In one of my previous blogs last month, I discussed various ways of how you can leverage failure as an entrepreneur. While failure can always be seen as a window of opportunity, we must first understand and internalize why so many individuals find themselves on the other end of the stick for success. In reality, entrepreneurs can fail for a multitude of reasons. While some may be out of their hands, others can be directly correlated to the overall leadership and operations at the workplace. Whatever is the case, anticipating these obstacles will always be the first step before committing to the world of entrepreneurship.
To help you make better choices and decide if entrepreneurship if best for you, I have listed six coherent indicators of why a business can possibly fail. As you go through the list, be sincere to yourself and mark each point that is currently present in your entrepreneurial life. These markers will not just alert you of the unconceivable red flags that will approach your life, but prepare you of how you can retrace your steps to get back on the right entrepreneurial path for success.
1. Financial Funding
At the end of the day, money is what makes the world go round. While the act of attaining the necessary financial funding plays a large role why some businesses do not launch, the actual ability to utilize the funding in the most strategic and optimal way is usually the biggest downfall for many novice entrepreneurs. For any startups seeking capital investment, it is absolutely vital that you know these three things:
- How much your business is worth
- How much you are seeing
- What you are going to do with the overall investment
Many entrepreneurs fail to appreciation how having a deeper understanding of these numbers can help you meet your milestones. By not internalizing these three figures, you may be risking your investors or your company from beneficial opportunities that can take your company to the next level.
2. Grandiose Expectations
While it is great to be optimistic about your business, you also have to be tangible about the current state of your company. Many entrepreneurs fail within the first year because they are often self-delusional by the actual problems hindering their success. Believing in hitting unrealistic expectations (financially) or capturing an impractical market cannot only be damaging morally, but also financially to your business. Rather than setting intangible expectations, try setting objectives that you know you can hit. Make them challenging, but not too difficult that it becomes inconceivable.
3. Foundational Skills
While there are no specific requirements needed to be an entrepreneur, you will be required to have some foundational knowledge of leadership, management, and business in order to succeed within the field. Many novice entrepreneurs seem to expect that things will magically come together. While, hope does play a portion into any success, the skill to manage operations and finances of the day to day will dictate the overall success your company will see within the near future.
4. Questionable Partnerships
There is a famous saying, “Keep your friends close, but your enemies closer.” Many novice entrepreneurs find themselves in a pitfall when the biggest hurdle is within the company itself. To prevent this, make sure you know the people you are getting in business with. If this can be done before you establish your business, great! If not, there is always ways to double check whether or not they are a strong and viable fit for your company. Start by doing research on the person or their firm. Doing a holistic background check their educational and work experience can help gauge whether or not this person is the right fit for you. In addition, question their overall goals for the company. If they seem to align, continue to press on about what they can do for your business. If not, it might be the best option to walk away and say no.
5. Marketing Problems
In the field of entrepreneurship, you will be faced with a variety of obstacles. One of the biggest hurdles you will be expected to overcome is tapping into an oversaturated market. Many novice entrepreneurs fail because their companies remain invisible not just to the world, but also to their intended customers. While marketing and PR may be costly, it is a necessary evil that all businesses must do in order to get their name out there. Keep this slogan in mind. “If they can’t find you, they won’t buy from you.” Make sure you allocate the right resources, time, and funding to help showcase your business and services to the world.
6. Insufficient Sales
Even with the best marketing team, one huge reason why many businesses fail is because of insufficient sales. While we would love to blame timing on this, it could potentially be the case that your product is not inherently right for the marketing pool you are trying to reach. Good entrepreneurs understand all forms of sales. They analyze early customers and various trends so that they can improve on month after month. If you find that your product is stagnating with success, be sure to analyze the reasons why so that you can improve on your services. At the end of the day, sales are the true definer of your company’s success. Be sure to leverage every opportunity to improve on your product so that you can improve on your sales.