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Most businesses that fail do so because of their owners’ “sins.” Usually it’s not for lack of hard work. On the contrary, most owners put in long hours. The ones who find success produce results, have a business development plan in place, and optimize their resources, says Sam Allman, CEO of Allman Consulting and Training, Inc. With this in mind, he offers five common causes of business failure and ideas for redemption:

1. Drifting and squandering. Owners drift when they harbor no vision of their dream store. Owners squander resources when they fail to set a business development strategy that drives their company’s growth. This describes the plight of many small businesses with fewer than 10 employees (and some larger ones, too). Their owners continue to “do” business (that is, directly serve customers) instead of “run” it. When they retire or sell out, they receive the market-value of tangible assets, but nothing for their years of hard work. Redemption: Articulate your dream business in writing; then determine the strategies that will drive you there. Be strategic.
   
   
2. Wasting cash. Avoiding bankruptcy requires thrift. Thrift is easy when you have no cash, but it’s much harder when you are flush. Cash tempts business leaders to spend. Some forget that cash in hand is not spendable cash. Accrual-based accounting measures the flow of value, not the flow of cash. Many companies plunge into bankruptcy while showing a profit on their P & L. Redemption: Determine your spendable cash by preparing a quarterly statement of cash flow. Ask yourself, “How effectively did we exploit our three cash sources: operations, selling assets, and borrowing? In operations, how much cash flowed in through sales, and flowed out through expenses, accounts receivable, inventory, and accounts payable?” Next, prepare a “Forecast of Cash Flow,” to estimate future cash expenditures. If you foresee a need to borrow, confer with your banker before you actually need the money.
   
   
3. Operating from the hip. In many companies, the cost of not doing business equals net operating profit. That is, if we did everything correctly and avoided the cost of fixing errors, we could double profits. Common errors include botched orders to suppliers, mis-measures, overlooked tasks, resources wasted on searching for something, and inefficient employees scrambling to fill in for coworkers who call in sick. Redemption: Establish operational systems. You may like being independent but the reality is that franchises survive at a much higher rate because they have systems in place that maintain operational excellence. Design your organization’s structure: create and enforce job standards and procedures, write detailed job descriptions, and hold employees accountable for measurable outcomes.
   
   
4. Copying the competition. Trying to beat competitors at their game only cuts profit-margins. The best you can hope for when trying to imitate a competitor is to look just like they do. Even when you succeed, you lose — and price becomes the only difference. You keep pricing yourself into lower margins, and inevitably you invite business suicide. Redemption: Don’t sell price. Always sell value. When you sell value, expect to lose some shoppers (perhaps 20 percent). But don’t lament the loss. Price-shoppers incur costs, not profits. Serve them as a charitable donation, if you wish, but not as regular fare. You can sell value when customers find your offering is both distinctive and valuable.
   
   
5. Seeking mere satisfaction from customers. Customers who are merely satisfied don’t come back nearly as often as loyal customers. Your surveys may report a high percentage of “satisfied” customers, but don’t expect them all to buy again, or to recommend you to friends. Satisfied customers can be seduced by a lower price or a new product. Far more important are loyal customers. They won’t walk away to save a nickel. Redemption: Work to build your customers’ loyalty. Ask them what they like about your business. If it’s your service packages, products, or prices, they can be lured by competitors. If it’s your service or your people, they can resist competitors’ bait. Respect your employees, so they in turn respect customers. Respected customers become loyal.