The Most Common Reason Businesses FAIL!

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why businesses fail

“I can’t make a profit on my shop,” said Jane to Abbey.

“What’s the problem?”

“I don’t know. I have beautiful clothing. People walk by the store every day, and a few stop by to make a purchase, but I just can’t sell enough volume.”

“What have you done?” asked Abbey.

“I’m doing marketing campaigns, always offering discounts and coupons. With low prices, I do attract more customers, but with low margins, so no real profit. What do you suggest?”

“Stop selling rocks!”

“I’m not selling rocks, Abbey! I’m selling quality clothes!”

“You are selling clothing like you were selling rocks. You are selling a commodity. There’s nothing remarkable about your clothing. That’s why your business will fail.”

“You are being rude, Abbey!”

“No, I’m just being honest! Do you want help or not?”

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“Please,” said Jane, starting to feel depressed.


“Do you know what are the most common reasons new businesses don’t succeed, Jane?”

“Because they are selling rocks, I suppose…” Jane said doubtfully.

“Correct! Just like all other retailers in this same street, all selling clothing. The ONLY reason people want to buy from you is for a discount. You are competing by price!”

“That’s a commodity, correct?”

“To succeed in business, you need to differentiate yourself,” stated Abbey.

“How? Please give me an example.”

Abbey paused for a moment, thinking of a good example, and said, “What does Nike sell?”

“Sports shoes and clothing,” Jane answered.

“No! Nike is NOT selling you a shoe or a shirt.”

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“What do you mean?”

“Nike is selling you an emotion. When people buy Nike Golf clothing, they’re buying the success of Tiger Woods. Nike sells the dream of being like Tiger.”

“That’s why they pay him millions?”

“Tiger makes an estimated $30 million per year from Nike alone. Seems like a lot, but now people pay over $90 for a $5 shirt. How do you like the margins now?”

“Sounds like Nike is selling diamonds!” said Jane, scratching her head.

“Jane, your business is set to fail if you are selling just another product in the market. BEFORE you start a business, have a strategy to position your ‘rocks’ above your neighbors’!”

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