“Many of life’s failures are people who did not realize how close they were to success when they gave up.” Thomas A. Edison
Most people that start businesses lack relevant business and management expertise in areas such as marketing, finance, purchasing, selling, production and hiring and managing employees. Many are excellent technicians, but unless they seek help from professionals in the areas where they lack competence or skills, business owners soon face disaster.
It is a fact that most businesses fail in the first 5 years due to various reasons, like:
• Being started for the wrong reason – to ‘get rich’, to ‘work less’, to ‘be your own boss’. In the first years this will not happen – you work more, spend/invest more than anticipated and swap one boss for many (clients, suppliers, employees…).
• Insufficient capital – not enough working capital to keep the company going until it starts being profitable; investments and expenses tend to be understated while sales projections are often optimistic.
• Poor market research – you need to fulfill a need in the marketplace and be able to differentiate your product, or service, in some way.
• Lack of planning – you need a SMART business plan including a brief (but clear) description of the business, vision, goals and keys to success, human resources needed, budgets and investments, cash-flow analysis, marketing, advertising and promotional strategy and the knowledge and support to evaluate the results after putting the plans into action.
• Poor management – a passion for what you do is very important, but insufficient if you do not have the competencies to do it and the persistence and resilience to see it through. When you start a business you need to control all the company’s activities and operations (or have someone you trust doing it) while keeping the staff productive and motivated.
• Failure to anticipate or react to competition, technology, or other changes in the marketplace – markets and technology are constantly changing so anticipation is always a good strategy. Foster innovation by encouraging the staff to come up with new ideas to improve or expand the business.
• Unrealistic expectations – many entrepreneurs assume that because they are good at what they do they will succeed. It usually takes at least a year to develop a profitable business and that is working more, spending more and having more setbacks that most people imagined. The good news is that each month you survive, your chances of surviving increase, which is why it is so important to stay committed and focused.
To become a successful business owner you need to accept that you are 100 percent responsible for what happens in the company. Sure, there are a lot of things outside of your control, but you control how you react to them. Blaming the economy, the computers, the suppliers, etc. will disempower you and contribute to your downfall.
When starting a business, you must thoroughly and objectively analyze the feasibility of your idea. A good plan takes into consideration the common reasons for failure upfront.
Understanding other people’s failures, as well as their successes, are valuable lessons that will save you time and money. That is why Coaching and Mentoring are so important in every phase of a business.
