Part 2 of 5 in our entrepreneur series. This week: All the big mistakes to sidestep on your way to success.
Starting a business and keeping it going is challenging, especially when the Small Business Administration provides numbers that show just how many small businesses or startups fail each year. The statistics show that 50% of new businesses make it five years while one-third survive up to ten years, but nearly 90% are now believed to fail within their first year.
While there are many reasons for why a business fails, one of the key factors is the entrepreneur behind that business. In fact, due to their behaviors and actions, there are some that fail before they even get started.
Here’s 10 reasons why…
1. Assuming you will make a ton of money
While it’s great to be confident, it’s a mistake to focus only on making money. The emergence of unicorns in the past few years with billion-dollar valuations is sure to make anyone’s mouth water at the thought of achieving that status. In reality, there are very few that reach that status.
Also, in focusing on making money, you are creating a business around reaching a certain amount of revenue rather than planning to build a sustainable company that can go the distance and solves a problem that is impacting numerous people. If you want to focus on money, then don’t quit that day job.
2. Believing everyone wants what you are offering
Feeling passionate about your idea helps to keep you motivated to get through all the hard work of turning it into the business. However, you can’t assume everyone will automatically love and want your solution. With such a segmented audience and ever-changing interests and desires, there is no way your idea is going to appeal to everyone. You will fail before you start because you will not be developing a segmented strategy that targets audience members that you know specifically want what you will be selling.
3. Listening to others more than going with your gut
It makes sense to take advice from others, including mentors and investors. They have the experience and knowledge to provide you with key insights that can help build your business. Yet, if you only ever do what they are telling you, this could be a sign of early failure.
One of the reasons you are an entrepreneur is because you wanted to be the key decision-maker and lead a company to greatness. You have that entrepreneurial instinct to really make a go of it, but if you only ever listen to others, you are wasting your idea. Only you truly know what you have in mind and need to execute on that or you will fail.
4. Thinking a great idea is automatically a great business
Like the assumption that everyone will just love what you offer, it’s a mistake to think a great idea produces a great business. There’s significantly more that goes into building a great business than just the idea. For example, it depends on the talent you can find, the business model you create, the strategy you devise, the marketing you plan and even the external environment.
In recent years, there have been numerous great ideas that have failed due to a recessionary environment, legislation, and even competition that did it better, faster, and even cheaper. Do the due diligence to ensure that the idea looks better than just the paper it’s printed on.
5. Not being disciplined with your work ethic
Thomas Edison said, “Genius is one percent inspiration and 99 percent perspiration.” No matter how incredible your idea is, it will not produce that “incredibleness” with you sitting on the sofa in your pajamas, watching daytime television, playing the 50th game of Candy Crush, or hitting up happy hour.
While you may have a boss at your job that keeps an eye out that you are working diligently, you will be left to your own devices as an entrepreneur. If you cannot self-manage and maintain disciplined work habits to put in the long hours it takes to build something good, then you will not succeed. You need the focus and determination to work independently and around-the-clock to build a business.
6. Not focusing on adding value
The recent movement to be corporate socially responsible has proven that if you start with the idea of adding value and working with a purpose versus working for money, you will end up succeeding and most likely also make that money. Whether you are targeting consumers or businesses, the primary desire of today’s audience is the value they receive from the products and services they buy. No one will be interested in what you are selling if you can’t create that value proposition from the starting gate.
7. Lacking knowledge about business basics, your industry, and your audience
Within that 99 percent of perspiration mentioned by Thomas Edison is sweating it out over research, learning, and preparation. You will never make it if you don’t take the time to get to know your audience by studying their habits and behaviors. Along with this key component is the need to understand your competition, the overall industry you serve, external factors that impact your industry and the basic operating standards of a business. Essentially, if you don’t study, then you will fail the test.
8. Fearing failure and avoiding risk as a result
No success has ever come from the avoidance of feeling and fearing failure, but many great stories behind some of today’s biggest companies involve entrepreneurs that embraced failure. You cannot grow without experiencing some important life lessons that come from missteps along the way.
If you are afraid of failure, then you also will not take the calculated risks necessary to disrupt the marketplace and really create a significant opportunity for success. If you want to be the next Steve Jobs, Bill Gates, or Richard Branson, then you need to jump in and face the potential for failure because they did and failed a few times before they succeeded.
Billionaire Dallas Mavericks owner and “Shark Tank” investor Mark Cuban is happy he has failed and stumbled because it helped him get to where and what he really needed to be doing. If you are not willing to do so, then the failure you experience as an entrepreneur will be ongoing and you might as well go back to climbing the safer corporate ladder.
9. Looking short-term rather than being visionary
When you look at running a business with an employee mindset, you get stuck on the day-to-day aspects rather than having a visionary sense of the big picture. If you are someone who is only focused on putting out those fires rather than scheduling the brush clearing in advance, you will not make it as an entrepreneur. You need to develop that tactical business plan and strategy that maps out the future in various increments so you work the long-term while still keeping an eye on the near term.
10. Wasting money
Bad spending habits in your personal life will easily spill over into how you manage your business. The key here is “habits” rather than any particular incidence of a bankruptcy or foreclosure. Life happens, including unforeseen illnesses or job losses that put your credit score in a bad place. That doesn’t mean you are incapable of budgeting or running a business. However, if you are an impulsive spender and money burns a hole in your budget, you could be destined for startup disaster. Everything related to starting a business often involves doing more with less, stretching that funding as far as it can possibly go. Learn how to handle money, develop self-discipline, and start saving first, then go start a business.
These 10 personal habits really can be seen as a pre-disaster of your entrepreneurial success and are primarily related to a certain mindset that drives inaccurate and misguided beliefs about what it means to be an entrepreneur. What is involved in creating and managing a business often doesn’t match what we had in mind to do and we can be blinded by misconception. Fix those misconceptions and reframe your mind before taking on a startup so that you can increase the likelihood for success.