While particular statistics are difficult to nail down, it has been reported that the majority of businesses fail, and many cite 90% failure rate in past five years. Why does this happen? The three topmost reasons behind entrepreneurs failure are discussed here.
They fail to give themselves enough runway
We often hear that it is easier and cheaper to start a business and is all because of new technologies. Though, there is only one cost factor for starting up called “cost” that is related to business.
Most people are unaware of the fact that it usually takes 2-3 years to build true foundations of a business. For this, enough money is not enough, but operating the business once it’s set up and make it in working condition for 2-3 year period.
There is a famous acronym “TGFO”, meaning “Thank God For Oprah”. When Oprah Winfrey started her business, it took 2-3 years to make the foundational point.
If you do not take this review of 2-3 years, you may end up with having close up shop prior to the time when a business has a chance to survive.
They do not know the responsibilities of an entrepreneur
Many entrepreneurs think about a fantasy driven view. Thinking about an idea is fun. Writing your business plan and choosing a logo is also fun. Executing the idea is not always fun. The best preparation is getting practical about the meaning of owning a business.
Everyone believes that if you really love to do something, you will do more when you run your business. When you run your business, you need to do and understand so many functions, ranging from marketing to accounting, from employees to customers and much more. At the day’s end, you spend less time and doing whatever, you will enjoy it.
If you want to create music or bake cakes, you will spend less time in doing this because you will prefer to spend most of your time with critical business tasks. You will spend time doing what you like than with your business.
There are many people who are willing to risk their life savings on business that they don’t know about and not prepared for.
Before starting, get some experience to know something about business. There are some ways to get an experience like getting jobs in the industry, follow someone who is experienced, reading and researching, getting advice from experts, and crafting business plans with targets you want to achieve.
They are unable to market their products or services
This is the most critical step an entrepreneur can take prior to ensure some success and making sure that is there a market for a product or service or not. It is also important to see if the entrepreneur can reach the target customers.
He can test his product on a small scale. For example, in the case of cupcakes, make sure that you will get repeat and frequent orders before investing on a large scale. He can also consider doing a food truck to increase business skills.
Testing assumptions, researchers, and going small scale enables you to get a successful business.