For first time entrepreneurs, starting a business is both a dream and a fear. Most entrepreneurs start a business without careful research and planning. Starting a business is like a running a marathon and the need for a good plan is inevitable. Statistics suggest that more than 50% start ups fail within the first five years.
Business Failure
Of course, real entrepreneurs accept business failures and use them as a stepping stone to success. History has always taught us that civilizations that have learnt from their past have sustained more than those which haven’t. Instead of re-inventing the wheel, new entrepreneurs should learn from the mistake of others, without having to go through all the pain and suffering.
We have attempted to put down a list of 6 top reasons why businesses fail and how to avoid them:
1. No Business plans. Benjamin Franklin once said that “By failing to prepare, you are preparing to fail”. Many people think that writing down business plans isn’t really worth the effort. I wish I could explain to them how WRONG they were! Penning down a detailed plan is the best way to make sure you transform your idea into a successful business.
2. Lack of a clear business model. One of the most critical elements of the success of any business is it’s business model. A business model describes the rationale of how an organization creates, delivers, and captures value. A good business plan will have a business model. In order to survive every organization has to follow on adding value to its customers and clients – What is it that your business is doing different from its peers that will bring and retain more customers? Think about it!
3. Action. All business coaches, mentors, trainers, motivational speakers tell you one thing in common – ACTION. The success or failure of business is often attributed to actions or a lack thereof! Even a million dollar idea is worth nothing if it is not acted upon. This is where the business plan comes in handy. The business plan ideally should have a separate section on implementation – what is to be done, who is going to do it and by when?
4. Lack of proper research. Many entrepreneurs who approach us have great business ideas. However, one common issue that we have seen is the lack of proper research. Running a successful business is all about having the right thing at the right place at the right time. A good research is essential for completing a comprehensive business plan. Research is all about where is your market, who are your customers, what is their need? If you have got this right, you have made a great beginning. Remember ‘Well begun is half done’.
5. Not enough marketing. Peter F Drucker once said that, “Business is all about innovation and marketing”. You might have a great product to sell, but without reaching the product to your customers you will be sitting like a beggar on a golden bench. A clear marketing strategy and a marketing plan is the most essential aspect of the success of any business.
6. Calling it a day too early. Business is all about strategy and patience. Many businesses fail because entrepreneurs give up too early and are not willing to wait for the tree to bear its fruits! Successful people have always learnt from their failures – Abraham Lincoln, Thomas Edison, Steve Jobs – All of them kept trying with patience until they found success!
What are your thoughts on this? Let us know in the comments section below.