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You're Reading:Why Most New Businesses Do Fail .. Is There any Secret for Success?

Why Most New Businesses Do Fail .. Is There any Secret for Success?

by Tasos

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Oct 7, 2015

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Transcript

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There could be a hundred reasons , literally.But I want to discuss about some of the major factors.Is there a way to predict some of them and escape a future collapse?..Sometimes yes , but the most important thing to remember is that we should take action no matter what.

 

Few Hours Ago

 

I was at my favourite gas station in the morning , near the highway , rush hour , long trucks come and go like items in a production line.Grabbed a coffee and placed myself onto the driver’s seat to continue when my eye caught a new sign inside the property.

..”We are celebrating 10 years , thank you for your trust”..I thought it for a while , he was a decent gentleman , always smiling , the personnel very friendly … in other words the customer service was incredible and there were many extra sections offering services such as laundry , oil change equipment , the snack bar , the shop…Congratulations I whispered slowly , you deserve it and I salute your next decade in the business.

 

I want to underline here that during these last 10 years many gas stations in that area closed due to the economic “Downhill” in my country.

 

It’s not always about the lowest price , but about the Quality.I would not change that gas station with a new one only for money , in fact I never look at the prices when I fuel my car.

 

Not Long Ago

 

My mind travelled back in time , 12 years ago , when I launched a new start-up in the “Tourism” industry as newcomer.May be 10 years more and we’ll break even , who knows…

I remembered a friend from the high school , he was in the same business for more than 40 years if we count the period that his father and uncle endeavoured into a new “Adventure”Well done “Old” buddy.You kept the family’s tradition during very tough times.

 

But Most of the Businesses Do not Last Very Long and Fail , Unfortunately

 

Let’s discover some of the most common reasons and may be we shall try to “Recap” at the end for a mini conclusion.

 

Family Problems – Sudden Extreme Incidents – Unknown Non Predictable Reasons 

 

I believe this is a “Big” family , when in those circumstances we may end a business without having the chance to resist or to to choose alternative options.Anybody can fall in that trap , I can’t blame you , no one can predict the “The Next 10 or 20 Years”…But if we take a closer look at these patterns we may “Shield” ourselves and make wiser movements , driven by our subconscious.

If you study “History” you can somewhat predict a part of the “Future” , knowing why some businesses failed can direct you into great decisions.And you would not even know that until a live example passed you by at a later time.

 

Stuck Behind The Competition

 

I can see a lot of new businesses run from exceptional minds that reach high levels of success during the first years.But then all of a sudden they seem to get stuck against other “Newcomers” that enter the field or the old “Players”.Why is that happening?

May be they took for granted that early results and gave up on improving.May be they did not move into the right directions when it was time.They might missed some chances and opportunities available.

 

Where all their competitors were seeking innovative solutions for their customers , they had enough success to “Blind” their entrepreneurial spirit.

Was it due to ignorance?…NO , I don’t think so , someone that is succeeding even for a while can do miracles , but I think they were not listening their audience.At least not enough.Because your customers , your visitors are communicating with you and your business , you have to listen to them carefully.All the brilliant solutions and excellent ideas come through this process.

 

An endless “Eye” upon the customers’ actions and changes…Are your clients seeking anything new?…Are they moving to your competitors because they found something you have not been able to provide?

 

Early Investments & Expansions

 

At least in my country this is one of the Top reasons that most of the businesses fail.When the first money roll into a new business is a nice feeling , I can assure you for that.Especially when you run a “Franchise” model where you have spent a lot and you are eager to recover as soon as you can.

But you have to break even , remember?…No business is successful before that obstacle.

 

By expanding in new areas very soon , you take some risks that are not so well displayed.You might need more personnel to cover these new sections and expansions.Are you going to sell even more in the near future?…Now, don’t get me wrong , I am a fan of investments.But I want to weigh the Pros and Cons before any important decision.

I would suggest that you take your time and invest when you can afford it conveniently , keeping the budget as low as possible.Later on , a well established business can easier use capitals to sprawl.

 

 

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No Improvement , No Innovation , No Actions , No Risks At All

 

I may sound like a man who is not taking “Risks” but I am taking Big Risks from time to time…I do that following my instincts.I am not taking Risks that could jeopardise my family or other businesses I run , no … nothing like that.But some Risks worth to be taken.

When everyone in your exact business field , your niche , your market is doing things “White” why don’t you try “Grey”.?…I can hear a lot of entrepreneurs say ..“Do exactly what I do , and you will be successful..”…NO ,a big NO , no one can guarantee just that.What works for me might not work for you.

I may do things in “Red” and succeed while everyone is doing “Blue” , it does not matter.Any entrepreneur is different and unique.Anyone has its own voice.Put your colour , your touch in everything you do.Your customers will respect that authenticity.

 

Additionally you have to continuously improve yourself and your services.Doing that you improve the personnel’s experience , the customer satisfaction , everyone is getting benefited.

 

The worst thing you could do is to watch the changes roll by.Because I believe deep inside me that everything is “Evolving”...Nothing is standard , no empire can last forever.Take action in every step in your way.Try new things and learn , keep an eye open and a mind free.

 

Awful Management , Huge Expenses , Big Loans , Bankruptcy

 

These are the most obvious reasons where “Stress” can add  to an already tough economic situation.Some people are not able to handle money and keep their expenses low , they might consider in passing these activities to trustworthy partners.Not everyone is suitable for every job.

But there are always people who can advice or consult these at first sight “Bad Entrepreneurs” and so that they can improve.

I would NOT suggest to anyone get a huge bank loan to build a business , take it one step at a time.Get a loan , yes , borrow some money , but do not try to reach the top of the mountain at your first attempt.Always back up your moves.

 

 

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Conclusion

 

… “Real Entrepreneurs” do not bother if they continue in the same exact business area or field , they just keep on going adventuring new horizons , multiplying their interests , passions and desires.Taking action in any case , can guide you to “Success” , that moment when you feel a little bit “Complete” , not 100% , never , no one can reach that Magic Number because we are humans , and being NON Perfect is what makes us so awesome.

 

Consistency and open mind is all you might need in this journey.Anyone can become an excellent entrepreneur , it requires Self-Belief.

 

Thank you for following my reads , I promise to come back soon.Till then , drop by with your comment , we may discover something new.Your online partner.

 

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8 Comments

  1. Sim

    While I think there’s a lot of truth in what you explained in your article, I think the major reason why most startups fail is the lack of research and thoughts put into the project prior starting it.

    Many people don’t fully understand what they are doing and go ahead without having planning correctly.

    My 2 cents. Keep it up.

    Reply
    • Tasos

      Welcome Sim , your input shows another aspect of this problem.Research is absolutely necessary in order to create a solid plan of future actions.

      Thank you for visiting my blog , for stating your point of view and your kind words.All my best.

      Reply
  2. AlexRS

    As a senior manager of a multimillion dollar company in a corrupted country I fully agree with your approach.

    Businesses have to be built step by step, and more often than not I see people investing in business in a way that doesn’t make any sense trying to replicate other business models that simply don’t apply to their own. Entry barriers and exposure to external factors are things that sometimes entrepreneurs simply don’t take into consideration… And those who don’t are simply crushed by more experienced businesses that have a better foundation.

    I apply this in my company: first win the deals, and then invest to grow to follow those deals and guarantee the promises you made are fullfilled. This limits the risk, and allows for a sustained growth.

    All in all great article

    Reply
    • Tasos

      Great points Alex , I agree.Too bad you live in a corrupted country , like me.But what can we do?…They take control and do whatever they want.

      Replication is not a great idea in entrepreneurship.On the other hand innovative ideas seem to help in growth but are risky.

      Generally , if a company provides value , is friendly , communicating and fulfill its promises and even over deliver then chances are it will be a successful one.

      Your approach is logical and can drive businesses to long term success.

      Thank you for this visit , it is nice to meet someone from a huge company.Good luck with your projects.

      Reply
  3. Jane

    Taso, thanks for the great read! I agree that Trust for any business, whether it be a physical location or online, is a huge factor in becoming successful. Listening, really truly listening to your customers is also a main ingredient to a successful business. If you do not have customers….you do not have a business. I think many people start up a business and they do not have an attitude of service. I am a firm believer in the old adage that if you help others get what they want, your success will follow. What is your opinion on that?

    Reply
    • Tasos

      Welcome Jane , very good observations.What if I have a business without customers.?..They can point any business to react and improve.And that is what we all expect as customers , a good experience and decent service.

      Could not been said better , if you manage to give people what they want this is magic , and yes , success will come inevitably.

      Thank you for visiting my blog and for your meaningful comments.

      Reply
  4. Franchesca

    Great article, yeah some start ups failed and people is afraid of failure however you will never know if you will be successful or not until you try it, if you try it there’s a chance of win but if you never try it there will be a permanent no in your life. Thanks for the tips

    Reply
    • Tasos

      Hello Franchesca , I definitely agree , we have to try no matter what the results would be.Even if we fail there is a lesson to be learned and we gain experience.If we stay active and love what we do then the sky is the only limit.

      Thank you for visiting my blog and for participating in the discussion.

      Reply

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