Being an entrepreneur is very liberating and fulfilling, but sometimes it can be downright scary. A study done by Inc. magazine and the National Business Incubator Association (NBIA) revealed that 80 percent of new businesses fail within the first five years.
While external factors are always at play, there are plenty of internal factors that are very much within the control of the business owner to remedy. Self-employment expert Karyn Greenstreet, cited 14 reasons why small businesses fail in a very interesting article for CapturePlanning.com. Some of the reasons she gave that caught my attention include:
Mistaking a business for a hobby: Just because you love something doesn’t mean you should convert it into a business. Too often businesses fail because the owner feels their passion is shared by others. Research your business idea and make sure it’s viable.
Poor planning: Yes, you must have a business plan. It can be a simple three-page plan or a huge 40-page plan. The point is that you’ve looked at all the aspects of your business and are prepared to handle problems when they arise. Your business plan helps you to focus on your goals and your vision, as well as setting out plans to accomplishing them. And don’t get mellow – revisit and revise your business plan annually.
Lack of experience in running a business or in the industry you’re entering: There are so many hats you have to wear, from marketing and selling in order to run a business effectively. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. If you don’t know about these basic skills, educate yourself. Talk to others who are successfully running their own businesses, talk to industry leaders, get a book, find a website, get a coach, do your homework. And keep increasing your business and industry skills by attending classes or reading new books every year.
“Far too many women in business start wonderful companies only to hide in the backdrop and play it small.”
Poor money management: You need to be able to live for one to two years without income when getting started; often businesses are very slow to get off the ground. Also, you have to create and use a realistic business budget, and not constantly drain the business income on personal spending.
Competition: Customers will go where they can find the best products and services. It’s important for you to know who your competition is, what they have to offer, and what makes your own products or services better.
Procrastination and poor time management: Putting off tasks that you don’t enjoy will sink your business faster than anything else. You can’t afford to waste time on unimportant tasks while critical tasks pile up. All tasks need to be done; if you don’t like to do them (or don’t want to spend your time doing them), hire someone to do them for you. If your time management and prioritizing skills are rusty, hire a small business coach or take a class to help you.
Entrepreneurial burnout: owning your own business requires a huge investment of time, money, energy and emotion. It’s easy to work long days and forget to take time off. But in the end, this only causes burnout where your motivation and creativity will suffer, and a pessimistic attitude prevails. You’ll find yourself unable to balance your business and personal life, and both will suffer. Schedule self-care time into your work week and be religious about taking time off from your business.
Some other reasons I’d like to add include:
Going it alone: Most small business owners I speak to agree that being an entrepreneur can be incredibly lonely and isolating. Joining a mastermind group or creating a personal board of advisors are proven methods to help you achieve your professional goals and also re-ignite motivation. Every woman in every women’s leadership group I have ever facilitated have said hands-down that coming together collectively and sharing successes and challenges is one of the best things they have ever done for themselves professionally.
Dropping off the radar – or not being on it in the first place: I know far too many women in business that start wonderful companies only to hide in the backdrop and play it small. They expect that their website alone will bring them the recognition and business they are looking for! Determine what it is you want to be known for and what you want to be seen as an expert in – and then go out there and showcase it! Don’t assume that your audience is just going to “get it”. Be clear, consistent and constant in your messaging.
Realizing life will ALWAYS throw you curve balls: Tending to elderly parents, organizing your children’s lives, fixing that leak in the basement…..there seems to be a never-ending list of responsibilities that can completely exhaust and de-motivate you. So you put your business on hold until things get better, only to realize that some other event awaits you and beckons your immediate attention. There was a time not too long ago when this was exactly me. In fact, I remember doing my 360 feedback personal brand assessment several years ago, and one of the overriding weaknesses that people identified in me was “she doesn’t give time to her business”. I needed to wrap my brain around the fact that life is never going to cease to give me challenges – and that if I wanted to see my business thrive and my vision realized, I needed to commit to doing at least one small thing regularly.
So, the answer is yes you CAN save your business if you eliminate self-sabotaging behaviours and stop ignoring basic, fundamental principles of owning a small business.
Do you have more tips to add to this list? We’d love to hear from you!