It's no secret that starting your own business is risky and challenging. Even after years of failures and setbacks, however, many entrepreneurs still choose to continue trying their businesses one more time. The good news is, there are ways to reduce the chances of failure and keep on going with your business. Let's take a look at why so many new small business owners go bankrupt and learn how not to make the same mistakes when starting your own company.
What caused the startup failure of so many entrepreneurs?
The main reason why so many entrepreneurs fail at their startups is due to the same thing that caused many great businesses to go public - lack of support from family and friends. Entrepreneurs often get this wrong and end up spending their family’s money and their own money to get the business off the ground.
Entrepreneurs who use family and friends to support their startups are asking for financial failure and a sad ending for their business. Entrepreneurs who rely too heavily on family and friends, while nice people, are asking for major setbacks in the early stages of their business. Entrepreneurs who want to avoid these setbacks should learn to support their startups themselves - by funding them themselves and/or hiring employees who are willing to work for free.
Lack of support from family and friends
One of the biggest causes of startup failure among entrepreneurs is a lack of family and friends support for their startups. As the co-founder of a startups, you are the backbone of the business and your primary source of support. If you don’t have anyone in your network to turn to for help, you may have to start from scratch - without any financial backing from anyone. Make sure you have support in place for your business and be prepared to get your funds bankrolled early on.
Incorrect product ideas
Mistakes early on in the development of a business can easily become habits that can hinder its growth and, ultimately, its failure. Entrepreneurs who don’t hold firm to their convictions at the start of their businesses are likely to lose their way in the dark, uncharted territory that is entrepreneurship. When you’re in charge of the product development, you are effectively in charge of your own market. If your product doesn’t pan out, you’re stuck with a very expensive throwaway. Entrepreneurs who make the mistake of changing their product ideas frequently are likely to end up with a flop.
Entrepreneurial mindset: Set small goals and focus on them
You’re not going to be successful if you try and do everything yourself. There is no way around it - you need to hire employees to help you scale your business. If you want to start a food delivery service, for example, you need to hire employees who can help you serve the customers and make sure they receive their order on time. You can’t do it by yourself - and that’s okay! The key here is to have a small set of goals and focus on them.
Not enough capital: Set aside money for startup costs
If you don’t have the capital to get your business off the ground, you need to set aside money for startup costs. If you want to start a delivery service, for example, you need to have the money to purchase the equipment you will need to operate successfully. If you’re a software developer, you need to find money to buy the computers and software you will need to develop your product. startups often don’t have the money to buy the equipment they need to operate, so they turn to family and friends to get the funding they need. This is asking friends and family to put your business in jeopardy. Don’t do it!
As an entrepreneur, you have the opportunity to create something amazing and bring hope and change to the world. The key to success for any business is to find a way to overcome challenges and reach your goals. The courage to fail, the will to succeed and the correct mindset to make your business successful are what will separate the champions from the rest.
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