Reasons for Business Failure and The Critical Factor

Reasons for business failure and If you think creating a successful online business is as easy as finding a product that sells and simply making it available for the public to buy, you’re among the countless entrepreneurs who are missing out on the most important factor to transform a new online business into a rock-steady powerhouse.

Reasons for Business Failure

According to Forbes, only 10%  of all startups succeed. Nine out of 10 new businesses fail, sometimes for very simple reasons.

If you want a lucrative, successful business with the longevity to last for decades,  you can’t simply sell one product that was popular for a brief amount of time. Market trends change.

Styles and consumer preferences change. If your idea is fantastic you’ll attract competitors. Basically, you have to be everything but a one-trick pony to succeed in the online business world for more than a season.


Reasons for Business Failure and The Wrong Way to Think

Reasons for Business Failure

Obvious thinking will get you mediocre returns.

You can see the greatest example of this with how many entrepreneurs  view customers: I want consumers to buy my product; therefore I must supply them with the hottest new merchandise, ideas, or style.

The problem with this kind of thinking is that it is not sustainable.

If every single person who clicks on your website buys something, this kind of thinking would be acceptable. However, we both know that you’ll never  turn  100%  of all your  site views into sales.

Focusing on selling a one-hit-wonder to those people, who you can’t guarantee will spend  money,  is a sure way to fail.

At the heart of this failed idea is a misunderstanding of what your focus should be. Common sense dictates that in order to sell something, you must have people who view your product. You then must turn those people into customers and you must make a profit out of it, or else you won’t be able to sustain any kind of business.

Many companies thrive by turning a negative profit on their customers’ first purchases, but that won’t guarantee you a stable startup.

The key to a sustainable business isn’t obvious, but it is critical, and it lies in looking the right way at the Tactical Triangle.

The Tactical Triangle

Reasons For Business Failure


Developed by Perry Marshall and Jack Borne, the Tactical Triangle describes just about every transaction in the history of mankind, whether it’s a customer purchasing merchandise, a country borrowing money from another country, a romantic relationship, or even volunteering for a charity.

Its three facets continually flow into each other and create the dynamics of business and help keep you out of the reasons for business failure.

The 80/20 Rule

Reasons For Business Failure

At the center of the Tactical Triangle is a critical idea: the 80/20 rule.

This rule, also known as the Pareto Principle, dictates that 80% of the outcomes can be attributed to 20%  of all causes for a given event.

According to Perry Marshall, this is the most important aspect of business you could ever understand. The 80/20 Rule applies to “customers, products, companies, employees, highways, real estate, rabbit populations, tree branches, and the size of craters on the moon.”

In the business world, it means that roughly 80%  of all a company’s revenue comes from only 20% of its customers.

This should tell you two very important things:

Some customers (about 1 in 5) end up being much more valuable than other customers.

You should focus the majority of your efforts on recruiting and retaining that 1-in-5 customer.

Focusing on that 20% comes down to the principle of leverage. Get out more by putting in less.


That’s the ultimate leverage in life and in business.

In order to help you leverage these 20% of customers, Digital Altitude gives you the ability to follow up with valuable customers through a built-in autoresponder email system, giving you the ability to quickly and easily communicate with your most valued customers in a way that is proven effective.

The Tactical Triangle’s Three Corners

Reasons For Business Failure


Knowing that the Tactical Triangle’s power is drawn from the proper leverage, let’s break down the triangle’s corners:

T :  The T stands  for Traffic. In order to sell a product, it must exist and come into contact with the customer. People have to be aware of your goods or services before they can make a purchase. In an online business, Traffic consists of potential customers clicking on your page and viewing your products.  Most people would assume this is the most important factor in a successful business, putting all their efforts into getting traffic, but they’d be wrong in doing so and may have reasons for business failure.

C:  The C stands  for Conversion. Someone  who clicks on your site becomes a customer when they cross over from observer to buyer. This is the corner of the Tactical Triangle where consumers are born. There is quite a bit of science and marketing savvy behind getting traffic to convert into customers, but again, this is not the key ingredient in creating a successful, sustainable business.

E:  The E stands  for Economics. The big question you should be asking yourself is if you can attract people to your products or services (traffic) and turn them into customers (conversion) and make money while doing so? Or in other words, does it cost more than you gain to reach a potential customer and turn them into a buyer? Economics is the allusive corner of the Tactical Triangle where that critical factor resides.

“Thinking Backwards” with the Tactical Triangle

The typical way entrepreneurs  look at the triangle starts with Traffic, flows to Conversion, and ends up at Economics. In order to be successful though, you’ll have to look at the last aspect first—Economics, the reason you started a business in the first place. Finding an exploding market, figuring out how to sell to that market, and then trying to turn a profit will get you nowhere fast.

You have to have the endgame in mind from the very beginning.

The Sales Funnel

Reasons For Business Failure


Looking at the process in reverse will, in essence, create a sales funnel. The sales funnel shares some common qualities with the Tactical Triangle but is a linear process rather than one that continues to repeat, like the Triangle.

The sales funnel starts with catching a multitude of prospective buyers (the large end of the funnel, designed to cut a wide path through your market). They might be attracted to your site with coupons, vouchers, special offers, or any number of marketing messages they’ve seen about your product or service.

The people that enter your sales funnel got there simply by choosing to click on your site.

Many of these  people travel further into the funnel by buying your products. Oftentimes they buy your entry-level merchandise— the goods you had a promotion for or the most popular item you sell. They prove that you have a market for your products and therefore reduce reasons for business failure.

At this point in the Tactical Triangle, the consumer would then make a transaction that either makes or loses you money, and the process would repeat itself.

With the funnel however, the customer travels to an increasingly narrow part of the funnel where specific tastes are refined.

At the end of the funnel, the perfect customer emerges: one who is invested and loyal to your company, who spends consistently, and who buys your most expensive and profitable products.

This customer is your most valuable resource, the person you should target 80% of your effort toward. These customers may not be one in five, or even one in fifty, but they will make you more money than the rest.

Back End Profits

Reasons For Business Failure


The customers that are crafted perfectly to be your perfect buyer contribute to what is known as back end profits. This is what focusing on Economics is all about. Think about your back end profit consumers from the very beginning, for they  will be the driving force of your business.

Let’s take a look at an example for how neglecting this could lead you astray:

Say the market is extremely lucrative right now for a new type of fancy outdoorsman wristwatch.

They’re selling faster than stores can get them. You join in because the market is so good, and for a while you’re successful. But when the trend turns toward something else, unless you’re a sporting goods department that sells all types of outdoor gear, you won’t be able to keep up and your business will fail.

Now let’s say you sell watches when they’re in, and with the profit you begin selling outdoor adventure manuals, maps, and guides.

Many people who bought your watches may be interested in these outdoor activities and may buy your other products. Then say you recruit outdoor tour guides to teach people survival skills, navigation, etc.

These lessons (or even seminars) would by far be your most expensive item, and few might buy them, but they may turn out to be your most lucrative asset, particularly when the outdoor watches become less fashionable. This would be your back end profit, and what your focus should have been the whole time.

Watches were just a way to get many people into your sales funnel.

The Top Tier Model

Reasons For Business Failure


Your back end profits may be so substantial that your front end profits (i.e. the first products you sell in the sales funnel) cost more than they earn to acquire and sell them. While you can  still be profitable this way, use the Critical Factor of Economics to create a top tier model of business.


Thus your earnings will be phenomenal every step of the way.

Funding Your Top Tier Business

Having quality products from start to finish will launch you into a lasting success.  Be sure you can fund your startup  costs so that you make money from day one.

Here are a few simple ways to fund your top tier business:

  • Start part time
  • Start the business out of your home
  • Get a part time job if needed
  • Use a credit card or apply for a company one
  • Apply for a business loan or line of credit
  • Apply for a home equity line of credit
  • Dip into your savings or investments
  • Sell something like a car or real estate
  • Borrow from family and friends

Thankfully, right here you can end the reasons for business failure by starting with a proven and well-founded affiliate business with Digital Altitude, giving you the ability to test the market and the tips offered by the Tactical Triangle for very little startup cost (and, with the right strategy and hard work, make a lot of money in the process).

By going through the steps you will not only gain the knowledge, but the coaching, community and assistance to get you going and build a great Lifestyle

Watch and Listen to Chiara on this Subject <==

Author: Lance Sumner

I was born in Sacramento, California and lived in a small suburb town of Rio Linda close to the American River. While growing up I can say one thing for sure about myself and that is I’ve always been a Big Dreamer and that has never changed today. I choose to Keep Challenging Myself and Always Giving to Help Others.

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