Five Reasons Companies Crash Overnight

Five Reasons Companies Crash Overnight

You’ve seen it before. Grand Opening! Grand Closing… Sometimes within a year.

Right as a company is soaring to its greatest heights, in comes an unexpected storm, and down it goes. In many cases, the demise of a company is predictable and preventable. Danger is apparent long before the drop in altitude occurs, but the pilots of the plane (the CEO and/or management team) ignore the signs until it is too late.

The Internet is chock full of articles listing how and why companies fail. Here is another one. This list is by no means comprehensive or the final say on the matter. In fact, there are a wide variety of reasons why companies fail. Listed here are the common challenges we’ve witnessed first-hand – and done our damnedest to prevent – for small to mid-size companies.

Not Being Prepared

“Success is when opportunity meets preparation”. Remember that old trope? Well, it’s true.

Businesses that plan and prepare are better suited to capitalize on favorable circumstances when they arise. Those that don’t prepare – or stay prepared – are certain to die. But what does “preparation” mean?

Preparation can be something incredibly basic, like commercial insurance or cash reserves. Are you prepared for a lawsuit? A major liability claim? An unexpected expense? Are your books in order? Have you prepared for a slowdown that is beyond your control? All too often companies slide by and take risks that would sink the business if their gamble doesn’t play out positively.

Preparation also means seeing the changes in the industry before they happen. Is there a lean and hungry competitor quietly eating up market share? Is your product or service about to be disrupted by technology to the point of irrelevance? Or is your line of work suddenly cheaper to fulfill with an overseas firm?

We empathize with busy business owners who are so far in the weeds they can’t see the horizon. A second set of eyes and an impartial opinion are invaluable for the future of a company.

Not Listening To Customers

This is as critical as having a plan – maybe even more. To put it plainly, you attain a dangerously high level of tone deafness if you don’t listen to your buyers. They know your brand from the perspective of a “user”, and they’re ordinarily frank with their feedback. They can tell you all the strengths and weaknesses of your product or service, and (most useful) they can also alert you to opportunities and threats.

Every engagement with a client should be followed with some feedback process that informs and educates you on ways to improve. This could be as simple as an email campaign or a built-in functionality that solicits ranking and reviews. For a more personal approach, a post-contract interview will help you discover invaluable criticism.

Ignoring the needs and concerns of your customers is a sure way to see your company decline precipitously. Just as the needs of your business have to be met, the needs of your customers go way beyond the benefits of the tangible product or service. They want to be appreciated, understood, and treated as an important part of the entire business model.

Getting Price All Wrong

Are you priced correctly? Is your rate too high or too low? Does your model appropriately cover all of your fixed costs, variable costs, and surprises? How are you priced relative to your competitors? What is the perceived value of your product to the buyer? These are critical questions that must be regularly explored.

There are obvious traps with getting this wrong. Pricing too low leaves money on the table and creates supply challenges – not to mention potentially damages your brand. Pricing too high could kill demand and drive away strategic opportunities at a critical time.

Companies need to carefully collect sales data to discover a greater understanding of how their pricing strategy affects their success. All too frequently we see established companies (who should know better) pushing forward blindly with a pricing structure that does not account for costs, historical demand, competitive data, or a reasonable amount of profit to support future business initiatives.


The three traps above eventually affect sales, the lifeblood of any company. If you’re not running a sales organization your company is either dependent on charitable contributions or destined for doom. Even fundraising (of the non-profit variety) is a type of sales process – with a prospect, a pitch, a pipeline, and a close.

All too often companies focus on private capital to keep their plan in motion without ever determining if the market will even buy their product. A well-written market analysis and carefully selected focus groups can tell you there is opportunity in the market, but at the end of the day, you still have to sell.

Let’s hit pause for second.

Sales is both a science and an art.

For many people, sales is the absolute least enjoyable part of running a business. Some CEOs do a great job promoting their own company and autonomously closing deals. And yet they don’t appreciate or fully understand the effort a salesperson puts forth to sell something they neither control nor own. Conversely, some small business owners would rather do anything besides sell their own service, which ends up forcing them to make deals that jeopardize the company.

Whether you’re a CEO of a growing company or a single-member business owner, you could probably benefit from sales training. We’re big fans of the Sandler selling system and SPIN selling, but there are plenty of great methods to explore. Just remember to stay curious, fully explore your customer’s needs, present compelling value to the buyer, and ask for the business.

Failing to Evolve

We’ve saved the best for last.

If you’re reading this you’re most likely over the age of 25… and if you’re not, congratulations! You have way more sense than we did at your age. Think about how many companies, products, services, and solutions have disappeared over the last 5 years. 10 years. 20 years. 30.

We don’t want to call out names, but you’ve seen more than your share of outdated models that keep hanging on for far too long.

The most sustainable and successful companies learn ways to evolve over the years. Whether it’s an important pivot to meet client demands or a massive marketing investment to position a product to new buyers, evolution is a healthy process that opens up more opportunities in the long run of a successful company.

To Summarize

Being prepared and listening to your clients will help you establish an effective price that drives sales and supports all the necessary transformation your company needs for long-term success.

Now go out and do good things!

Ready to take your business to the next level?  Contact us. We’re here to help.