Many persons think of starting their own business as a good way for wealth. And many have the ability and potential to begin a profitable business on their own. This is called entrepreneurship. The idea of starting your own business looks very nice: You are the boss, you manage the business as you like and if you have a brilliant new idea, you control it and see it grows until you become one of those top billionaires. This is what happened with Bill Gates in Microsoft, Mark Zuckerberg in Facebook, Jeff Bezos in Amazon…..etc. Entrepreneurs drive the economy in many countries. Yet not most entrepreneurs succeed in their business. In the USA, statistics show that 55% of start-ups will be gone by the fifth year. And according to the Small Business Administration (SBA), about 30% of new businesses will fail during their first two years. In Europe, the situation is not different. Statistics show that 50% of European start-ups fail during the first 5 years, and bankruptcy is only 15% of business closures.
Business failure can be hard on entrepreneurs, particularly on those who have borrowed money from friends or relatives. Some persons have brilliant ideas, and they begin to think of the promising side of these ideas, rather than on the caveats and risks of the potential business. They may get too enthusiastic about their project to the extent that they neglect possible challenges. Even some entrepreneurs think that the best way for success is by experiencing failure. In Europe, 48% of entrepreneurs believe that you should not start a business if it might fail while in the USA only 19% believe in this. This can be true but also can drive them away from the market. It is a 50/50 chance of success. It is a fact that successful entrepreneurs learn from their failures, and they use their mistakes for better future decisions. But why not study the behavior of others who failed and learn from them, rather than going through the try-and-see-attitude. Why adopt the random-walk theory, instead of planning ahead? There is a quote that says" if you fail to plan, you plan to fail".
Yes, you can avoid the pitfalls of others, but ahead of time, not while you starting your business. You can hit the road any time you want, especially if you love the journey, but you may get lost or waste unnecessary time if you don't have a map. You may know your destination, but there are shortcuts that allow you to reach that goal quicker and easier, but only if have that map.
Research shows that entrepreneurial success is not about strong markets or weak markets or a good or bad idea. In this information age, ideas are created by millions. The markets fluctuate, and at times collapse yet some people make money during these bad times. Business success is about your own thinking and behavior, more than anything else. There are many success stories but success is a bad teacher. You learn from mistakes and negative experiences much more than a success story. It is about learning. Learning is a continuous process, but you may want to start it before you begin your dream business, before it is too late. This is why it is important to know about the major causes of entrepreneurs' failure.
Many research and studies explore the major causes of business failure among start-ups. These causes are common. These failure factors have a trend. My observation is that these failure causes are mainly related to internal factors: internal thinking, assumptions and personality chracteristics. Of course, external factors such as: lack of cash, market competitiveness, market weakness, marketing mistakes, lack of market research, lack of business plan, lack of management skills….etc, are all vital for business success, but their priority is not the first. Major causes for failure are related to your enabling beliefs and limiting beliefs, your assumptions about yourself and your abilities, your flexibility in the face of future challenges, your goal and its clarity, your level of energy, and your emotional attitudes towards disappointments and set-backs.
Please join me for my next series about entrepreneurs failures.