“I am going to be an Entrepreneur” is the happy thought that is going through most people’s mind. The compelling reason may differ such as financial freedom and passion amongst other things. In the same way there are many reasons for a business, especially a start-up, to tank. I would like to list few of the practical difficulties or reason why budding 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 work 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, in a start-up, and even in few companies which have achieved break-even will have the business owners working part time. May be that is a safe way of doing a business but the risk of 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 his 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, you goals, etc.The practical difficulties and the ground reality will always drag any business to an unplanned, unpleasant and unexpected situations. A successful entrepreneur should stay rooted; strong on the business objective(but can be flexible in the route to objective).Whenever you have doubt 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 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 the important factor–“money”.Whatever you want to do for your business, from planning to get a service or a product to support your business, to advertising your business, paying employees, to creating your company portal, branding etc., 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 starts rolling, a business should start generating revenue, otherwise it is a trap. Most of the entrepreneurs will be confident on their business concept/model and in fact that will be a true winning concept. But without a proper revenue plan, it is very difficult in sustaining in the competitive market and will close the doors of any chances in progressing any further.
5.Expecting someone will help– Most of the start up 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 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 from your employees,contacts etc.
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 needless watch. Starting the business, creating customer base–whatever activity you think, it 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– Entrepreneur will take their business very close to their heart which in many occasions will lead them not listening to other’s valuable suggestion. 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, analyse 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,that 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 colleagues and Employees– Few entrepreneurs will be very good in customer management, they will do everything right when comes to customer. In a business, the two important people we need to take care are our customer and our employees/colleagues. To me, the employees of our organisation are primary as they are the one who always work to make the customer smile. If an entrepreneur fails to recognize his employees’ talent and their contribution to the organization,the organization is not in the right track of growth; it might even look like the business is winning—but not in the long term.
10.No clue on the right doors to be knocked-Wherever we are and whatever we are doing, we should know the right doors to be knocked to be successful. 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 that during start up, it will be challenging to identify the right doors, but an entrepreneur should quickly master in identifying the right people. This will help them in climbing the business ladder of success.
11. Not focusing on solving Social problem–
If a product/service or business is not addressing a social problem or requirement then the business will fail. People were in search for decent beauty shops which resulted in a chain of great Beauty parlours.Online shopping companies took mileage from people’s wish of shopping from home. So an entrepreneur should think whether his business is trying to solving any social issues or their product or service is supporting any business which aims in addressing a social problem.
12. Planned Budget is spent
For sure most of the entrepreneur will plan some budget for their business; they need to manage their business with that amount before entering break-even or profit mode. Due to 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 quick in entering profit zone, which will lead the business to drift in unplanned direction and to obvious disaster.
13. Nice Idea ,failed product
We heard 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 is good but it failed due to improper development.
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 markets’expectation and failed. Either in technology front, customer’s expectation, and trending demands, it will keep changing. A business which read their customers right and adapts to the market or trend will climb the ladder to success.
15.Choosing the wrong mentor
A good mentor plays an important role starting from studies, sports or whatever we do. If we have the right attitude and choose the right mentor we are on track. Every entrepreneur needs a mentor, some people say that you need a mentor only during the start up, but that’s not the case. Once a business enters into the profit zone, it should remain in that zone and there should be right strategies to take it to the next level–the right mentor will do it with ease.
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 lot of unexpected tasks to the entrepreneur, still he needs to maintain his cool and have to plan his priorities before jumping to the action. Random way of working not only messes up things; it will also add additional and unnecessary pressure. This may look like a basic and easy point, but it is not easy as it looks. Proper planning is most important skill that every successful entrepreneur will possess and if one is ready to practice then it is possible to master any skill.
17. Difference of opinion between partners
One of the major problems faced by most of the partnership business is difference of opinion. This will even make the most successful business to 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 which 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 are business registration processes, local government rules & regulations, copyright issues ,tax issues ,labour laws, permits and licencing, etc. 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 has to be clearly communicated and followed.Most of the business struggle with attrition, there may be many reasons for employees leaving an organization–attrition is one of the major reasons. Multiple lines of authority not only increase attrition, but also confuse the employees in understanding their roles and objectives.
20. Procrastination – Due to laziness or some other reason, people normally postpone things. Not able to prioritize an urgent task, in other words, delaying the things which require immediate attention leads to failure. A Better option to overcome this situation is to properly plan and continue with the effective daily,weekly,monthly and annual planning meetings. Also, track the outcome of the meeting at regular intervals.
Originally published here.
See you all next time with another topic! Your comments are most welcome.
My Startup is ourbusinessladder.com
Twitter – @thiru25