While the idea of working for yourself, building something from scratch, and setting your own hours seems absolutely amazing, there is a flip side to the entrepreneurship coin, and it can be a bit dark and scary. Did you know that only half of Canadian start-up businesses survive the first five years? In 2013, there were more business shut down than there were started.
There are no guarantees in business, but there are a number of ways you can avoid many of the negative triggers that will force you to give up on your start-up business dreams.
Top 7 Failure Triggers for Start-Ups
Entrepreneurship out of necessity rather than the love of it
There is nothing wrong with “falling into a business idea.” However, you need to make sure that you are passionate about starting that business. Starting a business because you feel it’s the right thing to do, or because you don’t know what else to do can put you in a tough spot if you don’t really want to put the work in.
Lack of planning
Did you write a business plan? More often than not, the answer is no. Chances are, those are the businesses that will fall behind. You might have the most incredible idea in the world, but if you don’t fully know how you will monetize it, how you will market it to grow the business, and how you will scale the business up as you grow, then what are you working toward? Clients often say that it is “in there head” and they don’t need to write it down. When you start a business, there will be a LOT of things going on and if you don’t write down the details of your planning, it is harder to keep track.
You don’t need to go crazy with a 50-page plan, but set out measurable objectives, define your target audience, figure out the best way to market to them, and have a sense of what your financial path will look like for the first few years. It’s easier to tweak your business plan as you go if you see it all laid out.
Lack of leadership
Without a clear company direction, start-ups won’t go anywhere. Similarly, if you aren’t able to clearly communicate your business values and goals, then your team won’t know what they are working for. This confusion will affect how you connect with your customers, and you’ll find they won’t be as eager to work with you or buy from you as you’d like.
Learn to delegate, which means learning to let go. The sooner you realize that you can’t do everything on your own the better. Find a team of third party consultants or in-house employees that you trust to help you build your brand. Empower them to help you grow your business without you always lurking over their shoulder. If you lay the groundwork with a strong vision for the company, they will see you as a leader.
You don’t fill a need
Successful start-ups seek to fill a need for their target audience, otherwise what is the purpose of your business? Before you start anything, you need to figure out what the value proposition of your business is. For your audience to buy into what you’re selling, there needs to be a need your business can fill.
You haven’t figured out your customers
Without customers, you don’t have a business. It’s in your best interest to start building relationships with your target audience. You need to be open to listening so you can figure out what they want from you in terms of product/service offerings, communication channels, and everything in between. It is all about the customers.
Growing before you’re ready
Things may be going well, and you have a huge contract offer that would take you beyond your current capacity in terms of staff, time, finances, etc. It may seem like an incredible opportunity, but before you sign on the dotted line make sure you have the processes and resources in place to hold you steady. It’s great if growth is your goal, but make sure you aren’t stretching your business too thin. It will be overwhelming for your team, leading to higher turnover, as well as you as a business owner – there is no escaping burnout unless you shut down.
There will be a learning curve when it comes to running your own start-up business. You will have to wear many hats when you are starting out in business. Make sure you track all of your finances down to the penny. You need to know what’s coming in and what’s going out. A solid financial forecast before you start will also help you stay on track to reach your goals. Using an accounting software like Quickbooks or Freshbooks will also help you stay on track as many of the processes are automated and it is an accounting system designed for small/medium businesses.
The reality is, owning your own business is not an easy thing to do. But then again, we usually have to work harder for the things that are most rewarding. While you shouldn’t dwell on the negative aspects of business ownership, you also shouldn’t ignore them. Once you acknowledge they exist you can plan to avoid the pitfalls that might come up.