Thinking about starting a business in 2016? Read this first…
The internet is swimming with advice, tips and inspiration for people thinking about starting a business (just like this article).
That’s a good thing. It gives potential entrepreneurs access to ideas and knowledge that wasn’t available a couple of decades ago.
But in our quest for insight into what makes a business successful, we sometimes forget to look at what causes a business to fail.
The truth is, building a successful business is really tough. A lot of start-ups fail within a few years, and only a relatively small percentage become long-term success stories.
And lets get one thing straight. There’s no shame in trying and failing.
Some of the best entrepreneurs on the planet have bounced back from defeat – using the experience to help them do things better second time around (or third, or fourth).
So if you’re thinking about going for it in 2016, take the opportunity to learn from those who’ve fallen short.
Here’s some of the most commonly-cited reasons for start-ups failing to go the distance.
You need money to start a business. How much depends on what you’re into, but you’ll need it.
You’ll also need cash to tide the business over until it can cover its operating costs. And to see you through personally – pay the mortgage, put fuel in your car etc – until you can earn a living from your venture.
Sadly, a lot of entrepreneurs under-estimate the costs involved in taking their business from A to B. They run out of funds, and it’s game over.
Some start-ups bring great products or services to the table, only to fail because – for whatever reason – nobody wants them.
Some start-ups fail because they bring really bad products to the table too.
Either way, at the outset of their journey, their founders probably thought there was a market out there.
It’s surprisingly easy to miscalculate demand – which is why market-testing can be so important.
A lot of entrepreneurs also miscalculate how hard it is to make sales. Even when the demand is out there, it can take a huge amount of legwork to convert people into paying customers.
You need massive confidence to start a business. But that doesn’t mean you should stop listening to everyone else.
A lot of entrepreneurs are so committed – both mentally and emotionally – to pursuing their business idea, they refuse to listen for fear it could force them to change course.
The truth is, nearly every business has to change course at some point.
If you market-test a concept with potential customers – or seek advice from a mentor – and you don’t like the feedback, don’t dismiss it.
You don’t have to act on what they say (they could be wrong), but you should consider it carefully. It may prove a much-needed reality check.
A business that isn’t growing is on borrowed time.
A lot of start-ups don’t have a plan for scaling-up, and – after initial success – they flat-line and eventually fail.
Don’t build a business that – if it gets to first base – has no way of getting to second base, third and so on.
It’s often said there’s never a perfect time to start a business. If you’re going to do it, you’re going to have to do it at some point.
But that doesn’t mean you shouldn’t plan.
Processes, work-flows, data management, ICT, taxation and so on. A lot of start-ups come unstuck because they ignore the dull stuff. You don’t have to do it all yourself. Just make sure someone is doing it.
There’s a lot of stuff written about how entrepreneurs should look after themselves – both physically and emotionally.
And with good reason. Even the most resilient human beings only have so much fuel in the tank – and if you burnout, your business will burnout with you. If you look after yourself – stay fit, manage stress, get enough sleep – you’ll be better equipped to last the distance.
Conclusion? Don’t be frightened by the failure of others. Learn from it.
If you take the plunge, starting a business will be one of the hardest things you ever do. But it could also be one of the greatest.