The rate of new business failure continues to be alarmingly prevalent. This is despite an overwhelming amount of business information at our fingertips.
The percentage of new business failures has not declined over a long time, so our goal is to help reduce failure rates, one owner at a time.
Government statistics worldwide often show that many new businesses fail within a few years (3-5 years).
If you’re dreaming of becoming your own boss, it’s crucial to know how to reduce the risk of business failure before you own a business.
The official reasons for business failure are just symptoms.
If you try to find out why so many businesses fail you will come across the same old stuff.
Dominant business websites, Governments and even many Accountants repeatedly claim there are three main reasons for business failure:
- lack of business funding so there’s not enough cash to keep going
- poor management because the owner isn’t a good manager
- a poorly conceived business idea because not all good ideas are worthy
Our experience as business owners and mentors is that these are symptoms and not the real causes.
These symptoms of business failure have “hidden causes” that are often far from obvious. They are also sometimes regarded as taboo and, therefore, rarely discussed.
What are 7 hidden causes of new business failure?
Through being business mentors and having been in the business world for decades we know what lies behind the scenes.
- Some people are not suited to owning a business and are better suited to employment. Unfortunately, many find this out the hard way by owning a struggling business or going bust.
- New business owners underestimate what is involved in running a business. They pick and choose what they like doing and tend to ignore some critical things which can cause a business to collapse.
- Too many business owners think their technical skill is the most important part of their business. Being an expert in a certain skill does not mean you will be a successful business owner.
- Often the speed at which a new business can generate income is too slow, which causes the business and owner to run out of cash. New owners often do not know how to work this basic stuff out, which can cause a lot of stress.
- The amount of money the business can generate will never meet the owner’s needs, no matter how hard they work.
- Many entrepreneurial people mistakenly think that a good idea will become a good business.
- The motivation and aspiration for starting a business are not always clear.
The good news is that you can help avoid business failure by adequately preparing yourself before you own a business.
Our content acts as a pathway to help you address important steps, such as evaluating your business idea or developing a Money Mindset for successful business growth.
You are the secret ingredient to business success.
Business failure and success have as much to do with the owner as with the business idea.
Lenders, self-styled gurus and business schools tell you to focus on business plans, marketing gimmicks and management tools, perhaps because they have never actually run a business themselves.
Much of the information on the internet or social media focus on “how-to” run a business. Gurus espouse urban myths abound about how easy it is to imagine success and build businesses with relatively little effort. Frankly, a lot of this information is feel-good, click-bait that adds little value to you but provides them with a healthy income!
A theory is no substitute for business experience.
Owning a successful business is every owner’s dream and behind every successful venture is a successful and well prepared business owner.
Over many years we have observed the characteristics and practices of people who succeed and why some people have not.
Whether you are younger or a grey entrepreneur doesn’t matter.
The right preparation before you own a business is key.
For any worthwhile pursuit, thorough preparation is often the most important element of success. The same can be said if building a successful business is your goal.
Avoiding business failure by focusing on:
Preparing yourself for the reality of owning a business.
Building your business knowledge and skills.
Adopting a Money Mindset from the start.
Choosing the best idea.
Here are some examples of how you can prepare BEFORE you own a business:
- Understand the critical business functions needed to run a business and what is involved.
- Carefully evaluate your business idea to make sure it can meet your financial and lifestyle aspirations.
- Assess personal resilience and preparedness for the challenges that lay ahead.
- Follow the 3 step process for evaluating a business idea that does not start with a business plan.
- Adopt a Money Mindset for success including the 11 Tips for growing your business.
- Buying a franchise is a common way of owning a business but owning a franchise is not low risk.
Take The Entrepreneur Personality Quiz
The Entrepreneur Personality Quiz has been developed as a free resource that quickly gives you an insight into what it takes to be a successful business owner. It provides links to more detailed information that can help you decide if owning a business is the right choice for you.
Starting or buying a business or franchise can be a tremendous experience if things go well. Sadly, for many, it does not end well.