I wrote on several occasions about business failure and fear of failure… Just as a short reminder most of the people fear that: they are not going to find customers, not going to be able to fund the business, or simply don’t have a good enough business to make a business out of it. I’m not going to deny that these are all good reasons why you can’t start a business because indeed if you don’t have customers, money to start and at least an idea about what your business could be about, chances are that you can’t build a business on these premises.
But wait! If you don’t have customers, funding and what to do, it should mean a start-up would fail in what? 3 months? I don’t have at hand any statistics, but I bet most business don’t fail in the first 3 months – they say they fail in the first 5 years! I don’t know how this sounds to you, but to me it sounds that they fail for some other reasons. And wanna be entrepreneurs fear about the wrong things! I’m not really an expert in why small business are failing in the 5 years (I’m sure there are statistics to show why), but if you are reading my blog for some reason, let me tell you my version of things.
Not so obvious reasons why your business might be failing
- You can’t see the forest because of the trees. That’s one of the classics, you have so many things to do as an entrepreneur that you need to become the hardest long hours employee of your own business. Everything that can’t be done by one of the employees, gets to be done by the entrepreneur, regardless of the work load. So, what happens is that before you know it, you develop some sort of business autism: you care so focused on the daily business that you are left with little time to watch for opportunities, competition and what your bigger goal is.
- Doing well, or too well. Why on Earth doing too well is a reason to fail?? Simply put, there is nothing that puts you in motion better than hunger and if you stop being alert and looking for opportunities things will change. Can be a legislation change, a new competitor entering the market or anything else. And because you felt well secured because of your well being it might happen that you won’t have the best product, best marketing or best sales to cope with the business environment changes. I think the current crisis is the best example, way too many business were caught off guard.
- Changing interests and goals. Usually, when starting a business, entrepreneurs are well focused on making it work. Ask any start-up entrepreneur and they will say there is nothing more important and requiring more attention than the new business. Problem is that people interests are changing: family balance sometimes comes first, having some time of your own, getting sick. So unless you manage to build a healthy enough business that is going to sustain itself without your intervention, it’s going to go belly up.
- Building a business on wrong values. I use to say that your business is your little baby. So, you want your child to leave a healthy moral life, with good values? Well, you should, because sooner or later a business build on bad values will go down: employees will leave, deals will get harder to get, bad mana and negative aura will build up against you.
- Starting the business with wrong partners (wrong as in not suitable). While a start-up it’s sometimes hard to know what are the best partners you should get. You’re selling them the business idea, so not so much to sell. If you don’t have much to sell, then you can’t ask for much in exchange. In the beginning it might not be much of a problem, but if money will come, trouble will come. They have something to win, you might be having something to loose. And if these fundamental issues arise business might end up badly.
- Failing to adapt. Again, I haven’t looked lately on any statistics on this, but from my experience, a lot of businesses end up doing something else than they were supposed to do as focus. I will give you my own business example – about 5 years ago I started my first business (exited about a year ago) with a clear goal: making software products. Along the way it turned on doing Web Design and PR. This doesn’t mean the business failed, it means the business adapted to do something better, accordingly to its strong points and market opportunities. So if you’re not prepared to adapt and do something completely different following opportunities it might spell trouble.
- Un-willingness to let someone else take control if you are not up to the job. As said earlier, every entrepreneur has paternal feelings about his business. You’re the all mighty creator, you’re the absolute ruler. Thing is that this doesn’t mean you’re the best CEO. In fact being an entrepreneur is quite opposite of being an entrepreneur. Entrepreneurs have an idea, spot an opportunity, then do whatever they need to do to make it work, including hiring the right people to manage the business. If you think being a CEO is what entrepreneurship is about, then you might be a business owner, but not an entrepreneur after all.
- Non-ability to cope with problems. No matter how successful you think a certain entrepreneur is, you can be sure he has to deal with problems. When you start up you think that if the business will make enough money, you won’t be having any other problems. Wrong. If you business makes money it just means you won’t have the money problem, but have all the rest. Problems with competition, hiring people, launching new products, all problems are still there except the money problem. Having a business making money does not bail you out of the rest of the problems. So if you’re not prepared to be a problem solver all your entrepreneurial path, things will go down eventually.
- Backup exit plan. Wait, exiting your own business doesn’t mean you failed? If you believe exiting your business means failure you’re dead wrong. Remember, an entrepreneur is the person that spots opportunities and make something out of them – this could mean one business ore 100 businesses. In fact, not having an exit plan makes you fail for real – you’ll get so obsessed that you need to make things work for you in that particular business that you won’t be able to act toward the real goals.
- Loosing life balance. Life balance can be lost in many ways as an entrepreneur and I’m not talking only about not having enough time to spend with your family or to do whatever you want to do. There is also greed. There is also health. There is goodwill and leaving a social life in your community. Loosing control over your own life and destiny.
Of course, I can almost hear you saying: I don’t need to worry about these now. Now I just need that money making idea to start a business and have it turn into a successful thing now. I will worry later about the other things. And that’s why most business are failing in the first 5 years.
