This is usually the single most important reason for business failure early in a business.
The first step to fixing a problem is identifying what it is. So let's take a look quickly at some of the reasons why most businesses fail. If you are looking to start a business or have already started a business of your own, you can use these tips to hopefully avoid some of these pitfalls in your own business career.
As a business owner you are hopefully starting for the right reasons. I cannot tell you what your reason should be but I can recommend it be something that you think about often, something that perhaps gets your emotions going, something other than just money. For most people it usually is a shock that most successful people are more passionate about something else that is dear to them which is why they are successful at what they do which is also why they make a lot of money.
Here's the big takeaway: if you start something for the wrong reasons, you will stop for the wrong reasons. If your only intention for getting into business is to make lots of money then your resolve and mental toughness will be test greatly if after five years you haven't even turned a profit. Attach the monetary value that you are shooting for to something bigger. Maybe you want to build a school, or donate money to charity, or retire your mother, something that will keep you going when life hits you upside the head.
Many a report on business failures cites poor management as one of the biggest reasons for failure. New business owners frequently lack relevant business and management expertise in almost all business functions and do not have enough capital to hire the necessary people to take care of what they do not know. Unless they recognize what they don't do well, and more importantly seek help, business owners may soon face disaster.
A successful business owner is also a good leader who creates a work climate that encourages productivity as well as innovation. You must be skilled at hiring competent people, training them and able to empower people to go above and beyond the call of duty. A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future.
A tall order for someone who just gets into business, which is exactly why most people are not able to defeat the battle of attrition that comes with new business.
No Mentorship and Lack of Experience
A lot of the setbacks and hiccups, failures and hurdles that are encountered along the way can either be avoided or alleviated with the help of a business mentor. If you are starting out a business entirely on your own you might as well have started the journey five years ago blind-folded.
A mentor can help you identify potential pitfalls as well as confirm certain setbacks you will face if you continue what you are doing. They are an invaluable asset that you must seek to have in your corner if you want to be successful in business and at least get your business off the ground.
Failure to Change with the Times
The only constant in business is change. The ability to recognize opportunities and be flexible enough to adapt to changing times is a key ingredient to surviving and even prospering in the toughest business climate.
The challenge is that most new entrepreneurs are so excited about their idea that they fail to see some of the cons of pursuing it. They choose to ignore their competition that most times are more familiar with the industry and are leveraging the changes in the marketplace. Be sure that as you pursue your business venture you pay respect to the economy before you and the competitors you currently have. They have been running the marathon longer than you have and are still running.
That is a good enough reason to pay attention to what they are doing as well as how they are reacting to the economy.
Business owners often fail to establish clear goals and create plans to achieve those goals, especially before starting out, when they fail to develop a complete business plan before launching their company. You can't achieve your goal if you do not have one. Having a goal gives you purpose and direction.
Goals act as your life map. They are like the dashboard on your car and chart your course and tell you when you have arrived at your destination. Most young entrepreneurs focus too much on the details versus just mapping out the end of the journey. You needn't worry about how you will achieve your goals. Simply concern yourself with the process of setting short term, medium term, and long term goals.
A written goal is infinitely more likely to be achieved that one that is merely kept in your thoughts or spoken aloud. Write your goals down and review them consistently.