“I am going to be an Entrepreneur” is the happy thought that goes through most entrepreneurs’ minds. The compelling reason for a person may differ such as financial freedom, passion to create amongst other things. In the same way, there are many reasons for business failure, especially a start-up to the tank. Below is a list of a few of the practical difficulties why budding entrepreneurs or even an established entrepreneur fail.
1. One Man Army
Trying to do everything on their own. One man can be a founder but trying to do everything on his own not only hampers his business progress but also his priceless personal life. Try to share the workload with your co-founder, employee, consultant, or an unknown expert by searching and finding them in your locality or nearby area. Sharing the work right from the start helps a lot.
2. Part-Time Business
Normally, a start-up, and even in a few companies which have achieved break-even will have the business owners working part-time. Maybe that is a safe way of doing a business but the risk of business failure will be the price it demands. The part-time work of the owner will show a negative image of the company.
The employees might start to drift to competitors’ company since they are not seeing the potential and the trust that an owner should have in their own venture. At least one or a trustworthy representative of the owner should be working full-time thinking about the business, tracking the employee’s work, and creating a synergy across the organization.
3. No Business Plan
A business plan is something that always reminds you of the key things your business should have. Few of them are –why you started your business, where you wanted to be, your revenue plan, your goals, etc. The practical difficulties and the ground reality will always drag any business to the unplanned, unpleasant, and unexpected reason for business failure.
A successful entrepreneur should stay rooted; strong on the business objective (but can be flexible in the route to objective). Whenever you have doubts and feel like you are drifting, a good business plan will be the right place to refer to bring an entrepreneur back to the right and planned track. No business plan or the lack of clarity in the business plan will always lead to business failure.
4. Not Planning the Revenue Model
There can be thousands of reasons for starting a business, but any business will strongly depend on one of the important factors–“Revenue”. Whatever you want to do for your business, right from planning, to getting a service/product to support your business, to advertising your business, paying employees, creating your company portal, branding, etc., and money is a key factor. Any kind of business will demand Initial investment (That may vary depends on the business and the scale one wishes to start).
When months and years start rolling, a business should start generating enough revenue to sustain itself otherwise it will lead to business failure and your business will fall into a pit. Most of the entrepreneurs will be confident about their business model and in fact, it will be a true winning concept. But without a proper revenue plan, it is very difficult in sustaining in the competitive market and there will be no chances of progressing any further.
5. Expecting Someone will Help
Most of the startup has been started having few people in mind that they, in some way or the other, will help in the growth of their company (If you are an entrepreneur reading this, just rewind and see–you too had it). They might be your friends, relative, colleague, etc. But the bitter truth is, most of the time the people in your contact will be busy in their lives or have a different opinion of your business.
It doesn’t mean you have to work alone, but have fewer expectations from your contacts. The only person who can do magic in a business is the founder and obviously with the support of your employees and mentors if you have any.
6. Lack of Networking Skills
This is the most important skill a business will demand from an entrepreneur. Without the right networking, any entrepreneur is like a needleless watch. Starting a business, creating a customer base–whatever activity you think, demands networking. Lack of networking skills will leave the entrepreneur in isolation and will be a barrier between the entrepreneur and his success.
7. Entrepreneur’s Ego
The entrepreneur will take their business very close to their heart which on many occasions will lead them not to listen to other’s valuable suggestions. This doesn’t mean always accept what others say about your business, but be open-minded to positive criticism. Listen to all the criticism and inputs from others, analyze whether they are genuine or not.
8. Superior or Inferior Thought
Thinking our self to be superior or inferior to others is a basic and fundamental problem; especially in a business scenario. The thought will divert the entrepreneur by making him compare himself with other businesses rather than concentrating on his own business analysis and improvements. Although benchmarking your business with the industry-standard or with a competitor is absolutely fine, comparing yourself or your business with them either to be proud or feeling less competitive will be a problem.
9. Fail to Recognize Employees
Few entrepreneurs will be very good at customer management, they will do everything right when comes to the customer. In a business, the two important people we need to take care of our customer and our employees. The employees of the organization are primary as they are the one who always works to make the customer smile. If an entrepreneur fails to recognize his employee’s talent and their contribution to the organization, the organization is not on the right track of growth; it might even look like the business is winning—but in the long term failing to recognize employees may a major reason for business failure.
10. No Clue on the Right Doors to be Knocked
Wherever we are and whatever we are doing, to be successful we should know the right doors to be knocked. Right from choosing an auditor, customers, vendors, etc., an entrepreneur should be on top of knowing who will be best suited for a particular task. It might be challenging for a startup to identify the right doors, but an entrepreneur should quickly master identifying the right people. This will help them in climbing the business ladder of success.
11. Not Focusing on Solving the Social Problem
If a product/service is not addressing a social problem or requirement in the market then the business will fail. For example, People were in search of decent beauty salons which resulted in a chain of great Beauty parlors. Online shopping companies took mileage from people’s wish of shopping from home. So an entrepreneur should think whether his business is trying to solve any social issues or their product or service is supporting any business which aims in addressing a social problem.
12. The Planned Budget is Spent
Most entrepreneurs plan some budget for their business needs and they need to manage their business with that budget before entering break-even or profit mode. Due to the enthusiasm and lack of practical exposure, the entrepreneur will spend lots of unplanned money towards brand-building and marketing; this might lead to a situation where his entire planned budget is spent well before the planned timeline.
Once locked financially, it will affect the business owner’s mind and will suffocate the entrepreneur to act quickly in entering the profit zone, which will lead the business to drift in an unplanned direction and too obvious a possible disaster.
13. Nice Idea, Failed Product
We heard a lot of famous cine-heroes saying that the director narrated the story well but was not able to bring the same onscreen. This can happen in the business world as well. The concept will be innovative and will solve social problems but the product/service didn’t come up well. In simple terms, the study and design are good but it failed due to improper development and execution.
14. Not Updating Products up to the Markets’ Expectation
Many top companies including famous mobile, electrical and watch companies did great business once, but did not update them to the market’s expectation and hence the reason for business failure. Either in the technology front, customer’s expectation, and trending demands will keep changing. A business which read their customers right and adapts to the market trends will climb the ladder to success.
15. Choosing the Wrong Mentor
A good mentor plays an important role in shaping an entrepreneur’s business journey. Every entrepreneur needs a mentor. Some people say that you need a mentor only during the startup phase, but that’s not the case. Once a business enters into the profit zone, it should remain in that zone and there should be the right strategies to take it to the next level–the right mentor will do it with ease.
So always have the right mentor mentoring your business and taking you to achieve great heights.
16. Unplanned/Random Way of Working
There is a saying -“Until we can manage time, we can manage nothing else. “Yes, everyone knows that a business world will throw a lot of unexpected tasks to the entrepreneur, still he needs to maintain his cool and have to plan his priorities before jumping into action.
Random way of working not only messes up things, but it will also add additional and unnecessary pressure. This may look easy to manage time, but it is not as easy as it looks. Proper planning is the most important skill that every successful entrepreneur should possess and if one is ready to practice then it is possible to master time management skills.
17. The Difference of Opinion between Partners
One of the major problems faced by most of the partnership business is a difference of opinion. This will even make the most successful business the tank and this issue demands keen attention. No two humans can think alike, mature entrepreneurs will understand this and will have a healthy debate on the difference and will come to a decision that benefits the business rather than imposing their ego on their business.
18. Legal Issues
Fix it very clear in your mind, if you are thinking of starting a business ever, the first things that should come to your mind is business registration processes, local government rules & regulations, copyright issues, tax issues, labor laws, permits, and licensing. Never take the legal stuff lightly, you will end up regretting later.
19. Multiple Line of Authority for Employees
There can be any number of partners involved in a business, but the roles and responsibilities of partners have to be clearly communicated and followed. Multiple lines of authority for an employee not only increase attrition but also confuse the employees in understanding their roles and responsibilities clearly.
20. Procrastination
People normally have a tendency to postpone things to be done. Not able to prioritize an urgent task or delaying the things which require immediate attention leads to failure. A better option to overcome this situation is to properly plan your daily, weekly, monthly, and annual planning. Also, track the outcome of the plans at regular intervals.
Stop Procrastinating and get things done.
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