The Why Question
Why Most New Businesses Fail And How You Can Make Sure You Don’t Do The Same Thing.
I frequently post in a couple of Facebook groups where new business owners (mostly sole proprietor eCommerce dropshippers) frequent. I know that most of them will fail for any number of reasons but the main reason they will fail isn’t because of the lack of capital it takes to start a business (which is a huge reason for many) or lack of skills but because they simply do not understand ‘Why’.
All new businesses, no matter if they are a brick and mortar business, a service-oriented business, or an eCommerce business need to be able to answer ‘Why’ to everything about their business. The main three ‘Whys” are:
- Why Should Anyone Want To Do Business with You?
- Why Should They Buy A Particular Product Or Service from You?
- And ‘Why Do You Want To Be In Business For Yourself In The First Place’.
Only when these three ‘Whys’ are answered does a business have an above-average chance of success. This blog will be more geared to online businesses and not brick and mortar businesses but the reasons ‘Why’ apply just as much to them.
1. Why Should Anyone Want To Do Business With You?
When consumers make purchasing decisions, they ask themselves one question: ‘Why’ should I do business with this company?
People transact with you because they know, like, and trust you, simple as that. The relationship and the experience are what make sales.
If you can establish a reputation of trust, and deliver what you promise every time, customers will choose you. No one is going to engage with a business they cannot trust which is one reason Amazon is so successful. People trust Amazon and they won’t trust an online business if you don’t establish trust. Demonstrate your professionalism, and you will gain new business. Do not import AliExpress product reviews as many are fake if you are dropshipping or say that your store is having a fake 50% off sale or use those scammy-looking spinning wheels. People can smell fake a mile away. I am constantly amused when I see dropshipping stores that sell a product that is clearly used by one particular sex-such as women’s rings or leggings and then there are a bunch of reviews from men in Russia with English names for the product. SO FAKE!!! People also know how much a product costs and equate 50% off sales with businesses going out of business.
If you have a dropshipping store do everything in your power to not make it look like a dropshipping store.
Trust is a prerequisite for a purchase, especially with so many choices available at one’s fingertips online. It does not matter what your type of business is. If you have an online store you are competing with Amazon-not because of the actual product or price but because Amazon is trusted.
Every business owner has to start from scratch with no sales and no social media proof to leverage. With these strategies below in place, you’ll hopefully be in a better position to accomplish your first few sales and establish an excellent reputation that keeps your customers coming back.
Before you build your website think of the reasons ‘Why’ someone should want to buy from you. ‘Why’ should they want to buy from you versus going to Amazon or to a local store? Defining your competitive advantage and establishing ‘Why’ they should like and trust you first before even looking at any of your products is key to making sales online. There are many companies that offer the same products as you and many will be cheaper and with faster delivery. You MUST give them a reason to buy from you.
Defining a competitive advantage basically answers the question: ‘Why’ would customers choose your company over a competitor?
Websites that are built without answering this first ‘Why’ are pretty much doomed to fail. Unless you are able to compete on price alone (which is pretty much impossible unless you buy products substantially in bulk or if your supplier as MAP (minimum advertised pricing) you need to be able to have your website tell your story so that people like you, trust you and want to do business with you.
The sad thing is most people starting up a business fail to grasp this. They think slapping together a cut-and-paste store with a bunch of products will get people to buy them. It just doesn’t work that way.
So what are some ways you can differentiate yourself and answer the first ‘Why’?
Share the human side of your business with your customers.
As consumers, we tend to distrust brands at first glance. The ultimate goal of an online business, after all, is to earn money. However, we are more inclined to trust people.
That is why it is a good idea to show the human side of a brand in order to overcome consumer skepticism. Introducing yourself to your customers—the person behind the business—can be very valuable, especially if it adds authenticity and credibility to your brand.
The About Us page is a great location for doing this. Rather than putting all your emphasis on your products, you can tell both your stories and your brand’s stories simultaneously. This allows customers to get to know you better, which in turn helps them trust your business.
A Great About Us page captures the store owners’ personal experience in the industry, gives an overview of their expertise, and explains their reasoning behind wanting to provide better service to their customers.
This helps to cultivate the kind of emotional connection that can only be established with a small business. The fact that the business is knowledgeable and that it is run by real people encourages people to buy from it.
Similarly, you can add a human face to your business by linking your personal story to the brand story. Many online sole proprietors stores try to make themselves look like a huge company or describe themselves as a world leader. Be honest. Remember if people sense fake they won’t buy from you.
Create a great About Us story by making it real. So often people try to tell their story in their About Us section and do not actually say anything about themselves or the company. Instead, they just post some BS statement about whether they exist to find new products or a mission statement about trying to help people save money or that they are a world leader. Take the time to talk about yourself and your team. Talk about where you are located. Talk about your background and ‘Why’ you exist. People would rather buy from you if they knew you lost your job to Covid and started up the business as a way to make money for your family to survive than if you posted you built the store to save the rainforest or the whales. If you are passionate about the niche or have expertise with the products they want to know it.
For some people, your company story and the reason ‘Why’ you are in business will be the deciding factor in their choice between your competitors and yours. They may relate to the problem you wish to resolve. Maybe your story can resonate with them.
People are emotional beings. You may be able to appeal to your customer’s emotions by appealing to various things they care about. Establishing empathy for the problems your buyers face and addressing them can be a part of your first ‘Why’ answer.
For more information on creating a great About Us Page click here
2. Why Should They Buy A Particular Product Or Service from You?
Customers buy from you because you are the cheapest, the fastest, or have superior service, right? That is what most businesses would like to believe, but it is not true.
Almost certainly, your company is making at least one of these claims. Look at your competitors and you will see them making the same claims.
A competitive edge in the form of a better product or service can be of great benefit when it comes to making sales, but what about when you are selling the same product as thousands of other online stores? ‘Why’ should they buy your product?
It is important to realize that how you sell can be as or even more important than what you sell when building a business. In essence, I feel that the Field of Dreams adage of “Build it and they will come” should be more accurately stated as “sell it better and they will come, build it and they will stay”.
Remember the primary reason a customer buys is that you best address their problems, needs, or desires to own something. When developing and marketing a product consider which particular strengths you have and how they may appeal to your target market. When specific benefits can be offered you have a compelling value proposition and possibly a unique selling proposition.
So often online businesses use supplier-provided product specs as a product description. This is the wrong way to try and sell online. Specs may be important for some products but not for all and more often than not it is not the reason anyone is going to buy a particular product. People want to buy something that provides a benefit to them, be it making their life better, making them look better, or making them feel better. Think about the reasons ‘Why‘ you would want to buy a product and use that as your product description.
I just recently explained this to a person that I am mentoring who was trying to sell an ABS roller which is nothing more than a small wheel with handles. Her description pretty much consisted of the material it was made from. Nothing at all about ‘Why’ someone might need the product (fat gut) or how the product could solve the problem i.e 30 minutes a day of exercise will help tighten up the stomach muscles so that they can look better in a bathing suit this summer…
You see, people will purchase goods and services in order to satisfy one of two primary needs. Sometimes they will purchase to satisfy both needs.
The two needs are:
- The desire to avoid pain or a loss
- A need to gain pleasure.
Basically, these are the two motivations in a person for doing anything in their life; to gain pleasure or to avoid pain. You have probably heard it stated as “The carrot or the stick”. The carrot represents the edible reward, while the stick refers to a punishing switch.
Your objective is to understand the pleasures or pains your prospects wish to gain or avoid, and then demonstrate how the product or service you offer will enable them to achieve those pleasures or avoid those pains.
People buy products and services based upon emotional needs or wants and the benefit to them and then justify their purchase logically.
There are many reasons why customers purchase a product or service. They typically purchase to solve actual or perceived problems. They want to stop experiencing pain and start experiencing pleasure. They want to feel better after having purchased a product or service than they did before.
Customers are more likely to buy from you if you meet these criteria. However, there are other reasons your customers will buy from you instead of your competitors.
1 – If they consider you an expert and a specialist.
2 – If they think your product or service is superior.
Let’s look at each of these in turn –
#1 Customers are looking for signs that you understand them and their business. Therefore, specializing in a particular niche makes a lot of sense. Work in a specific niche and become known for it.
#2 It makes sense to say that people will come to you if they believe that your products or services are better than your competitors, so you need to make sure they understand this message. It’s not just about selling – customers will form an opinion of your product based on the image you create. I believe you’ve heard the phrase, “you never get a second chance to make a good first impression.” If you want to attract customers to your company, then everything about it must make a great first impression.
Bottom Line: Sell the benefits of a product, not product specs. That is ‘Why’ a customer will buy.
The more consumers know about what they are about to purchase and why they should purchase it, the more likely they are to actually purchase it.
Does this make sense?
Nice! Let’s move on.
3. Why Do You Want To Be In Business For Yourself In The First Place?
This one may not be as important as the other ‘Why’ questions but it is something for all new businesses to think about and probably should have been listed as the first ‘Why’ but for most people reading this you already know your ‘Why’ answer to this….or you think you do. . There are several reasons why people decide to start a new business be it online or a brick-and-mortar business. Many people have lost their jobs, while others wish to build something for their children. Some people dream of a better life, or they do not want to be ruled by their employers anymore. Some want to become instant millionaires and become digital nomads. If you wish to start a business, you should be motivated by more than just your dreams. Making easy money online is not a reality, it is a pipe dream for most.
If you start a business, you are putting your financial status as well as your family’s well-being at risk. So, if you’re ready to convert this aspiration into reality, you need solid reasons. ‘Why’ you are starting a business can be a part of your About Us story and help you stand out from the crowd.
You have the time to invest in your business.
If you believe owning your own business means four-day workweeks and more time to relax, think again. Most business owners work more than the standard 40 hours per week and need to put in even more hours during the first year. With Covid going on myself and others I know literally work 7 days a week to run our businesses. If you earn enough income to support yourself, spending long hours may not be necessary; however, if you plan to launch a new enterprise, you need to prepare yourself.
According to entrepreneur Gary Vaynerchuk on the website Inc., during the first year, your business should be at “code red” until it begins to make a profit. This means 18 hours per day, if necessary. According to him, most companies fail within the first two years of being in business because “they do not fully realize how hard it is, and how all-in they need to be.”
If working hard is your idea of fun, then starting a business is a great reason to do so. If you don’t have time to invest in starting a business ask yourself ‘Why’ are you even going to try. Having the time available to open a business is one reason ‘why’.
You’ve got some money saved up to start off with.
If your business idea does not need money to get started, it is unlikely to succeed. All businesses require some type of funding, whether it is merely for a website or business cards. Brick and mortar businesses usually require equipment, licenses or registrations, and insurance. Online businesses need money for marketing and operating costs. At Digital Papercuts we suggest that an online microbusiness start-up needs to have at least $3,000 in working capital. That is a minimum figure-there is no upper limit.
If you can provide the funds yourself, that is ideal. If you do not have the capital to finance your business, you will have to find someone who will. Do not ask your parents – that’s cheating. Put together your business plan and investigate guaranteed small business loans offered through the Small Business Administration.
If strangers are willing to lend you money, there is a chance that you have an excellent business idea. If they won’t then your business idea probably isn’t as good as you think it is.
If you don’t have enough money to run the business for a minimum of 6 months, including advertising and working capital don’t even start. You will fail. Ask yourself ‘Why’ do you think you can start a business with no or little money?
If you have an established business and documented revenue it is easier to obtain capital to grow. A business bank or even Shopify will provide funding for online businesses that do business with them if the stores meet certain criteria. This is only available for U.S. and Canadian businesses for businesses that have a low-risk profile, a certain level of sales.
You have a fairly in-depth understanding of your market.
Unfortunately, a good business idea is not enough by itself. The world is teeming with great ideas. Knowledge of your market is critical prior to the testing of an idea. If you already have experience in the market you wish to enter, you are already more than halfway there. You’ll be able to make better product selections and be able to write better sales descriptions. If not, you may find that investing your time and energy in market research will enable you to be prepared. It can be a reason ‘Why’ you chose a particular niche.
You have strong business skills.
All successful entrepreneurs should have the following business skills::
- Time Management Skill
- Strategic Thinking
- Financial Management Skill
- A Branding Strategy
- Sales, Sales, and more Sales Skills
If you lack proficiency in any of these skill areas, you can have someone fill in those gaps for you – at least until you are able to learn them yourself. Now, this will cost money but if you need help you should get it. When it comes to learning as one goes, there is nothing wrong with it, provided that you can do so quickly and are not afraid to fall off your horse a few times. You can take online courses or go to a community college to take classes if needed, or watch a lot of YouTube videos or read books online. The nice thing about these business skills is learning them will help you grow as a person. Most of these skills are considered soft skills. You do not need an MBA in Financial Management to understand it and how to manage your business.
A college business degree teaches some of these skills but a year of real-world practice is worth 10 times more than a college degree. A business degree from a 4-year college is nice but more so for the college experience that helps one grow and gives you a solid foundation to become a successful entrepreneur but it is not required to create a successful business.
If you possess all 10 of these business skills, your family and friends probably wonder why you haven’t started a million-dollar company yet. Having these skills is a reason ‘Why’ to start a business.
You are willing to take a risk.
The hard fact is that the majority of new small online businesses fail. I have seen stories that up to 97% of new Shopify stores fail in the first year.
If you are willing to work hard and smart, if you have researched and drafted a solid business plan, then you already have a leg up on millions of other entrepreneurs who have launched successful small businesses. Yes, do a business plan. The time spent doing it first can save you a lot of heartache down the road. After doing a business plan you will see more of the risks and potential benefits of starting a business and the benefits if they outweigh the risks can be your real ‘Why’ reason. Doing a business plan and figuring out EVERYTHING needed to run your business is a heck of a lot better than spending money needlessly just winging it like so many new online business owners do.
‘Why’ You open a business can be for many reasons but basically for most people an individual should open a business because this will provide an additional source of income to you even if they lose their corporate job. If you own a business, it will always generate income for you, and in tough economic times, a person cannot depend on a corporation. If you have your own business, regardless of whether it is a small side business or a business in which you have someone else on your payroll, you will never be unemployed. This is the biggest reason. The other reason is that your job skills are improved by having your own business, kind of like going to college.
It’s similar to obtaining a master’s degree in business from college. You could attend college, and all you need to do is read books and answer multiple-choice questions. It teaches you the tools to read and write, but the ability to own a business is where you acquire the job skills, social skills, and sales skills necessary in order to never be unemployed. If you have someone who has worked in a factory their whole life and they lose their job, they are like a fish out of water. They have no idea how to make money. They don’t know how to operate a business, they don’t know how to make a business successful on its own, but a business owner is constantly selling to make the business succeed.
Running a business is a lifelong learning process. Marketing and Merchandising are continuously being learned. A business owner gains a wide variety of job skills in his or her life. People in the world can be divided into two categories: those who will always have work and employers will want them, and those who will own businesses and those who will not.
If you always take the time to learn – you always develop your job skills – and you always develop your business, you will never be poor. You will never be unemployed, but if you go to the factory every day and use your hammer and then that factory closes and you are 50 years old, what are you going to do? What kind of skills should a person develop in order to have a job or a business, that is, you develop your social skills such as a business owner like the mayor of the town? They know everyone. You may reach a point where the line between work and play ceases to exist.
It is just as enjoyable to be at your business and talk with people and hang out with them as it is to be in a bar drinking. While you’re in business, everyone is paying you to talk to them and they all want to listen to what you have to say be it online in the form of a sales description for a product or a service you are selling. Nobody really cares about you unless you can give them a ‘Why” reason. With regards to your business, whether it is networking with clients or suppliers, constantly gaining benefits through your socialization process.
So these are some of the primary reasons ‘Why’ an entrepreneur should open his or her business.
Are you ready to start your business?
One of the hallmarks of entrepreneurship is the freedom to make your own decisions and take control of your own destiny, something conventional jobs do not offer. You can make your own decisions and justify them for whatever reason you choose.
‘Why’ did you decide to start a business? Did any of the ideas I described resonate with you? Do you have any additions to add to the list? Please let me know by leaving a comment below!