a business coach over the last 5 years.
Reason #1, not hiring a business coach. I know, I know, you are probably thinking, you’re only saying that because you are a coach. Why do I have to make such a large investment in the business from the beginning? Why is it always about hiring a business coach? Whew girlfriend, we have a lot to unpack here but I will try to keep it brief. Honestly, too many women start businesses overestimating how easy it will be to sell their goods and services, underestimating how much effort it takes, and the right type of mindset you have to have to succeed. They spend too much time, energy and money on mistakes trying to learn how to package, price, position, promote and profit from a business on their own. We have encouraged people to “boot strap” their way up to learn to save money but this is just as costly, if not more in most cases, then just hiring someone who has done what you want to do, how you want to do it and have them share with you how to replicate similar results faster, smarter. We try so hard to avoid the upfront investment to learn what could save us thousands of dollars and years of heartache and disappointment in the long run. For what? Just to say we went through the trenches? The statistics doesn’t show this is working out for us when only, according to the 2016 US Census statistics, the average annual sales for the nation’s 24.8 million nonemployers is only $46,978. In fact, a 2016 Federal Reserve Banks report found that 45% of the nonemployers had revenues of less than $25,000 a year. 81% of small businesses are classified as nonemployers because they have no employees.
Hiring a business coach isn’t just about paying someone an absorbent amount to tell you step by step what to do and what to avoid in starting or scaling a business in your industry, but it’s also to help with your internal game and mindset that you will need to make it a success. Again, because people start businesses with no proven roadmap they end up making mistakes that mess with their inner game and eventually leads to them giving up. Over 50% of businesses fail within 5 years and over 70% within 10 years. According to this Forbes article, 48% of female founders’ report that a lack of available advisers and mentors limits their professional growth.
You also want to start with a business coach because of reason #2 of why I see a lot of women fail in business, which is not understanding business models. Business models is the way your business is set up to generate income. The main type of business models are a product based business model where you sell a good that is usually a physical product. In most cases, unless you are selling something like cars or houses, most entrepreneurs are selling low ticket items such as t-shirts, jewelry, make-up, clothes, or items that cost a few hundred dollars or less. Their business model requires them to sell quantity to hit high revenue months.
Although, product-based businesses don’t have to spend hours in front of a customer and can just focus on sales, they do have to balance the costs of inventory, customer service, and volume marketing.
The other popular business model is serviced based business models where you sell a service, skill and or trade. You usually provide a solution in exchange for money. Service based businesses can have low ticket services that are a few hundred dollars or less and therefore still requires quantity to hit high revenue months but they have the ability to charge whatever they like, unlike product based businesses for their services.
The problem when women pick product based businesses is that they usually invest all their money in their inventory and branding just to have no capital for marketing, advertising, awareness, audience, or not enough, to make enough revenue to reinvest in the business and make money. As a business coach myself, I personally do not work with product based businesses for this reason. I often find that women who come to me wanting to run online stores or sell low ticket items ($100 or less) don’t have the money to invest to sell to volume every month to hit their revenue goals.
The problem when women decide to do a serviced based business is they have no idea how to price themselves in the marketplace. They often look to their competitors not knowing if their competitors are even doing well, if their pricing strategy is even profitable, what type of support or backend offers their competitors have. They price their own services based on what they can see on the outside of their competitor’s business but not on the inside which is far more important. This leads to a lot of serviced based women entrepreneurs undercharging because they don’t understand how to value their OWN services and results and how to structure their fees to work in a model that will allow them to consistently hit their revenue goals with ease.
I talk about business models so much because I’ve had hundreds and hundreds of calls with women who were struggling with building their business and over and over I realized that women are not doing their numbers. They are deciding to start a business with no real idea how many sales they need to make every month to be profitable and successful. Women were coming to me saying they wanted to make $10,000 a month but where offering $97 events, $10 ebooks, or $125 services. I tell my clients all the time you have to reverse engineer and work backwards to see if the numbers make sense for what business stage you are in.
For example, if you want to make $10,000 per month and your offer is $97 you have to sell 103 people every month. If you sell a product for $20 you have to sell 500. If you sell a service for $800 you have sell 12. And now we arrive back to one of my original points, that too many women overestimate how easy it will be to sell their products and services. We think, oh because it’s inexpensive we will sell more and have more customers and clients. Only to realize that it takes strategy and skill to sell to just 1 person. This is why I like to work with women who want to be in a high income service-based business model where they price themselves at no less than $5,000 per client. This way it only takes 3 clients a month to generate $15,000 months.
Again, this is why having a business coach is so valuable because they can help you do these numbers to make it make sense for you and for the strategy to make sense for you and to help you be realistic, aware and prepared to make the right decisions that will get you to your success fast.
Not building the right business model, not knowing your numbers and not having a proven plan to make sales can cost you years of slow progress and confusion.
Which brings me to my final observation on why women fail at business and that is the inability to make sales. When women finally do their revenue numbers and find out how many people they have to convert into sales to hit the income goals, they are either overwhelmed because they hadn’t realized that they would have to sell so many or they think it is way easier than it’s going to be. Selling is a skill. Selling requires you have an audience of people who need or want what you have to offer. It is hard to sell when no one knows who you are, they aren’t sure if they can trust you, and or you aren’t consistent enough for them to take action. Too many entrepreneurs start a business not investing enough in this skill of making sales and simply don’t make enough to make their business successful.