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6 Ways you can KILL YOUR BUSINESS (But shouldn’t..?)

Owning a business is, well, tricky business. You don’t know what tomorrow has in store for you. All you have built could topple overnight, and you will be pushed back to where you started. Owning a business is about keeping your head right and being mindful about the decisions you take, and everything else follows. It is, in fact, easier to fail in the business world than to succeed. Sometimes you make mistakes, either due to bad judgment, or irresponsible attitude, and it costs you your life’s work.

Here are 6 ways to (not) butcher your business (thoroughly hoping you take lessons!)

1. Not checking brand portfolios regularly

Companies spend huge sums of money on launching new brands and leveraging new ones. Most businesses end up selling way too many brands. This Research shows that for most companies, the brands yielding profit is lower than even the 80/20 rule. Examples-

a. Out of 35 types of liquor brands that Diageo, world’s largest spirit brand, sells, only 8 bring in over 70% of the revenue.

b. Out of the 8000 brands Nestle markets, 200 make the most money.

Checking brand portfolios regularly helps keep track of which brands are making money and which aren’t. That in turn helps make the life-saving decision of dropping some brands, selling some off, or merging low yielding ones with the profitable ones. Doing so would prevent additional costs (mostly latent) that used to get eaten up marketing marginal or below-marginal brands. That cost could now be used to better the remaining few brands, increasing revenue inflow.

2. Poor rival identification

Rival identification starts before launching one’s brand and continues way after it’s done.

Michael Porter lists out 5 forces that comprise the competitive environment

a. Competitive rivalry

b. Supplier Power

c. Buyer power

d. Threat of Substitution

e. Threat of New Entry

Competitive rivalry includes identification of rivals, and knowing exactly how many.

Is the quality comparable, or does it vastly vary? A detailed analysis of who your rivals are, what they are selling, what base they are targeting will help determine many things:

should you launch in the same market?

should you try a different product? etc.

A study of Kit-Kat will illustrate this point well. Catering to all age groups, Kit-Kat became a popular brand internationally. Reason: It introduced wafer covered wafers into the market. With literally 0 rivals, the new crunchy chocolate caught on and remains a popular brand till date.

3. Improper analysis of consumer behaviour

Bisleri launched POP, which included ‘Pina Colada’, ‘Spici’, ‘Limonata’ and ‘Fonzo’, in 2016. It had to withdraw in 2018 because customers weren’t keen on buying these products. Customers were adequately satisfied with Coca-Cola, Pepsi, and Fanta (all 3 had several brands under them), and were apprehensive about trying new flavours- Pina Colada, whose name was based on an alcoholic drink.

India’s per capita soft drink consumption was 5-6 bottles, while Mexico’s was 605 (2012) owing to drier food in foreign countries. (Study)

Customers entirely identified “Bisleri” with water, while the above-mentioned 3 brands with soft drinks. That adds to the reasons why Bisleri POP couldn’t sustain in the Indian Market.

4. Poor Marketing Strategies

As Shakespeare writes in ‘As You Like It’, “If it be true that good wine needs no bush, ’tis true that a good play needs no epilogue. Yet to good wine they do use good bushes, and good plays prove the better by the help of good epilogues.”

Irrespective of how good a product is, it needs marketing, and it has to be done right. The attitude that people will flock once the product has been built, kills a business. Failing to market well, failing to target the right consumer base, all lead to the downfall of a brand.

Dove’s “Real Beauty” Campaign had been running successfully for 15 years when they ruined it. In England, they launched shampoo in shapeless bottles of different sizes to send out a body positivity message. It backfired. The ugly bottles sent out the wrong message and it failed.

Product differentiation helps sway the customer towards one’s products. Out of so many similar options in the market, why should one choose your brand? If you are selling soap, “made from natural ingredients”, “no animal testing” will help grab attention (while being true) and hence boost sales.

5. Lack of Capital

“You have to spend money to make money” stands true for businesses too. It is imperative to keep track of where your funding is and will be coming from before starting a business.

Not reviewing the financial statement every month is detrimental. One must know which areas are eating up the most money, but shouldn’t, and which areas are also eating money but rightfully so.

Company must have strong policies regarding on-time payment.

There are 2 kinds of capital:

a. Working capital- The bulk money out of which you pay your employees, and other bills, it is the money that keeps you going month after month.

b. Growth capital- The money that makes your business grow. It is supposed to increase over time. It comes into play when the business plans something big, like an expansion or a merger. In the absence of growth capital, business will be stuck in an endless loop of day to day activities, without going anywhere.

The two capitals must never be mixed. They need to be put in separate piggy banks right from the beginning. Good returns on growth capital over a period of time can mean better spending of working capital, and surplus working capital may be saved up as growth capital, but under no circumstances must the two be interchanged, or mixed-up.

6. Failure to Innovate

88% of the Fortune 500 companies of 1955 are now gone. Reason?

Failure to innovate. Keeping up changing market trends is crucial. Netflix used to be a video cassette renting company before starting video streaming services in 2007, while retaining DVD renting operations. Around the same time, Blockbuster stuck to renting services and that arrogance tanked the brand. A once highly successful brand like Blockbuster failed because it failed to innovate.

As sufficiently substantiated with case studies and research data, owning a business and successfully running it is no walk in the park. That does not mean that you stop taking risks. You take calculated risks, measured by how much your company can bear to lose while still staying afloat.

Want to know if your business idea will work out?

Watch out for the next blog, or visit for business strategy consultation.

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