What do you need to know before you run with your idea?
Many people spend time at some point in their lives daydreaming about the day they could run their own business and be free of the constraints of traditional employment. A lot of people have tried, and regrettably, a lot fail within their first year.
I don’t want to be a wet blanket, but that’s just the reality of business. According to some statistics, the failure rate can be as high as 8 out of 10 new businesses! But don’t despair! There are reasons why people fail and since we know what those reasons are, there is no need to re-invent the wheel.
Top 5 reasons why businesses fail
- Business owners run with their ideas without having any real heart-to-heart confabs with their target customer. Often, it turns out that the idea has no customer.
- The business is not unique. You have to find a way to be different (read: better) than your competition.
- Even if the business is unique, if you’re not communicating those values in way that your potential customer can hear you, the business can’t move forward. There’s a lot of noise out there, so you have to work to be heard.
- Your idea is great but it doesn’t make money. If your business model doesn’t have any actual revenue stream, it’s a hobby.
- There’s no money. Cash flow, startup costs, overhead. These are all essential to a growing business. If you don’t have any, it’s going to be hard to keep going.
So now that you have an idea of the reasons why many businesses fail, and what to avoid, here are a few considerations to help ensure that your business isn’t one of them.
Have a vision before you leap in
If you’re building a house, you have architectural blueprints drawn. If you’re writing a novel, you’ll have a detailed outline with backstory and character sketches. If you’re starting a business, you need to have your goals and vision outlined. It’s absolutely essential that you have an understanding of what problems you will be solving, for whom and with what effort.
This is a process that can be difficult to do on your own, and one option to help you is to find a business coach. That person can help you to boil down your ideas and notions into a solid vision that will keep you grounded and on task.
Time and effort count
Are you ready to put in the work that’s required to get a new business off the ground? It doesn’t always have to be an uphill climb but it won’t just fall onto your lap either! Effort counts when it comes to starting a new business so you really need to make sure that you can make one!
Do you have the time? Can you find the time in your schedule to start? Are you going to be working full time and starting your business on the side or are you leaping in with both feet? Figure out what your commitments are (family, work, volunteering, etc.) and decide whether or not it’s realistic for you to be starting a business right now.
Do you have a support system in place?
A solid support system is one of those new business essentials that many courses don’t mention. That system is usually comprised of different parts: friends, family, peers and others, but they’re all important.
The friends and family support mechanisms may seem obvious but the reality is that if you don’t have support for your initiative at home, the long hours or disrupted family time will become a real problem. Discuss your plans with those who are closest to you and get their buy-in. This kind of support can be pivotal in your success or failure.
Beyond your immediate ‘team’, consider also business peers. These are people that you meet through networking or at events that may have complementary businesses or whose businesses have nothing to do with yours but they’re a little further ahead in the startup process. They can give you support and advice, which you can pass along eventually to those coming up behind you!
Finally, there are other people who can help support your business, albeit that you might be paying them to do so. I’m talking, of course, about outsourcing.
What are your strengths and what do you need to outsource?
Regardless of the kind of business you are starting, whether service or product based, brick and mortar or online, you will have strengths that probably led you to the idea in the first place. For example, you might be a dance instructor with years of experience and you want to branch out on your own with a studio that focuses on young children, so that their first experiences of dance are positive and fun! Great! Does that also mean that you’re a whiz at social media marketing, accounting, content production and graphic / web design? Probably not.
It’s important to be honest with yourself about what you cannot accomplish, while at the same time trying to build a business with your skills and experience. Trying to do your own books, for example, may seem like you’re saving some money, but if you don’t have a good understanding of the tax laws and ways to save, you are not only spending precious business building time fussing over numbers, but you could be doing it incorrectly! A bookkeeper or accountant will be in a position to help you keep your numbers on track, while you do the thing that you do best. It’s money well spent to get the expertise you need on your team.
Still a little muddled?
The ‘where do I start’ and ‘how do I get going’ fears are normal, when you’re contemplating a new business. Your best bet is to start as you mean to finish and look into business training, coaching and find a network of like-minded business owners to network with. The time spent with people who have “been there and done that” will help you avoid the common pitfalls of new businesses, creating instead a stronger path to success.