When starting a business, many entrepreneurs hope that their venture will be as huge as Facebook and that they will be as rich as Bill Gates or as famous as Steve Jobs. Even when the chances are slim, they bet on their dreams and put in their blood, sweat, and tears. So, why do entrepreneurs fail after all this hard work?
Failure is not something any entrepreneur would like to think about when starting a venture, but statistics show otherwise. Research shows that the failure rate of startups is almost 50 percent within the first five years. While most entrepreneurs follow the golden tools which help them to succeed, they fail to look into the reasons that would lead to their failure and work on them.
Here are The issues that Derail Entrepreneurs’ efforts.
1. They lack a well-defined purpose
Definition of purpose is the starting point of all success. Entrepreneurs who do not have a defined goal from the time they start planning their business are likely to fail. Unfortunately, there are very many entrepreneurs out there who do not have a personal purpose, leave alone a business purpose. They lack a dream, vision, mission, and target. Such an entrepreneur wakes up without a well planned out day, and instead says, “Let me leave the house and see what the day holds for me.” They run their ventures without set goals. Just like the adage goes, “failure to plan is planning to fail,” the possibility of the startup succeeding is very low.
When you observe the entrepreneurs life, you will realize that their life is controlled by fate. They trust in luck and accept whatever that comes their way, which means that they settle for less several times. When an entrepreneur loses control of his or her destiny, they have also lost control of their business. Making statements such as “life is unfair” and “such is life” is the beginning of a venture that is likely to fail. After all, if you do not control your destiny, someone else will.
2. They are not smart enough
This is not about IQ, but rather, entrepreneurial intelligence. Entrepreneurial IQ has to do with the wholesome understanding of situations. As an entrepreneur, you should understand not only your idea but also the market and how to meet the needs of your niche clients. Know who your competitors are and how to beat them. Many are the times when entrepreneurs have shallow depth and domain.
Most entrepreneurs have a grasp of their idea but do not know how to crack the market. As such, they sell their beautiful ideas without packaging them well for the market to accept them. Even worse are the entrepreneurs who trust that they are great at activities at which everyone else sees them as horrible. If one is incapable of seeing what everyone else in the industry sees, they are blind to success and may not get it.
3. They believe in the false assumption of “if they build it, they will come”
Most entrepreneurs, especially those in the tech industry, focus on creating a product with the belief that it will be good enough for the market. Unfortunately, monetization does not always come after, which leaves the entrepreneurs frustrated with the outcome. Some are even under the impression that there will be no need to market the business or themselves and customers will find them. A large number of these people come up with this delusional vision without surveying the market and ensuring that it’s ready for the product or service. Without market validation, you are set to fail.
Although the idea sounds ideal in your mind, it must be able to provide real value for the market to appreciate it. What is the market gap? This query can only be answered by going out there and trying to sell the product even when you haven’t finished working on it. Monetization that is defined before setting the business is the best proof of a successful business. After all, the best validation one can have for a startup is satisfied customers. You can look for clients within your networks or through referrals. Entrepreneurs should work on the principle of “sell it first then build it later.”
4. They treat their ventures as monopolies
Most entrepreneurs start their businesses with the mindset that they are the only ones in the market. However, the fact is that there are many other similar businesses out there. When an entrepreneur gets into business with this mindset, the chances are that they will not work hard enough, so the venture might fail.
There are thousands of players in the market already. So, thinking that you are the best in town is a good way of looking at it, but assuming that you are the only player is an idea that will set you for doom. Realizing that you have competition in that space and undertaking a proper competitor’s analysis is an excellent way of combating the intense competition and emerging a leader.
5. They fail to aim above mediocrity
So, you have a set goal and a well-planned out strategy, but is your goal challenging enough. Most entrepreneurs fail because they aim below the belt, so they end up using a small portion of their potential. Eventually, they are not successful enough, and the winning odds are quite low. When an entrepreneur sets goals that they can achieve quickly, they might as well be planning to fail.
As an entrepreneur, you should not curb the fear of not attaining set goals by aiming below mediocrity. You should be willing to go beyond your comfort zone because your competitors are also willing to cross the borders. Rather than setting small achievable goals, go for the entire package. Just like the adage goes, “Aim for the sun, if you miss it, you may hit the moon.” So, do not dream small dreams, because great potential lies in the big goals.
6. They lack persistence
There is a famous painting that illustrates the importance of being persistent. The picture shows a man who is digging for gold. Upon digging for miles, he feels that he has had enough and chose to quit. Unfortunately, he gives up when he is less than a meter away from the gold. Another man comes later and picks up from where the first man left, and within no time he finds the gold. That is how determination works. If you start a venture and give up along the way, someone else will pick your idea, perfect it and experience full-blown success. Many are the times when entrepreneurs give up when they were about to succeed. Your concept is marvelous, but you must stick to the end until it prospers – that is only possible through persistence.
Persistence and determination are omnipotent, and nothing in this world can surpass the importance of perseverance. Persistent entrepreneurs are the only ones who end up victorious. Practicing a successful habit for a day is not sufficient; you need to do it all over. Persistence is a requisite for success, and most entrepreneurs give up when they are about to get their big wins. They quit on the yard line and give up when they are a foot away to win the game.
7. They keep bad business associates
Take caution of the associates you choose, because the environment you live will shape your destiny. Someone once said, “Show me your buddies and I will tell you the kind of person you are.” Just like personal friends can determine how well you do in life, so can business associates. The people you associate with as an entrepreneur can either push you up or down.
Entrepreneurs who take business advice from their trusted friends or non-entrepreneurs might be set for failure. It is best to seek help from other capitalists or a business coach. Also, you should consider hanging out with business people that are better than you are because there is a lot to learn from them. When choosing who to associate with, find someone with better culture or behavior from yours.
8. They are overly cautious
If you want to succeed, your craving to achieve should be higher than your fear of failure. Over-cautiousness is one of the biggest reasons why entrepreneurs fail to thrive. If you insist on seeing with perfect clearness before deciding, you may never choose. Sometimes all you need is a leap of faith and a heart that is willing to try the deep waters. When you are too careful, you might end up becoming too fearful or have a condition known as analysis paralysis.
There are many people out there who have great business ideas and well thought out plans, but fail to succeed only because they are afraid of making a move. Some wait upon a perfect trend, an ideal economy or for the best direction. Eventually, their dreams remain to be dreams, and they do not get far. In business, all lights can never go green, so sometimes you have to start with what you have.
9. They do not know how to turn manual processes into automated processes
With a reproducible system in place, the next step should be to scale the business. Most entrepreneurs manage to develop a well-documented system that never gets to the following steps. You ought to use technology in scaling the venture and boosting the margins. There seems to be a gap between guys who have a tech background and those who do not. This is because the majority of the people who think about developing procedures and systems don’t have tech knowledge, so they fail. On the other hand, those who understand the tech side of the product develop it without first finding out if anybody is willing to pay for what they built.
Scaling a product is the part where you should have a tech co-founder or consultant. In the absence of these skills, you might not get far. When all procedures and systems are set up, your technology will be scalable and robust. At this point, you can start working on boosting your marketing and sales efforts.
10. They fail to enlist help
One of the most significant concepts in entrepreneurship is empowerment. The idea is that you should first empower yourself before extending a hand to those around you. Although the leading force for an entrepreneur should be figuring how to get it done alone, you should also think about asking others for assistance.
Entrepreneurship is also about empowering and trusting other people. You should get to a point where you can dedicate responsibilities and trust that the work will be done to expectations. Your success partly depends on how well you use your social skills and how you relate to others. Therefore, think about how to use your teamwork and collaborations to enhance your business.
11. They lack proper funding
Everything in this era requires financing, and entrepreneurship is no exception. If you do not put in the necessary amount of money, your business may not go beyond the idea phase. Before pursuing your brilliant business idea, you should first analyze the necessary funding and plan on how to source it.
A stable and well thought out business needs sufficient funding to prosper. When your capital is in check, you will manage to run everything at the required time without sacrificing at any step. When developing your business idea, take some time to analyze the required capital. Avoid over-approximation or under approximation. Next, look into the ways of raising the required amount. Although everything doesn’t have to be perfect from the onset, you should have most of it in check.
Entrepreneurship is a beautiful journey, as it allows you to pursue your passion and get the most out of your strengths. Unfortunately, the statistics are quite the scare off, with 15 out of every 20 businesses failing soon after they start. However, do not let the figures scare you from going for what you want.
The folks at Pound Coffee created an infographic on entrepreneurs who failed before making it big. Learn from these 18 extremely successful entrepreneurs who failed before they succeeded. Infographic can be found here: https://poundcoffee.com/18-brutal-business-failures-from-entrepreneurs/
There is a lot that you can do to achieve your entrepreneurial goals. It’s time to look at these facts and work on the aspects where you fall short. All the best!