When done right, entrepreneurship can offer you limitless possibilities. We are all familiar with the modern day rags to riches stories of entrepreneurs being propelled from the bedroom to the boardroom. However, there is another side of entrepreneurship that tells the tale of misfortune and failure! As entrepreneurs we start our ventures with a lot of hope and aspirations. For one reason, or another, those hopes don’t materialise. So why is it that some businesses make it to the list of Fortune 500 companies, and others fail?
There are numerous reasons why businesses fail. Here are 10 common causes of business failure, and hopefully these bits of insight will show you how to avoid business failure:
1. Being driven by survival instinct:
When entering a particular field of business, we all aim to survive and make and make an impact. However, making survival a goal is not going to bring out the best in you. Rather, you should focus on adding value. If your only objective is to seek money, and you care less about creating and adding value, your dreams of being successful may quickly fade away.
In today’s overly competitive business world, every entrepreneur must focus on offering innovative products and services to its customers. Profits will follow eventually once they are able to cater to their customers/clients successfully.
“Profit in business comes from repeat customers; customers that boast about your product and service, and that bring friends with them.” – W. Edwards Deming
2. Having inadequate business knowledge:
Knowledge is the key to success. An entrepreneur, who does not feel the need to upgrade their business knowledge, is clearly comfortable standing still, and not concerned about moving forward. Something new is happening every day in the business world, and being up-to-date is absolutely crucial. Contrary to what many people believe, a successful business cannot be quantified by just profit. The value you add to this dynamic world is also a significant measure of business success.
3. Having no focus:
Being a jack-of-all-trades but master of none can be detrimental as an entrepreneur. If you focus your energy and concentration on multiple things at a time, you may not be able to achieve excellence in anything, and in the end, you could be damaging the competitive advantage of your business. Instead, you should channel your efforts into maximising your strengths, and find people around you to support your weaknesses.
4. Being afraid of failure:
Okay, failure in business is quite common, but it is something that we are all afraid of, but you cannot let your fear prevent you from taking risks. After all, being an entrepreneur is almost synonymous to being a risk taker, right? Instead of letting your fear hold you back, you should let your passion and creativity drive you. Remember that the death of fear is only possible when you dare to do the thing that you are most afraid to do.
5. Having no vision:
Entrepreneurs are people who tend to poses great vision and creativity. Being shortsighted as entrepreneur can be costly. Although short-term goals help us stay motivated, but having a long-term vision is crucial. If you want to make a difference with your project, you would have to start thinking into the future. You need to think about how you can do something today that will leave an impact even in the future.
6. Not being resourceful:
As entrepreneur, you have to find creative ways to do more with less. With the limited resources that you have available at the start of your venture, you cannot afford to be flamboyant or wasteful. To be successful in your entrepreneurial journey, you need to learn to climb up the ladder of success by being resourceful and frugal.
It’s one thing to have a great idea, but the great test is being able to find creative and effective ways to successfully execute that idea.
7. Being over confident:
Confidence can help you achieve great things, but over-confidence can sometimes ruin it for you. A person, all by himself, may not be able to achieve all that he wants. Teamwork is extremely important, especially when it comes to running a company. You cannot move ahead unless you know how to empower the team that is working with you towards the same goal.
8. Failing to listen to customers:
The fate of a business lies at the hands of the customer. If you can’t cater to their needs, you have no business. In order to understand your target customers better, you need to give them a platform where they can directly interact with you. Also, remember to pay attention to their feedback. While positive feedback will encourage you to do better, negative feedback will tell you where you need to improve.
“Your most unhappy customers are your greatest source of learning.” – Bill Gates
9. Ignoring online marketing:
In today’s age of digital marketing and social media, you cannot overlook online marketing. This goes even for businesses that do not offer their products online. Yes, even if you own an offline business, having a strong online presence will help you reach potential customers who may not be aware of your existence. You will be missing out on a lot of potential growth if you ignore online marketing.
10. Failing to adapt with the changing business market:
As mentioned before, the business world is constantly evolving at a rapid pace. If your business strategies are working today, there is no guarantee that they will provide the same results tomorrow. As the dynamics of the industry change, you will have to change your business model accordingly. Businesses that fail to evolve, ultimately fail, as they eventually become outdated and irrelevant.