The 5 (hidden) human reasons entrepreneurs fail
All entrepreneurs, budding and experienced, know the start-up fatality statistics. They are depressing reading. They read like a slap in the face, and they basically say that there is a 90% chance you are going to fail. This is not even glass half-empty stuff, with these kind of stats being flown around, these glasses only have a sip in them...
And to be fair to the statistical glass sip-full naysayers, there is truth in these disparaging statistics. I know this, not just because of reading these things online, but because I have failed many times myself. And when you do, it hurts, every time. If you look at my recreational monetary outgoings over my life, the majority of my spending has gone on start-up businesses and business ideas.
There are lots of reasons why businesses fail, with some fairly obvious ones, like running out of cash, but I thought I would add a twist to this, and focus on some human reasons why entrepreneurs fail. My goal is to help entrepreneurs think slightly differently when they are building their ventures. This is relevant if you are wanting to start a venture, starting a venture, or have already begun one. Here are my top 5, often hidden, human reasons that entrepreneurs fail.
1. Only you are your market
It is all too easy as an entrepreneur to get carried away with what you have made. After all, you would have given it everything. Odds are, you have been working 24/7/365 on your "baby," you wake up at night thinking about it but that does not mean anything if know one gives a damn about what you are selling. The first and most import reason that entrepreneurs will fail is because there is no market for what they have created and only the founders themselves are the market. They fall in love with their creation, and despite getting some initial traction, there is not a true market out there. Test, test, test and refine until your opinions about your offering are truly matched by others, otherwise there will be no business and no future. As Peter Drucker says, "The purpose of business is to create and keep a customer." Don't forget that.
2. Personal shadow objectives get in the way of business objectives
As an entrepreneur, you must ask yourself, why are you creating this venture and whether you are creating it for the right reasons... What even is your objective of being an entrepreneur? It could be the quest, and need, of creating wealth, it could be to escape some dreary job, it could be to prove yourself to yourself, or indeed others. In fact it could be all of these and more, but when founders start a venture they must focus on the objectives of the business first and foremost. Put whatever personal objectives you have further down the line in the hierarchy of importance, and focus deeply on the objectives of the business and what it will deliver. Don't be afraid to be wrong or to put aside your personal needs.
3. There is not enough purpose in your endeavour
There will be hardship. There will be pain. This is guaranteed, but there is nothing wrong with that and that is par for the course (More on this in the book The Hard thing about hard things). To help you get through these difficulties however, you need to ensure that your venture has a strong societal meaningful purpose. One that truly provides value for others and the particular community you are serving, and one that you as a founder can relate with. If you have not found a true and relatable purpose that your business is serving as a founder, even if you have found a niche, or a gap in the market, you risk losing steam and passion when delivering on your company's objectives when the bad things happens. Entrepreneurship can be a lonely hard road, without finding your business's true purpose you risk giving up your best fight.
4.Ambitions impact business delivery
Entrepreneurs are usually pretty ambitious people. There is nothing wrong with this, I am ambitious. We only have one shot at life, so we must be. But if your ambitions run away with you, then you can lose focus. You can expand too quick, take in money at too high a valuation, or try and deliver too many things at once. This all has a major impact on your capital effectiveness and your ability to deliver at all. So check your ambitions when you make bold decisions, and triple check that they can be delivered with what you have available.
5. No man is an island; delegate.
Most entrepreneurs are pretty good at doing everything. Indeed, when you start up your business, you have to do everything anyway. But as you grow, people will hopefully join you, and odds are they are going to better than you at many things. Entrepreneurs need to let go of tasks when the time is right. Hanging on to everything all the time is going to risk your ability to scale. In Allen Dib's great book the 1 page marketing plan, he mentions the rue of thumb that if someone can do it 80% as well as you, then let them do it. No man is an island, release the collective power of your team with effective delegation to let your company scale.
Good luck!
You can beat the odds, indeed you must. And as the saying goes, success is built on failure so despite my failures, I carry on, and they have led me to create this very site. The benefits of my failures, is that I am in the fortunate position to be able to reflect on what it is that causes failure and share with you tips to help.
Just remember, often the reasons that businesses fail are down to people and how they think, which in turn impacts how they do. There are a load of market, capital and functional requirements to figure out as you build companies, but everything can be learnt with enough gusto, just make sure you get yourself in order along the way, and to do things for the right reasons.
