HomeBusiness ModelsBusiness Model - 6 Reasons Why your business model is not working?

Business Model – 6 Reasons Why your business model is not working?

Business Model – You must agree with me that 90% of startups fail because of a poor business model. So, in this post, I want to focus on the 6 reasons why your business model is not working for your business. 

Your business model is the key integration of the right product the right customer and the right financial equation. If you do not have the right business model no matter how talented you are no matter how hard working you are no matter how committed you are your business is bound to fail. Thus it becomes important for you to understand what are those five reasons why business models don’t work and why businesses fail.

business model not working

6 Reasons Why your business model is not working?

#1 Solving an Irrelavnt Problem  

The first and the most common reason why business models don’t work is that sometimes entrepreneurs start a business where they are solving an irrelevant problem. They’ve created a product or a service on which nobody is willing to spend their money. Sometimes as an entrepreneur, you just get into this fantasy world and you get infatuated with that idea and only you are in love with that idea thinking that everybody needs this product or service. A business owner needs to be prudent and understand if people spend their money on his product or service or if is it something that is out of fantasies.

#2 No Differentiator

The second reason why most business models fail is that they do not have any differentiators. It is like Copying and Pasting. 

Think about if you start a business offering just another product like just another business then you’re one among many that are already in the market. 

I have seen business owners start businesses in saturated markets there are already established players there are already struggling players and you just add to the list of those strugglers and eventually, you end up burning your cash out burning your savings out and you give up on the idea of building a business. Build a business with a differentiator if you do not have a differentiator then please note that that’s a recipe for the disaster.

#3 No Clear Vision

The third reason why business models fail is that the entrepreneur does not have a clear vision. The entrepreneur is easily distracted by opportunities. Many entrepreneurs start their business with one product or one service idea but when they don’t get their desired response from the market they become desperate for business and they start doing anything and everything that can make them money.

You can never build something with that kind of distracted approach. You may be able to get lucky and sustain for a few months by cracking a few deals but in the long run, you fail. If you have no vision, no clarity of direction, no clear strategy, no clear system or team. It just becomes a game of income generation for survival and it does not last long.

#4 No Clear Target Customer

The fourth reason why business models fail is because of no clear target customer. When someone asks you who is your target customer the worst answer would be everybody. 

You need to have clarity of who is the right customer who has the money to spend on your products and services. Who needs your products and services?  

If you’re going all over the place and you’re trying to sell your products and services to anybody and everybody you are doing a big mistake. If you do not have clear target customers your business model will fail.

#5 Poor Execution

The fifth reason why business models fail is because of poor execution and the real root cause of poor execution is no skills and poor capabilities.

Think about it many business owners start their business with a lot of sincerity but sincerity is not equal to skill. Sincerity enough is not enough to produce quality output for your customer. When you do not have the basic domain capabilities required to produce a qualitative product or deliver a qualitative service to your customer the faith of the market in your business goes down and your business model fails.

So you must build the foundational capabilities required to deliver a qualitative product or service because quality is the basic requirement of the customer in today’s world.

#6 No System or Inconsistent Execution

The last and final reason why business models fail is inconsistency in execution. Think about it in most businesses the business owner is doing everything. Everything is dependent on and driven by the business owner. No matter how hard-working a business owner is that one person cannot make sure that marketing, sales, operations, R&D, Accounts, Human resources, and management are happening consistently.

You need a system to make sure that everything is consistent and going hand in hand. When there is an inconsistency in activity there is an inconsistency in income. When there’s an inconsistency in income there’s a lack of stability. When there’s a lack of stability you run out of resources eventually and your business model fails.

Over to You

Are you facing any problems or challenges in your business? If you need any advice or consultation on your business model you can send me an email at sk@moneyexcel.com.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.