You want your business to succeed.
We get it.
Who doesn’t want to see a business — into which a person dedicates blood, sweat and tears to blossom? But just so you know, 80% of business fail within their first year.
The statistics is terrifying and you don’t want to be part of it.
Fortunately, knowledge is power and understanding why entrepreneurs fail at building profitable businesses can help you to avoid making the same blunders.
We don’t have all the answers, but we can share the patterns we’ve noticed in other failed businesses.
If you can manage to avoid these 5 common reasons why entrepreneurs fails, you will greatly increase your chance of becoming one of the 20% of entrepreneurs who succeed:
1. They waste all their time planning
The landscape of entrepreneurship is changing, and what you learnt in business textbooks won’t always remain relevant. This is especially true of online businesses. So, when you begin your entrepreneurial journey with a 45-page business plan, you’re putting the cart before the horse.
Why? Well, business plans aren’t based on reality. They are built around “what if,” “maybe” and “on the chance that.” The online nature of most new businesses renders these business plans obsolete within weeks. A one-page plan is often more effective, takes less time and allows you to remain flexible as well as adaptable.
2. They obsess about creating the perfect business idea
The easiest way to fail at entrepreneurship? Never taking action to actually become an entrepreneur because you obsess over the idea too much. This is the reality for many wantrepreneurs. They obsess about the details of their business ideas and spend all their time researching.
Don’t get us wrong: Research is necessary, and you don’t want to set yourself up for failure by acting on a poorly-researched idea. But when you obsess too much, you come up against analysis paralysis: The inability to make any decision because the information you’re consuming is paralyzing you. If you fall into this trap of obsessing over finding the perfect business idea, you’ll never take action and you will never become an entrepreneur at all, thereby failing.
3. They worked hard, but not smart
New entrepreneurs often feel they have to be everything to their businesses: sales, design, copywriting, administration, communications, marketing — everything. But, the one-size-fits-all model of the entrepreneur is completely ineffective. You’re far more likely to succeed if you do solely what you’re good at doing.
The entrepreneur who is excellent in sales but lets administrative tasks fall behind will be far more successful than the entrepreneur who is doing what she can to keep up with sales, administration, web design, marketing and communications all at once. Channel your energy into the small amount of activities that you excel at doing, and either outsource the rest or let your business ride on the wave you’ve created with doing excellent, focused work.
4. They spent too much money on marketing
Within the first couple of years, there’s no such thing as too much marketing, right? That’s what we’ve heard over and over again from industry experts and marketing firms. But, we’ll let you in on a little secret: It’s not true. In fact, some of the best business marketing is free. Think content marketing, word of mouth and adding incredible value.
If you’re skeptical, spend some time trying everything, then, drop 80 percent of the marketing actions you are taking (that provide only 20 percent of the results), and re-channel your energy — and budget, if it requires it — toward the remaining 20 percent. Try the free stuff first. Don’t run into crisis because you kept opening your wallet to pay for marketing.
5. They followed their passion
Everyone tells you to “follow your passion” and you’ve been soul-searching so you can leverage your passion to build your business. But, entrepreneurs who follow their passions don’t make money; entrepreneurs who provide value to their target markets make money. And sometimes, you’ll be lucky enough to have the overlap where your passion provides value to others.
One thing new entrepreneurs fail to realize is that you’ll feel a lot of passion for your business, even if it’s not focused around a pre-existing passion. After all, you’re growing it, nurturing it and putting your blood, sweat and tears into it. Your business is your brainchild and unless you really hate the topic, you’ll be passionate about it for the simple fact that it’s your baby.
Have you been making these silly mistakes? it’s time to get out there and increase your chances of success.