Someone once said, “The richest place in the world is the graveyard.” While this may be true, the statement has a macabre overtone. To rephrase more positively: “The richest place in the world is the human mind.”
The two maxims make the same point — we all dream up great ideas that have the potential to earn us commercial success, but most times we never get beyond the “gee-whiz” stage. Some do go beyond this initial excitement stage and attempt to put their dreams into action. Yet, a significantly short time after launching, they end up faltering and eventually shut down completely.
This scenario is a sad but regularly occurring one. If fact, most businesses fail in their first 12 months of launch. Does it mean that the idea wasn’t worth pursuing in the first place? Far from that! Most ideas, even the seemingly crazy ones, have good potential for monetary returns if early conditions are favorable.
Most startups die young for three key reasons. Avoiding them will keep you from making the same mistakes.
1. Poor planning
Most startups fail due to poor planning. After the entrepreneurs dream up an amazing business idea and are full of passion and enthusiasm, they believe they now have the answer to all their problems. They begin daydreaming, already seeing themselves as a top executive, rubbing shoulders with successful business leaders and living the luxurious life. They even begin to think about leaving their current job. At this daydream phase, their mind conceives all kinds of unreasonable expectations. It’s clouded by uncontainable excitement.
Next, they begin to share their idea with the people close to them. At first hearing, their confidants instantly point out loopholes in their plans, which they simply rebuff, considering them dream killers. (Some could be, though. Beware!) The budding entrepreneurs promise themselves that they won’t disclose the plan to anyone else until it kicks off fully. They tell themselves, “I don’t want detractors around me.”
Passionate and dedicated to the new course, they get down to work, drawing up their plans, all the while sticking resolutely to its unrealistic aspects. (Note that these are usually the parts that make things so unique and exciting.)
Even in the planning stage, most will become aware of the flaws, but they’re too sentimentally attached to their idea to make the necessary adjustments. They tend to believe that somehow things will work out. They don’t want to entertain any thoughts that might dilute the allure of this new course.
This sort of approach to a business idea is a sure recipe for future failure. Sadly, most of us fall victim, as we often approach new ideas in this way.
So, how should we approach ideas and prepare our business plans to ensure success?
First, consider the question: Have you ever wondered why big corporations hardly fail when they try new ventures? True, they have the resources in terms of finances, experts and public trust, but most of their success comes down to effective planning. WhatsApp and Instagram became great social media platforms once Zuckerberg bought them from their original owners. They’ve been transformed into much better social network websites. The difference is that Zuckerberg had a better plan.
The good news is that you don’t need to be a trained strategist to be able to work out a solid, practical plan for your prospective business venture. You only have to give it sufficient thought and put serious preparation into the planning process. Ask and answer these questions as honestly as possible — without emotions or half-truths:
- Does this idea already exist? (Chances are that yes, it is.)
- In what ways can I be different?
- Who are my competitors?
- What advantages do they have over me?
- What advantages do I have over them?
- What’s the demand level of my new product/service?
- Who is my target audience?
- Why would they choose me instead of my competitors?
- How diverse is my target audience? (Diversity of target audience could be age, gender, geographic location, race, lifestyle, etc.)
- In what ways can I reach them?
- What resources do I need?
- What resources do I have, and what resources don’t I have?
- What are my short- and long-term goals?
To succeed, entrepreneurs must have a clear vision of what they want to achieve and how to go about it. The planning stage is a vital one, as this is the foundation of future success (or failure).
2. Lack of discipline
To ensure success, entrepreneurs must adopt the basic attributes of industriousness, dedication and discipline. They must have such great focus and resolve that they allow nothing to impede or undermine their efforts.
One of the greatest enemies to success is procrastination. It should be avoided at all costs. Entrepreneurs must apply themselves to what they’ve set out to do, and do it, in order to get through the very critical first 1-3 years of their new venture. This launch stage involves loses and pains; only focus and discipline can get entrepreneurs past this stage.
Becoming an entrepreneur means assuming the position of a leader, and to be a leader requires mastering one’s self first — exercising great control over one’s emotions and actions. For example, serving customers is not an easy task, and at the startup stage, this will even be harder. Customer satisfaction must achieve 100 percent, meaning keeping emotions in check when dealing with angry or dissatisfied customers, even when they’re in the wrong. Such customers can be a cause of business failure, as they can spread bad impressions of the business or product — something no business wants.
Trust is an offshoot of discipline. In their emerging business, entrepreneurs should make building customer trust a priority. The problem with most startups is that, over time, they lose some focus and discipline, forgetting the promises made in their mission statements. How can they build and maintain trust? Delivering on promises is one, and this takes a tremendous amount of discipline.
3. Low motivation
Most entrepreneurs enter into business with a great deal of enthusiasm and high expectations. However, over-expectation is a real problem as it sets unrealistic targets. After launching the business, reality slowly begins to set in. The entrepreneur realizes things aren’t panning out as envisioned. Soon, motivation tapers off, which can have a direct effect on the business. Lack of motivation triggers a lack of discipline, which in turn leads to business failure.
Besides over-expectation, attributes like inexperience, impatience and lack of focus can lead to a loss of motivation. When the business venture isn’t achieving the results expected, motivation dwindles.
Motivation is the wind that constantly fans the embers of entrepreneurial fires. To remain steadfast in your goals, find ways to keep your vision and passion as stoked as it was at the start.
To accomplish this, carry out these three key actions:
- Revise your mission and vision statements.Doing this has a way of taking you back to the “gee-whiz” stage. You need that burning enthusiasm.
- Impose a measure of patience.If there’s anything you need at the early stage of any venture in life, it’s patience. Nothing good comes easily. Many people were on the verge of success when they became impatient and quit.
- Set short-term/long-term goals.Your long-term goals are for the future, while the short-term goals are small tasks that you complete in working toward broader long-term goals. Achieving your short-term goals step by step helps keep you highly motivated. When you achieve each goal, your resolve grows stronger.
A host of factors, separately or together, can make or break a new business. However, overcoming the three most notorious destroyers of new businesses will give you more guarantees that your new business will survive past the first 12 months and counting.