Imagine if you could cast a magic spell to become a successful entrepreneur overnight. Perhaps, that works in the world of Disney but unfortunately, that’s not how things work in real life. Many people are moving from their 9-5 jobs to entrepreneurship, as they believe they have just the apt idea to make things work. However, it takes more than just an idea to ensure that the business doesn’t fail. While the uniqueness and newness of the idea play the most crucial role in the success of the business but the absence of the right approach and exposure could lead to the failure of even a promising idea.
Entrepreneurs are those who are not afraid to take a leap of faith into the world of business and always find a way to be on top of their game. Backed up by their enthusiasm, optimism, and the ability to take the risk, for them the potential delight of being a successful entrepreneur is much higher than the probability of failure.
As per the researches across the globe, the rate of failure of a start-up is close to 50 percent. Nevertheless, there are various factors that are behind the failure of an Entrepreneur:
Lack of Right Attitude and Commitment
A right attitude goes a long way when it comes to entrepreneurship. It is not for those who are merely lured by the success, but those who have the unwavering focus, commitment and accountability to complete what has been started. Lack of passion, clear vision, and zeal to create something new leads to the failure of an entrepreneur. A successful entrepreneur not only requires IQ but also needs to be high on EQ to execute the idea.
Not Enough Planning
Entrepreneurs often fail when they don’t plan enough. Planning goes beyond the budgeting and funding, it includes thorough market research, target segment, market visibility, and the risks involved. Jumping into the market with the focus on just the core product or service is a sign of inefficient planning. For example – Entrepreneurs with the conventional thinking that their product/service would automatically attract the market without paying attention to the market presence and target audience are most likely to fail. For instance, due to the lack of market knowledge and not enough planning, the new products of Motorola failed in the early 2000s. They were not prepared to move to the 3G technology back then and did not anticipate the 21-century communication essentials to its products. Motorola was acquired by Google in 2011.
Lack of Professionalism
Entrepreneurs tend to fail when they lack the most important skill i.e. being a professional. Professionalism doesn’t mean wearing a suit; it is more about perfecting your skills and respecting the learning curve that comes along in this entrepreneurial journey. Lack of proper communication with stakeholders, lack of listening skills, disrespecting and intolerance towards opposing perspectives, lack of domain knowledge, not speaking with conviction, not staying current, and not learning are few of the reasons that lead to a failure of an entrepreneur. For instance, Kodak, once the most dominant company in the photographic film industry missed the digital revolution. It is said that they were able to build digital or filmless photography back in 1975, but the leaders did not trust the technology and did not trust their team. Kodak announced bankruptcy in 2012.
Not able to Evolve
Stagnation kills a perfectly running business. Entrepreneurs usually fail when they are not flexible enough and not able to adapt to the changing dynamics. The inability to evolve the business as per the changing needs and preferences of the market leads to the inevitable defeat of the entrepreneur. For instance, when the mobile industry was moving towards bigger touchscreen displays, BlackBerry mobile was rigid with its design. They failed to adapt to this change and later in 2017 they were out of the smartphone manufacturing business.
Not able to make the Sale
The most significant part of the business is making the sale and hence, profit. Entrepreneurs fail when they are not able to sell to the right segment at the right time. It is important to be ahead of the market by investing in R&D and reaping the fruits of the first movers’ advantage backed up by a strong marketing program to increase the visibility of the product. Marketing defines who you are and helps in positioning your brand in the market. Ignoring the importance of marketing and not sharing the word out about the business at the early stage can hamper your business in the long run. The world needs to know that you are out there because if they don’t see your presence you would not be able to make the sale. For instance, Toshiba was one of the tech giants which built innovative laptops, but they were not able to meet the European market price and sales trend and their sales drastically dropped in 2016. This made them announce that they would stop making PCs for European consumers.
One of the most important traits of an entrepreneur is managerial capability. Relying too much on yourself or relying too much on the partner or subordinates can lead to mismanagement. While you definitely are the driving force and the navigator of your business, however, thinking that you can do everything on your own is the first sign of mismanagement. It is important to empower the people working with you, trusting them, and collaborate for the dream team. On the other hand, it is equally important to channelize the efforts of your team in the right direction and being there for the required support. Not able to strike the right balance between letting go and holding on the work leads to structural disability and marks the failure of an entrepreneur. While there are a lot of reasons for the failure of a business, but Entrepreneurs typically fail when they lose motivation and interest to turn the business around. At times exits are inevitable, a successful entrepreneur is the one who could anticipate the perfect time for exit or to move on to the next venture.