Entrepreneurship has been the trending buzzword in the business space for nearly two decades, with every up-and-coming entrepreneur dreaming of revolutionizing entire industries. However, only a few of them manage to be successful in the end due to several intertwined factors. According to Bloomberg, only 20 percent of new businesses succeed within their first one and half years.
While some entrepreneurs give up after failing for the first time, the truth is regardless of the nature of your business — retail, consulting, technology, or manufacturing, you're bound to experience some levels of failure before you succeed, and here are the reasons:
Poor Finance Management
Poor financial management is the first and foremost reason 89 percent of new businesses go down. Inadequate cash flow, lack of capital, and incurring huge debt are a few of the financial factors influencing a business's success or failure. This is especially true for new entrepreneurs who have no previous experience in running a business. While experience helps, nothing compensates for a good understanding of finance, and the economic markets are more important than even having a higher studies degree. If you don't have a background in business studies, it's best to study a few things about how money works and how to manage it before setting off on your business venture.
The second major reason why most new entrepreneurship ventures fail is due to marketing failure. While the importance of marketing is obvious in any industry, most new businesses fail to plan and execute successful marketing strategies. Common failures of marketing campaigns can include not reaching the right customers and a lack of product or service differentiation. Though many established case studies are available for aspiring entrepreneurs to study marketing strategies, you should always keep in mind that every business's situation is unique based on the product and conversion target. So make sure to take more micro factors into account along with more standardized macro factors.
Lack of Innovation
Another common reason many new businesses fail is the lack of innovation or the willingness to do so to set the brand apart. When most novice entrepreneurs think of innovation, the first thing that springs to their mind is an innovation of the primary product or service. But that's not always the case, as innovation can also relate to technology, strategies, or marketing techniques. More often than not, you can significantly improve your brand's efficiency and customer standing by innovating and streamlining internal processes instead of spending all your resources developing new products, for example, online accounting software for small businesses. A general rule of thumb for bringing innovation to your business is finding the most recent innovations in the individual aspects, such as technology and strategies.
Lack of Company Vision
A lack of vision can also significantly affect a company's success. Many new entrepreneurs try to adapt to the situation as they launch their business, but that's almost always a recipe for disaster. Businesses that do not have adequately thought-out long-term and short-term plans will fail as they can't adequately prepare for emergencies and pitfalls. It would be best if you had your business's long and short-term priorities straightened out before even starting your business for this reason. Study up a lot of case studies on business failures as it allows you to learn from the mistakes of others. Try to keep in mind what worked for others won't work exactly the same way for you.
Lack of Specialty
Last but not least, make sure to have a field of specialization for your business. No matter your industry, you need something to separate your business from your competitors. Many businesses are too restricted by their capital and quickly delve into areas they do not specialize in, especially because it's the current trend. You need to understand that all trends aren't necessarily suitable for your business, so pursuing them blindly often ends up doing more harm than good. Instead of trying to generalize, try to specialize in a particular aspect of your product and service and continue improving on it instead of copying others.
Preparing for Success
If you're a new entrepreneur, then there's no doubt that you want to succeed as quickly as possible, like the people you read or learned about in motivational articles and videos. But the fact remains that success is hard to come by for most businesses, and it will probably be years before you succeed. So approach running your business with a steady mentality, and you will benefit in the long run.