These days, I am almost tired of reading about all of the “overnight” success stories of entrepreneurs on the Internet. “Man invents new and improved widget, makes $40 million in his first year…” or “How I became a millionaire before the age of 20…”
Don’t get me wrong, I am happy for those people and it is a key part to one of the cornerstones of this country – American ingenuity. But, my problem with these stories is that a lot of the entrepreneurs try to sugarcoat their journeys and make them seem easier than they were.
As an entrepreneur myself, I can tell you that obtaining this kind of success it not easy! Especially for people trying to walk away from their day jobs, it is a lot of hard work. Like it or not, hard work, luck, financial difficulties, and a million other things are necessary to achieve success.
So, what is the failure rate of entrepreneurs? The research varies, and some say the actual figure is impossible to track. The figures that I have seen are high – most are around the 75% level, while some go so far as to say that 95% of all startups will fail in their first year.
On that note, I thought it would be helpful to go over the main reasons why most entrepreneurs fail. After all, we can learn more from our own mistakes than we can from a story about someone who happened to be in the right place at the right time.
Small Business Mistakes to Avoid
1. Lack of Focus
I’ve seen a lot of aspiring entrepreneurs fail simply because they were “all over the place” with what they actually wanted to do. They tried so many different businesses in their first few years that they never got anything off the ground. A lot of this needs to be weeded out in your “pre-launch” process. That goes for both Internet businesses and brick and mortar businesses.
For example, if you know you want to sell products online, do your research first as to exactly what you want to sell and how you want to sell it. Launching a website and then constantly changing the focus from selling cupcakes to selling screwdrivers to selling women’s lingerie is a sure way to be “finished” before you’ve even started.
2. Veering Away From Your Passion or Talent
Stick with what you’re good at or what you love to do. Can you be successful being involved in something that you are not great at or don’t feel strongly about? Absolutely. But, how dedicated are you going to be to that concept in the beginning? How likely are you going to still feel motivated after doing it for six months? How much easier would it be if you had chosen something you are great at or passionate about?
From personal experience and from talking to other small business owners, I can tell you that it’s very important to follow your passions, talents, and dreams. Dedication is a huge factor, especially in the beginning of your venture, and any preexisting knowledge or talents that you possess will make everything easier for you. This passion is one of the key characteristics of an entrepreneur; stick with what you know and love.
Make sure you do your due diligence and do the proper amount of research before starting out. This goes back to my first point on focus. I’ve seen people dive in head first to areas that they knew little to nothing about, and the huge mistakes they made in the beginning were just too costly to overcome.
Any successful entrepreneur will tell you that mistakes are going to be made along the way, and it’s important to learn from these blunders and adapt accordingly. However, you need to be prepared enough so that you can avoid the huge, expensive mistakes that can sometimes sink your idea before it even has a chance to take off.
4. Too Hesitant
Before you start a new business, even if it is a passion of yours, there needs to be a certain amount of research that goes into it before taking the plunge. You won’t just wake up one day and decide to start a business. That just wouldn’t be smart. However, at some point in time, you’ve got to jump in!
I’ve seen people who just seem content to do continual research on a business, and are too afraid to ever actually launch it. There is always going to be a certain amount of risk and uncertainty in any new business that you forge. If you are not willing to assume that risk or simply don’t have the stomach for it, you’ll never succeed. You need to be able to survive those moments of doubt!
5. Not Seeking (or Ignoring) the Advice of Others
Nobody knows it all. It seems like the world is full of people who think they do, but no one really does. If you are one of these people, you’re going to struggle. Park your ego at the door and seek the advice of others. Talk to successful entrepreneurs, and where possible, get the advice of the people who are doing exactly what you want to do.
Of course, they’re not going to give away their best business secrets as to what made them successful, but you may be surprised by their willingness to help you out with some of the issues as you try to start your own business. They’ve been in you’re situation and are therefore often willing to help out. This can be quite a time-saver (and mistake-saver) in the beginning. Actively seek out the advice of others!
6. Not Listening
Once you get that advice, listen to it. This goes back to letting go of your ego. I’ve seen many fledgling entrepreneurs who didn’t make it simply because they were too stubborn. Effective listening is such a huge skill to have in your repertoire and I can’t emphasize it enough. I’m not saying that you have to put into practice every piece of advice you get, but you should be able to draw something productive out of every one of these conversations that you have. Once you get a good piece of advice from someone, whether it be a successful entrepreneur or a customer, listen and learn.
It’s easy to write about success stories of people who have hit it big by becoming their own boss. However, if you ever really dig into these stories, you rarely get any type of useful tips on how to become a successful entrepreneur. The reality is that, more often than not, new business owners fail. But if you avoid some of the mistakes above, your chances of success will go up dramatically.
What are some of the biggest mistakes that you’ve made as a small business owner? What lessons did you learn from them?