And the Walls Came Tumbling Down: Part 1 — Why?

Often times people have great ideas, dreams and ambitions. They are talented and have amazing ideas. They take these ideas, dreams and ambitions and try to change them into a business. Then, in a short time, their dreams a destroyed because their business fails.

According to the US Small Business Association (SBA), this isn’t necessarily true. The SBA states that 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. Why do they fail?

1. The cash cow is dry

Insufficient capital or financial backing is one of the main reasons. Starting a business is not only difficult, but it also can be quite costly. It’s not only costly in the initial startup phase, but also during the growth phase.

Ensure you have sufficient capital. That sounds obvious, but often times people just don’t think far enough ahead. Most businesses are not self-sufficient and profitable until they’ve been around for 3–5 years. You may have to, like most new entrepreneurs do, go without a salary for an extended period of time. Of course, there are several ways to accomplish this, and I’ll talk about this in a later article.

2. Failing to plan is planning to fail

Knowledge and experience are not enough. Even having ideas in you head are not enough. A real plan is needed, and not just a plan in your head. A written business plan is NEEDED. You are 42% more likely to achieve your goals if you write them down, and that’s just speaking of simple goals in life. How much more important is it and how much more likely are you to work if you have a written plan for building your business. Also, writing your plan down not only forces you to get clear on what, exactly, it is you want to accomplish, but doing so plays a part in motivating you to complete the tasks necessary for success.

3. Without a vision the people perish (or the company fails)

Being focused is key. If you don’t know where you’re going, you won’t know when you get there. If you don’t have a target, you’ll never hit it. In business you MUST have targets and goals. Know your target audience. Shot guns are good for one thing. Hunting. In business you need to be focused like a laser beam.

4. Walking before you run

Never put the cart before the horse. I know I heard that growing up as a kid and so did most of the rest of the world. This is very sound advice in business too. When startups are just starting and during the first phases, they cannot afford the “corner office” with a view. Sometimes starting with a home office is the best idea. Then grow into a small corporate office, and so on. This is true in all aspects of business.

5. Have a good team — give away the responsibility

Most startups aren’t going to have a full team of people and experts starting day 1. It usually takes time before you have a marketing specialist, CFO, COO, PR person and so on. There are some absolute needs right away like a good accountant and lawyer, but of course they won’t be on staff. You have them when you need them.

As you grow, you will have the opportunity to build a team. As you do, hire people who are experts at what they do and let them do it. If you’re an electrician, you probably don’t know anything about or you’re not an expert in social media or IT. Hire those people and let them do the job you set them out to do.