The #1 Reason Most Small Businesses Fail

You probably think I’m going to talk about marketing or sales. Maybe cashflow management. Believe me, I want to. They are so important, especially in the beginning.

But, it’s my belief that there is a different culprit. There’s a more significant reason why most small businesses don’t live to see their second year.

Most small business owners have no idea what they want. They aren’t clear on exactly what they are trying to build. They are operating with no plan or blueprint. Therefore, they have no clue how to build it.

Here’s an analogy that might be helpful.

Building a business is very similar to building a car:

* It’s hard as hell to build, especially your first time
* You have to start by knowing exactly what kind of car you want to build
* You need to understand exactly how that car will perform once it’s built
* You need to figure out what parts are needed
* You need to figure out how to put the parts together so that they work
* You ultimately want the thing to run on its own
* Getting some expert help would make all the difference

Would anyone in their right mind just go to a junk yard, pick out some parts, and come home and try to put them together in the garage, thinking that they are going to succeed and build a car? Especially a nice car? Of course not!


Imagine how the car would turn out if someone took that approach. Picture some crazed guy in the garage at 3am standing next to a glued together go kart, spinning the pistons manually with one hand, screaming “Work, you piece of shit!” while chugging a frustration beer with the other.

That’s honestly a decent visual of how most small business owners are going about building their businesses.

So why do most business owners build their businesses like this?

Most small business owners:

* Don’t understand the difference between building a business and creating a job for themselves
* Haven’t ever really thought about what kind of business they want to build/what it will look like when finished
* Don’t have a clue what part are needed, or how to put the parts together and make them work correctly
* Just want to pay their bills
* Don’t ask for any help – it’s just them in the garage in the dark with the flashlight

I know you want to avoid this. You want build your business correctly. You want to build a brand new Mercedes, not a go-kart. You’re not a “dude in the garage cussing” kinda guy.

So where do you start?

There’s many steps to building your “car”. This post focuses on the very first and most crucial step:

Step #1 – Decide exactly what type of car (business) you want to build.

In the business world, that’s called your vision.

I’ll break down exactly how to develop a vision and start using it to transform and continually guide your business. But first, let me give you some of the benefits you’ll experience by developing and strategically using a crystal clear vision.11370547216_f2b1897c3a_o

Your business will become:

* More focused, meaning:
– more likely to produce massive results
– easier to scale
– less vulnerable to shiny object syndrome
– goal setting becomes much easier and clearer
– heading in one specific direction means you gain a lot more ground

* More simple, meaning:
  less likely to cause stress
  less prone to wasteful spending
  no need for your business to have a million different things going on

* More gratifying, because:
– you and everyone on your team knows exactly where you’re heading and
– you and everyone on your team knows exactly what their role is in getting there is.
– you’ll build something that reflects your values, that you wanted in the first place, and that you will be proud of when it’s done

A lot of the benefit of having a crystal clear vision is that it becomes a strategic tool which is referred back to constantly during the creation of other indispensable items for your business, like your your organizational chart, position agreements, and annual business development plan.

First, let’s look at where you, me, and many others have been falling short when it comes to handling our vision.


One of the first things that you get told by business books and coaches is to develop a “vision” for your company. Usually, you think this means where you want your company to go or what you generally want it to accomplish. You write down your vision – which is probably anywhere from one sentence to a paragraph – and then think you’re done. Sometimes this even gets confused with a mission statement and you end up with something like “To end world hunger”. This also gets confused with setting goals, so you might end up with something like “To do 2 million dollars in sales”. Either way, you write down something that’s supposed to serve as some sort of sign post.

Once it’s written down, it gets tucked away. You figure that you don’t need to look at it because you remember it in your head. You put it away and forget about it.

Maybe you come across it a year later when you are goal setting and you pull out the ole “vision document”. You look at it and say “hmm…look what we wrote down for last year. We didn’t really end up anywhere close to this! Oh well.” You then shrug and start to write out your new vision. It doesn’t matter that you screwed it up last year because this year is gonna be different. (This reminds me of the New Years resolution January gym crowd)

You’ll repeat the same thing you did the previous year. The vision document will die on the vine somewhere while you go out and make shit happen for your business – driving up numbers and applying constant upgrades to make things “better”, because you’re going to fuckin’ knock it out of the park this year, bro!

I only claim to understand you because this is exactly how I’ve always operated as well, across all the businesses that I own.  I have so many documents sitting in Google Drive somewhere with my vision for the company on them, or goals for those companies. It’s funny. There was a part of me that knew that would happen, but it “felt good” to at least define what I wanted, so I could kinda sorta have it in my head as we went down the road. That’s about it. There was no further practical use of the visions I created.

There’s a lot of problems with doing it that way.

The goals that you’re going to set come from your vision. Projects are the breakdown of goals. It’s supposed to look like this:


6284836564_23856a28cc_zThe vision is the clear picture of what the business looks like in the end. The goals are the major “chunks” that make up that vision. You might look at your vision and see that it includes a marketing department, a sales team, a badass financial dashboard with all your numbers, whatever. All of those are goals that will bring that vision into reality, one piece at a time. Then you decide what’s realistic for, say, that year, and pick the highest priority goals to focus on for the next year. You then break those down into tangible projects (which further break down into tasks for you and your team members) that lead to the completion of the projects (which accomplish the goals and literally build the vision).



Can you see now how lacking a clear vision makes everything else virtually meaningless?

Without the clear vision, and I mean crystal clear, there’s no real way to know what projects or goals you’ll need to focus on in order to achieve it. This just leads to filling people’s plates with projects and goals that simply make things better, or so you think.

Ever heard of shiny object syndrome? This is the urge to pursue every single new opportunity or shiny thing that comes along and looks like it might make things better.  Lacking clarity on your vision is the best way to catch a case of this. Not knowing what you want makes you a little desperate and worried that you’ll “miss out” on whatever everyone else is doing. You’ll take everything on, which leads to a disorganized, unfocused business that is overwhelming, dissatisfying, and hard to scale.

We used to operate without a clear vision all the time. Goal setting was really arbitrary.  “What did we do last year? Ok, our goal is to double that. Now go!” Because there was no real reason to hit those goals (they weren’t tied to any larger vision), we didn’t really follow up on them, track them, or hold anyone accountable. Plus, we quickly got distracted and forgot about them anyways.

We were so ambitious, and we survived on that ambition alone. We could have done a lot better. The energy of that ambition was spread out like the beam of a flashlight, when it could have been focused in like a laser.

Did you know that overwhelm is one of the 4 BIGGEST detractors of happiness? In a very large happiness study, it was one of the top 4 reasons that people were suffering.

There’s no reason for you to be overwhelmed in your business. It happens as a result of not knowing what you want the business to look like when you’re done. As a result, you try to do everything to make the business successful in general, which doesn’t work (efforts are spread too thin) and overwhelms you.

In the car analogy, this would mean just slapping parts on top of parts. Adding a turbocharger to the engine when the doors are still falling off. Putting on racing tires when there’s still no roof!


After a few years, I got tired of trying to build a car without really knowing what I was doing. My business partner and I agreed we needed help. We hired David Foster, a stellar coach from the E-Myth company, (Michael Gerber’s company, author of The E-Myth Revisited), to help us build our business the right way.

We were tasked with the job of (once again) developing our vision. I sighed and was like “great, another one of these. I’m just ready to get down to improving our marketing and sales. I wanna do more!”. Our coach kept us focused and made us finish our vision and do it the right way. We probably went through 4 drafts of it. It ended up being about 3 pages long.

That’s right, 3 pages!

So what was the difference? Here’s how we did it.5756293347_a863f2503d_z

E-Myth recommends you shoot for a 3 year vision. For simplicity, I’m going to recommend that you just focus on one year away for now. A 1 year vision. For many, this is easier to wrap their head around. You can do a shorter summary for what it will look like in years 2 and 3 if you want.

Imagine a 3 minute video that provided a comprehensive snapshot of your business in 1 years time. Think in pictures. What would be in that video?

The video might include:

– A glimpse of what the culture is like at your company
– The key company values, each one briefly touched on
– A customer or two reporting on how they’ve experienced the business
– A detailed explanation of exactly who your customer is, what situation they are in, and how you help them
– An employee or two talking about what it’s like to work there
– The owner explaining how it got started and where their passion comes from
– What product or service the company actually provides, and how it’s unique. How it gets delivered.
– Details on exactly how the business makes money.
– The numbers, what actual sales figures the company did that year

Close your eyes and imagine your businesses’ “video”. Jot down some main themes.  Picture a short trailer (like a movie trailer) that touches on all parts of your business, not just your sales figures. Refer to the above points to guide you.

Read and reread your vision once you write it down. It will likely take several edits. Make sure that the vision you create feels good to you. There’s a saying at E-Myth that “the business is inside of you”. It’s a reflection of you at all times. How can you build something that is a true and accurate reflection of your deepest values and ambitions? No part of your vision should feel “off” in any way. It should not conflict with your personal values at all.

Forget what you’ve been doing in the past. Make sure this new vision is what you really want. This is your chance to get a fresh start.

Once you have your vision nailed down, you’ll use the vision to develop every other part of your business. You’ll also return back to it anytime a decision needs to be made. Does (this thing) move us towards realizing the company vision? If yes, do it. If not, pass.

In the next post, I’ll cover your company organizational chart, and how this is the next key piece to develop once you have your vision in place.

Great work so far and best of luck! Please leave all questions and comments in the field below.


Photo credits go to:
Dubwise Version
Michael Caroe Andersen
jonathan reyes
alvaro tapia

Brian Ellwood

Brian Ellwood is an author, investor, and entrepreneur. Brian is passionate about helping others take what they love and make it into a real business that can make them money and give them the freedom they are after.