Lots of people dream of starting their own business. After working for awhile, a lot of people feel like business offers the best path to financial freedom and ultimately independence.
We all have ideas in our minds about things we could do to launch a massively successful business. But before you start, it is important to know the top reasons why businesses fail and what you can do to avoid failing as an entrepreneur.
1. Selling Something that No One Wants
A lot of people think that if they follow their passions and become great at what they do, they can make a lot of money. Or they think of some great new idea that no one else has thought of before and think that if they can get it going, then everyone will buy their creation and they will get rich.
The truth, however, is that what is far more important than what you want to do is what your customers want. The most successful business people find out what the market wants and needs and then creates their product or service around that, instead of launching their product or service and hoping that people will buy.
Before you go into business, research your market and even talk to your target prospects first. Pay attention to what other businesses exist and what they are doing. Find out what people like and don’t like about those businesses.
Once you learn what people want, you may end up taking your business idea in a whole different direction. And if you can align your own interests with what people want, then you have a good business idea that you can run with.
2. Lack of Persistence
You absolutely must be willing to do what it takes to succeed. And don’t expect everything to happen overnight. Lack of persistence is a very common cause of business failure.
People often think of new ideas for how to promote and grow their business. They try it out once or twice and when things do happen quickly, they abandon the path. Be honest with yourself – have you ever tried something to make money and then quit when it didn’t work out right away.
In the later stages, emotional burnout can also occur. Sometimes we just don’t feel like working anymore and without a boss to tell us to keep going, quitting at times becomes a tempting option. When your business or life hits a tough spot, sometimes persistence is exactly what you need to get through it.
3. No Marketing Plan
A lot of people start a business with no marketing plan, hoping that people will just show up or that word of mouth alone will cause their business to explode. Having a very solid plan to get new customers and retain existing customers is critical for the long term success of any business.
Start by figuring out what your competitors are doing. Find out what similar businesses or even other businesses are doing and see if you can incorporate their strategies into your own business. Take some time and write down some real action steps that you and your team can implement.
4. Over reliance on One Marketing Channel
A very common problem that many small businesses face is relying too much on one channel or one customer. Getting one big client can feel great as they often offer competitive and stable pay. They also keep us from having to constantly look for smaller gigs and clients.
However, what if that customer one day doesn’t need our services any more? Or what if your one marketing channel stops working suddenly?
Diversify your clients and your marketing channel and you will build a strong base for your business.
5. Focusing on the Wrong Things
Beginner business people often focus on the wrong things. A lot of this misplaced focus results from having the wrong mindsets and being influenced by emotions. We often do things that we feel are important, while neglecting things that we know are more important. Here are some examples:
Growth vs Operations – A lot of people spend very little time on growing their businesses and instead focus on operational aspects. For example, if you are a writer, you might spend a little time going out and looking for work and most of your time writing. Most likely, if you focused more on growing your business, you would end up doing better financially.
Low Price vs Value Creation – Another area people fail in is focusing on price competition instead of value creation. There are always going to be people competing on price and working on razor thin margins.
By focusing on value creation instead and pursuing higher paying clients and customers, you stand a much better chance of success. You’ll get paid more for the time you put in and you’ll have happier clients that will refer you and your business to others.
Think carefully about the business model that you want to pursue. Are you going to compete on price? Quality? What are some things that your customers want and how can you make it better?
In summary, it is important to be aware of the reasons people fail in business and review them periodically to make sure you are not getting caught up in the same traps that everyone else is. Be aware of your progress and ask other experienced business owners for feedback when you get stuck. And most importantly, adapt your strategies to the changing environment and be persistent.
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