Entrepreneurs are behind every small and big corporations of today. Whether it is a home based business or a public company all starts usually from the idea of a single person or a small team. However not all ideas of entrepreneurship bloom into success. A CB Insights survey revealed 9 out of 10 entrepreneurship fails. After a tragic suicide of an entrepreneur of a company named ECOMOM, CB Insights gave a research on Strategies to avoid failure as an Entrepreneur based on the postmortems of the failed entrepreneurship.
First Strategies to avoid failure as an Entrepreneur is-Know how to manage
The prevalent problem entrepreneurs face is that though they have passion for the cause mostly they lack the management skills to run a business smoothly. Most of the causes of failure are associated to this point like-not being able to asses market need, pricing, get outcompeted, lack business model, poor marketing, not using network.
Single owner leads to more vulnerability
Steve Hogan, Owner of Tech-Rx once said possibility of failure in a single handed running business is more. A co owner can help to get through the problems like-ran out of investor, wrong team, not using advisor. As a different perspective comes into picture, he can help you to see if you are trying to sell a product not having a market demand or can tell you some hard truth which you may not be able to see by yourself. However it have some destruction if you are wrong at choosing a partner. A sluggish partner can be a reason to fail to proving the points-Not right team, disharmony in team ,legal challenges, lack passion from co owner.
Have a filthy rich and genuine investor
Cash in bank is definitely a big support to make any radical decision or change of plans. Also you need to be adept in managing shorter receivables and payable. The short term asset and liability combination will give you an edge against foregoing opportunity cost of reserving cash in bank. We can see cash flow problem is a 2nd largest problem. In case you are not that rich to pump money to the business try finding a investor who will invest for you. ‘An idea is worth million dollars’ all one need is to attract the right kind of investor.
Don’t let that happen to you. Admit that you don’t know what you don’t know about business, starting with these 15 tips guaranteed to help keep you and your company out of hot water. Some are straightforward, others are counter intuitive, but they’re all true. And some day they’ll save your butt.
Know all about intellectual property
Many of us have a vague idea about copyright, trademark, trade secret, patent etc. However these are the heart of a business. It is crucial to protect all intellectual property and knowing legal actions to be taken against the criminal who tries to compromise your IP.
Be humane but don’t try to be saint
It is really difficult to juggle a business and always maintain a good rapport with the stakeholders.
Sometimes you may need to be nice; however times will come when you will need to be blunt and composed. Learning to navigate through situations with logic and profit perspective is more important in most of the time. A set of basic business ethics will help you to identify the situation of when to be polite and when not.
Be efficient in writing effective agreements
You cannot be an expert in writing agreement or knowing what to look for ,in an agreement when you read it. However you can hire an expert and learn from him, you can Google or you can take suggestions.
It was the confusing terms of Zuckerberg in 2003 that his partner Eduardo Saverin failed to understand and landed him from 30% stakes to diluted stakes of less than 10% which he managed to improve to 5% later on after suing Facebook. So beware about this most wanted skill of an entrepreneur.
Business cannot be part time
If you are a student who wants to start a business besides study or an employee who want a venture to earn some extra money, keep this in mind that to establish the business you will need to be involved; involvement of time, money, interest and effort. All these involvement means only one thing- business needs all your attention. You cannot expect to be a success without giving your full time on it.
This runs the risk of burning out, lacking passion etc when your focus is diluted.
Know all about your finances
You have to talk and make forecast while you are with the investors or external auditors or with yourself. You have to be super smart when it comes to the figures of your-estimation, asset, liability, sale, profit, loss, cashflow, capital requirement, tax rate, interest and so on.
Major decisions are to be made based on these figures. So If you are not comfortable with figure, shrug the discomfort off ;learn inside out about your finance.
“There is false humility and genuine humility and between them, there is a desire of the practitioner to become humble. “ Even the most achieved owners do value humility as an important trait. It helps one to grow more and be reasonable. Humbleness is a great trait for leaders.
Figure 1 top-Mike Jeffries, From left bottom-Joe Cassano, Jeffery Skilling-example of pride and fall
CEO of Enron Jeff Skilling, CEO of Enron Joe Cassano a leader in American International Group (AIG) and Abercrombie CEO Mike Jeffries are three extreme example of overconfidence and failure. Despite their very good reputation of success traits their ego, overconfidence and self obsession were deemed to be the reason behind the failures of the organizations and of themselves.
Do not hire or fire hastily
Hiring hastily is not a good idea; in some cases firing too fast may not be a good idea too. In case of hiring, it involves a lot of cost. The total process of hiring, training and keeping the employee it all may go in vain if the choice in first place was a wrong one.
In case of firing if you have a problem (other than felony or something totally not worthy to compromise for) with the employee gives it some time to rest. Diagnose if the problem is him or something else. Usually in 90% cases employee faces difficulty to perform because of management issues. Before taking such a decision look inside the problem. Sometimes best answers are achieved by looking into mirror.
Every strategy in life has some consequences. Entrepreneurs are historically deemed as the strategists so no article can teach you Strategies to avoid failure as an Entrepreneur. Books and literature can only give you perspective and aid you to make your own way of accomplishments. After all there is no harm in learning from mistakes of others…right?