By Debbie Wicker
Editor of: Start-Business-Support.org
Since deciding to publish this web site, I’ve been spending a lot of time talking to people about their businesses current, past and future. Most people talk about going into their own business, but never seem to actually take steps to do it. Others start their own business, but really never get off the ground and fail relatively quickly. Still others spend YEARS planning and planning and finally launch, but never seem to gain momentum or succeed.
The failure statistics for small business are staggering. So staggering in fact that I’ve decided to try to define WHY so many people fail at business. What are the top five reasons people fail and how you can avoid their mistakes?
1. Not starting
It’s that simple. They talk about it, dream about, study it, name it, organize it, structure it, but they simply don’t DO IT! The United States is one of the BEST places in the world to start a business because of the resources available and the relatively low governmental intervention, but people still won’t do it. Even if they can do it without much risk or capital they still seem to never actually start.
If you’ve spent years dreaming of starting your own business consider that self-employment is the fastest and most efficient way to actually create wealth. That’s right! Wealth creation comes from business creation and taking the first step, no matter how small, will probably move you closer to your dreams than you realize!
2. Not Planning
If you where going to back pack across China, just to see what you could see, would you plan your trip? Boy, I sure would. Imagine being lost in China, not speaking the language, with no cell phone and no backup. That’s how most people approach their business start-up.
They decide to have an eBay business and they start taking photos of stuff (usually very blurry) and throwing some items out there to see what sticks. Then when they’re not successful they say “I tried to have an eBay business but no one really buys anything on eBay, you have to be a big company to sell on eBay now, it’s a joke”.
But they never REALLY gave it a chance. Starting your own business is MUCH harder than backpacking across China, but people for whatever reason are unwilling to plan their business. They don’t do their homework and look for real business opportunities. They just start “shot-gunning” random activities and assume everything will work out in the end.
The problem is it doesn’t and they are out of business before they really get started.
3. Too slow
Much of business, especially small business, is run on instinct. I know, I know — I just told you to plan, so how come I’m now saying to run on instinct? Isn’t that a contradiction? No, not really.
Once you have a STRONG business model and you KNOW how you’re going to ACTUALLY MAKE MONEY, then you have to use your instincts to make decisions.
Many people come from large corporate backgrounds, where decisions are made after YEARS of analysis, spreadsheets, marketing research and MEETINGS and more MEETINGS.
If you run your business assuming you need that kind of data to make decisions you will fail!
Once you have a basic plan in your mind, you need to use your gut and make decisions as quickly as possible but (THIS IS KEY) you need to measure the success of your decisions and be willing to CHANGE your decisions as quickly as you make them! That’s working SMART!
The sooner you make a decision and start measuring it the sooner you’ll know whether or not it’s a good decision. Waiting and analyzing and re-analyzing decisions only delays the implementation and feedback. It slows you down.
New businesses NEED momentum and few things kill momentum more quickly than analysis paralysis and indecision. You’ll end up working 120 hours per week and be moving backwards.
4. Too naive
Here are some facts of business life: Your competitors are going to try to steal your idea, your suppliers are going to bill you for products you never received, your marketing company is going to charge you even thought they totally screwed up the direct mail campaign, your employees are going to try to be paid for hours they didn’t work, the computer person is going to charge you $75 an hour when he/she didn’t really fix the problem! Or course this stuff happens. Expect it. You need to see it coming.
Many people go into business and say that everyone has been SO nice to them and so helpful. They AVOID conflict because they don’t like conflict. No one likes conflict, but avoiding it is going to likely going to cost you a lot of money and stop you from having a successful business. Business IS conflict and addressing it as quickly as possible is the only path to success!
5. Too stubborn
I can give you so many examples of how business people refuse to make adjustments and keep doing the same thing that doesn’t work. I’ve been involved with magazine publishing for a long time and printing is the albatross of any publisher. Printers rarely deliver what they’re supposed to, when they’re supposed to, for the price they quoted.
But no matter how many screw-ups the printer makes, or how many times the magazine is over billed, or no matter how many times the mailing is mishandled, THEY REFUSE TO CHANGE printers. Once THEY make a decision that’s it. They don’t re-evaluate and they will not change it period.
Stubbornness is such a common attribute in small business. It’s so common it’s almost cliché. It’s a common component of business failure.
How can you avoid these problems?
Try to learn to guard against them. Have you friends and family assess you and determine which are most likely to be major issues for you as you start you business. Spend time each week and try to make sure you’re being realistic, fast, addressing conflict and changing those things they need to be changed.
No one is prefect, but you can improve in these areas if you’re realistic and focused.