4 Factors That Determine Whether Your Business Will Survive or Die
From Katie Morell:
We’ve all heard statistics that around 90 percent of startups fail. Well, bah humbug. Yes, these numbers are grim, but if every excited entrepreneur subscribed to such Uncle Scrooge-like fear, we’d be a country void of innovation and…
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We’ve all heard statistics that around 90 percent of startups fail. Well, bah humbug. Yes, these numbers are grim, but if every excited entrepreneur subscribed to such Uncle Scrooge-like fear, we’d be a country void of innovation and new opportunities. So go after the American dream, motivate yourself to be the next Steve Jobs and forget all those naysaying stats. But before you do, take to heart the following reasons some young companies thrive while others fizzle.
Starting a company is, by nature, a risky thing to do, and as Mark Stevens says, entrepreneurs need to prepare themselves to navigate murky waters.
“Everyone wants to be the next Mark Zuckerberg, but do you have the guts to be an entrepreneur? When you decide to create a paycheck as opposed to collect a paycheck and it doesn’t take off like you hoped it would, people get crazy with fear,” says Stevens, CEO of MSCO, a marketing firm in Rye Brook, NY and author of Your Company Sucks.
So how can you gage if you’ve got the guts?
Stevens suggests thinking about your funding sources. Will you need to borrow money, use credit cards or ask for handouts from family and friends? How comfortable are you with asking for cash? Also, consider your current obligations. Is your family relying on you for health insurance? What will you do if you that insurance isn’t guaranteed?
Bottom line: prepare yourself for an exciting, and possibly rocky, ride.
Misreading the market
Your family and friends tell you they’d be your first customers when you launch your company, but what about the rest of the world? Will they like what you offer?
“Not understanding your customers is a very common mistake,” says Stephan Adams, general partner at Valencia Ventures, an Oakland, Calif.-based emerging fund focused on minority entrepreneurs. “What you want to buy may not be the same as what other people want to buy. You really need to research and understand your market before launching.”
Lack of a leader
“It only takes two people to make a bureaucracy,” says Stevens. “When you go into business with a friend or family member, it becomes an instant committee. One person should be the 100 percent owner.”
Unsure of your decision-making abilities? Consider this: does it take you a long time to make up your mind? Think back to your dating days. Did it take you months/years of unhappiness to break up with a partner?
“You just can’t do that in business,” Stevens says. “Entrepreneurs need to make decisions on a snap basis or the world will fly by.”
Failing to market
Small business owners can’t expect customers to come to them; they need to solicit day in and day out. Stevens says it’s important to think of yourself not just as a business owner but as the “salesperson and marketer-in-chief.” The most successful businesses are lead by people who never stop marketing.
“Your primary job as an entrepreneurs is to tell 10 new people about your business every day,” he says. “Don’t expect them to find you. Don’t let your company be a well-kept secret. Announce it to the world.”
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