Businesses established by entrepreneurs drive innovation, the economy, and job creation, but about half of them fail within five years and very few last less than a decade. The key to becoming one of the 33% of new businesses that last is to avoid the common hurdles that drive entrepreneurs out of business. Many small business owners are plagued by their fear of failure. Not only is the road to entrepreneurship filled with potholes but maintaining a sense of creativity and inspiration while navigating these roadblocks can be incredibly challenging. Making money is an important part of entrepreneurship, but it isn’t the only way to succeed as an entrepreneur. Let’s say that you define failure to your business and that you have raised the necessary funding – besides that, what could cause your business to fail?
1. Cash flow
The majority of entrepreneurs focus on the next sale or client when they’re starting a business. They rarely consider the long term or plan for the future. If a business does not have the cash flow it takes to operate, it is likely to stall out before it gets started. Whether a business self-finances, gets a loan from a bank or takes the “Shark Tank” approach and gets partners and investors, many businesses fail before they even start. Having positive cash flow can sustain your business in the lulls that are bound to happen. Businesses without profits can survive for years, but businesses without cash flow will fail within months.
2. Sales and marketing
As entrepreneurs, we often assume that all our friends and family will buy our products when we first launch. Unfortunately, this is not always the case. It would not be a great idea to ignore your marketing strategy just because you have opened a company and you do not want people to know about it. But how can you do that? You need to get your company’s name out there to the people and let people know about your company.
Is it possible for you to reach your audience? If not, you cannot succeed. Now how you do this will be beneficial for you? You need to make your business familiar to people and let people know your benefits. It will take a long time for you to make sales if you wait for the sales to just come in. Determine who your client is and speak to them about why they need your product or service.
3. Lack of Focus
Entrepreneurs often make the mistake of not focusing on their capabilities. The recent trend toward becoming a ‘jack of all trades’ threatens the importance of focus for startups. But if you want to succeed, you have to keep your focus because that keeps you fresh. The best method to keep focus is to do what you love. In that manner, you can never get bored with what you are doing.
4. Trying to Be Everything to Everybody
Entrepreneurship is about trusting and empowering others along the way, dedicating responsibilities and getting the best of what you know from those closest to you. Using your social skills is important to the success of your enterprise. Entrepreneurs often sink because they think they can do everything faster and better. Exit roles and have a plan for what to do. The business which knows what they do well (and what they don’t) and sticks to those last longer than those which try to become jacks-of-all-trades but masters of none.
5. Poor Planning
It is true that if you fail to plan, you will fail. This leads to poor execution without proper planning. There is no room for mistakes if you fail to plan. This leads to poor execution without a successful business plan. A good business plan is as simple as understanding your company’s product and competitors and developing a strategic plan. A good business plan need not be too complicated. It’s as simple as understanding your company’s product and competitors and developing a strategy.
6. Lack of Soft Skills
Often, entrepreneurs are missing the piece of the puzzle they need to succeed: Soft skills, sometimes intangible and non-technical talents, which are essential to effective leadership. A famous entrepreneur, we all know who they are, often becomes that way only after their first big hit. An entrepreneur who cannot listen is insecure, short-tempered, and intolerant of opposing views is likely to fail. People who refuse to accept responsibility for their mistakes are the worst entrepreneurs. They look for someone to blame for their mistakes day and night. As well as attitude, communication, empathy, motivation, teamwork, networking, leadership, decision-making, problem-solving, and conflict resolution.
An entrepreneur’s life can be incredibly rewarding, but the realities of what it takes to succeed must be faced as well. It’s not easy to make money through entrepreneurship, but if you are truly an entrepreneur, it’s nearly impossible to get bored.
Getting started with a new business and scaling for the long term is not easy. In addition to the common reasons listed above, there are several other factors at play. Thus, when entrepreneurs are aware of why businesses fail, they will be better prepared to navigate their way through entrepreneurship without falling into the pitfalls. You should remember that a startup or growing business is no different from a child, so you should devote constant time and attention to it. As long as you are focused on doing whatever it takes to succeed, then you can avoid the most common reasons entrepreneurs fail, and your business will thrive regardless of the economy.
