Nobody establishes their business with the goal of failing. Every person wants to start small and eventually create a solid foundation for their business. However, this dream is not realized by every entrepreneur due to entrepreneurial mistakes that cause business failure. Research indicates that 20% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10 years. The good news is that any business can succeed if the right plans are put in place. Discussed below are some of the reasons why you, as an entrepreneur, can cause business failure and how you can avoid the mistakes.
- You are a ‘know-it-all’
Being a ‘know-it-all’ is one of the entrepreneurial mistakes that cause business failure. Starting your business is a clear indication that you are courageous and smart enough to also run it. However, you do not own all the skills and knowledge in the world. You will need to outsource services for activities that you cannot do and also seek opinions from experts in the industry.
Listen to the opinions of your employees and consultants. Working with other people breeds innovation. If you let the ‘know-it-all’ attitude get in your head, you will realize zero to no growth.
- You started the business for the wrong reasons
There are several solid reasons why people start their own businesses. However, one thing that you must have is passion for what you want to do. Some people get into business just because they have the capital or because they need to be busy doing something. These are common entrepreneurial mistakes that cause business failure.
It should take you some time to determine if the business idea interests you. You may lack the skills or know-how but as long as you are passionate, you will do everything to learn and create a good foundation for your business.
- You do not have an online presence
Did you know that many people today rely on the internet to make purchasing decisions? Buyers search for information online to evaluate the best product and service providers. This means that if your business is not online, your potential clients will not find you. You need to have business accounts on social media platforms such as Facebook, Instagram, LinkedIn and Twitter among other sites. You also need to have a website where you educate people about your business through blogging for business.
- You fail to do market research
Failure to conduct market research is one of the terrible entrepreneurial mistakes that cause business failure.Some people get very comfortable after establishing their businesses. Therefore, they continue to use the same old skills and strategies to manage business functions. The market is very dynamic as the customers’ needs and preferences keep changing. If your business fails to meet developing needs, it slowly becomes irrelevant and sales decrease. Prosperity in business requires a lot of focus on market research to understand what the buyers want and the changes that must be made in the business.
- You underestimate company culture
The culture of a company speaks volumes about its value, beliefs, mission, vision, customer focus, practices and employee treatment among other aspects. It is the identity of your start-up. As the owner of a business, you need to create a positive organizational culture from inside out. You need to let the public know what your intentions are and what you are doing to achieve your goals. All the stakeholders of your business are interested in a positive company culture. If your company is known for poor employee treatment or other unethical practices, buyers are likely to switch to other companies. Soon, the sales will reduce and you might end up closing your business.
- You are not responsive to customer queries
If you sell products online and your online platforms are active, you can attest that customers can ask several questions that can be overwhelming. If your customer base is large, responding to the many queries can be quite difficult. Often times, online sellers reply to the first queries and ignore the rest. This is a huge mistake as customers want specific answers to their questions. Failing to keep the communication going can drive some potential customers away. To prevent your business from failing, always ensure to provide fast and useful feedback to your audience. You could even hire a social media manager to do the task for you.
- You fail to prepare for growth
Businesses start small and the common belief is that sales will gradually increase with time. At times, the opposite can happen. If you launch an innovative product that people want, the demand can be very high and you can make several sales within a short time, contrary to what you expected. This sudden growth can strain your services, make your employees feel exhausted or even make your systems to function slowly. The increased sales could also lead to an exhaustion of the stock. If you are not prepared for such issues, you can damage the reputation of your organization. To overcome such issues, always ensure that measures are put in place should unexpected growth happen.
- You use business funds for personal use
Unfortunately, some entrepreneurs use business money to cater for personal needs and emergencies. Some people even use business funds as pocket money. Random withdrawals of money meant for business can gradually lead to its failure. Entrepreneurs must understand that business money is meant to cater for business functions alone. They should make other plans to cater for their personal needs so as not to strain the resources of the business.
- You believe in the 8-hours sleep rule
Don’t get it twisted! Getting enough sleep is very important for brain restoration, memory consolidation and body recuperation. However, if you are starting a business, you need to sacrifice sleep. Sometimes you will need to sleep late and wake up very early. The 8 hours’ sleep rule mostly applies to CEOs who have already made it big in business. They can sleep for long hours because they are assured that their employees will take care of their businesses. Before reaching this point, they had to sacrifice several things including sleep. You need to commit a lot of time and effort to prevent your business from failing.
Entrepreneurs should take total blame for the failure in their businesses. Fortunately, they can avoid the poor habits listed above. Additionally, they should come up with risk management strategies to ensure that they can withstand natural calamities, high taxation and inflation among other conditions that affect the economy.