Why do most business owners fail? That’s a loaded question with a lot of different answers from different perspectives. As we all know, starting a business isn’t a walk in the park. It takes expertise, effort, commitment and hard work. Not to mention with today’s insecurities of an uncertain future, many small business owners have to face reality and accept the fact that they have to close their doors.
It’s common to think that the major difference between successful and unsuccessful entrepreneurs is luck. But if you take a look at how many who fail, it becomes clear they have less than good fortune in common—almost all of them! 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.
But why? And how can we learn from this amount of failure that we as entrepreneurs can apply to our business aspirations?
In my years as an entrepreneur and helping business owners reach their business aspirations, I have seen businesses in all shapes and sizes. And I can say this with full confidence, there is a way to keep your business running and thriving no matter what economic weather you are in.
Thus, I give you the top 3 reasons why businesses fail and how you can avoid them.
No Deeper Connection With Ideal Clients
One of the reasons why businesses fail is entrepreneurs failing to understand the needs of their clients. Entrepreneurs need to take the time to get away from the daily grind and think about what they’re passionate about.
In today’s competitive market, you have to get to know your clients. Know what they do, what makes them tick, and what are the problems they want to be solved. Walk one thousand steps in your clients’ shoes.
They hold the key to your success deep in their pain, behaviour, aspirations, values and the career they want to achieve. Build a deeper connection with your ideal clients, and have a dialogue with them.
Failing To Plan Is Planning To Fail
Planning for a business venture is necessary for a business to succeed. This includes developing an idea and planning how to implement it to gain a health stream of income.
Failing to plan can lead you down a path of failure, but with planning, you are sure that your new company has every chance of succeeding!
An efficient business plan should include the following:
- A clear description of the business
- Current and future employee and management needs
- Opportunities and threats within the broader market
- Capital needs, including projected cash flow and various budgets
- Marketing initiatives
- Competitor analysis
Businesses fail because entrepreneurs fail to address the needs of their business through a well-laid-out plan of action before opening their doors to clients. Don’t set yourself up for failure, have a plan to make your business goals your future’s reality.
The outcomes that everyone experiences in our lives and business are results from decisions that we’ve made. And our decisions are driven by beliefs, and value systems which for many of us go through life without even questioning and thinking about. For entrepreneurs who do well in their respective fields, they do so because their mindset is designed in a fashion that allows them to.
Businesses fail because when entrepreneurs are met with a particular problem, they try to fix it without solving the root cause of the problem. They end up constantly putting out fires, which more often than not is a mindset issue.
But here’s some good news, your mindset is not fixed.
You can shift your mindset and grow to be the best version of yourself if you continue to improve and change for the better all the time. Treat your mindset as a muscle, you can build and improve.