For an entrepreneur, nothing beats the excitement of starting a new venture. But the sad fact is that over half of startups fail within their first five years of operation. Knowing the most common reasons for a venture going wrong will help you avoid them, and make sure your business is around for the long term. IdeaPros, a Super Venture Partner™, guiding entrepreneurs with great ideas through the complexities and pitfalls of the startup world, describes the following seven entirely avoidable reasons behind why entrepreneurial ventures fail.
1) Insufficient Planning
The best entrepreneurs are filled with ideas and drive, but this energy needs to be directed. If you don’t plan your venture in full detail, you’ll be leaving too much to chance. Drawing up a solid business plan may not be exciting, but it’s essential. This is especially true if your business hits early success. Without proper planning, fast growth can easily sink a company rather than establish it as an industry leader.
2) Losing Focus
On a related theme, many entrepreneurs tend to chase new opportunities with eager enthusiasm. This can be a powerful driver of success. But if it means diluting your energies without ever fully finishing a project, you’ll never achieve the success you deserve. By all means keep an eye open for new profit avenues, but don’t lose your focus on your startup’s core mission.
3) Fuzzy Marketing
Whatever line of business you’re in, you need to know your customers. What do they want or need, and what problems can you solve for them? If you don’t draw up detailed customer personas, your marketing efforts will be flying blind, and your venture will flat line rather than thrive. Michael Corradini is the CEO & Co-Founder of IdeaPros. He recommends asking your most loyal (or lucrative) customers for their opinions on your plans, possibly offering an incentive such as a discount on their next order. “You don’t need to conduct a vast information-gathering exercise, but getting some genuine customer opinions can shed plenty of light on your current development ideas,” stated Corradini.
4) Poor Competitive Research
There are very few truly unique ventures. There’ll always be another company or entrepreneur working in the same space as you. If you want to come out on top, effective competitive intelligence and research is essential. Understanding your competition is every bit as important as understanding your customers.
5) Poor Cost Control
There are always plenty of demands on a startup’s budget, but until revenue streams are reliable, you need to keep tight control of spending. Don’t waste precious funding on investment which doesn’t provide a solid, measurable return. Make sure all your routine expenditure is as economical as possible. Expensive branding campaigns and so on can come later when your income justifies the investment.
6) Lack of Investment
However, you can’t avoid spending altogether if you want success. Don’t put off essential investment through a fear of accumulating debt. Just be sure you have solid funding for day-to-day operations, and sound business justifications for any spending your venture requires.
7) Resistance to Delegation
Lastly, most entrepreneurs are driven, hands-on personality types who like to oversee their entire operation. However, for long-term growth, effective delegation is a must. Whether you employ staff or use outsourced workers, hire the best you can afford and trust in them to deliver results. Trying to micromanage your entire business will place severe limits on its potential.
No ambitious entrepreneur starts a venture with failure in mind. But if you know the most common issues to avoid, you can build your startup on the firmest possible platform for success.