The 6 Biggest Reasons You’ll Fail
Fellow Inc.com columnist Paul Schoemaker recently wrote about how mistakes can be the secret to success. He’s right. Learning how to overcome obstacles and setbacks is incredibly important.
At the same time, outright failure can also be incredibly painful, both financially and emotionally. Failure is awful.
That's why no one sets out to fail… unless, that is, they do one or more of the following:
1. Assume that simply because it’s yours your business will be different. There's probably a building in your town that has been the home of three or four different restaurants in the just past few years. Entrepreneur after entrepreneur dives in—and fails. Each assumes somehow his restaurant will be different while ignoring fundamental issues like location, parking, traffic, and market demographics.
Assuming your venture will be different just because it's yours is a recipe for disaster. If others have failed, understand why they failed and then determine the steps you can take to make sure you succeed.
Most businesses follow a typical path, so under similar conditions your results will not be significantly different unless you are willing to do things differently than the typical entrepreneur.
2. Confuse advice with wisdom. Say you have an idea and you ask a friend for what he thinks. His immediate response is, "No way. I wouldn't do that,” and you immediately get discouraged.
Don't be discouraged, because you haven't learned anything yet. (Except maybe you need a more tactful friend.)
Instead, keep asking questions. If you want to open a restaurant and your friend says your capital estimates are too high, ask why. Ask how he arrived at his estimate. Dig into the detail. Keep asking follow-up questions.
Eventually you’ll learn one of two things: Your friend doesn't have a clue about the restaurant business and you can ignore his advice, or you should use his insight into start-up costs and financing requirements to help refine your business plan.
Never ask for advice unless you're willing to ask plenty of questions to uncover the reasoning—and the value of the reasoning—behind that advice.
3. Decide ease of entry signals great opportunity. Some businesses are easy to start. For example, anyone can build an e-commerce website and sell products that others fulfill. In its simplest form, e-commerce is really easy to do… and really hard to make money doing.
The only time a business that is easy to enter will generate a significant return is during the early stages of an emerging industry. Excess profit breeds ruinous competition, and so does easy entry.
The hard path is generally the best path if only because very few people will compete with you for space on the hard path—and when your business takes off, few competitors will be tempted to join you on that path.
4. Assume contrary is a strategy. Every trend starts with entrepreneurs who go against the grain. Dell ignored in-store retail when computer stores were sprouting like weeds. FedEx introduced speed when no one wanted speed. Auction sites like eBay decided buyers would be willing to buy items they hadn’t seen or touched.
Each went contrary. Each also had a plan.
Think you can open a successful downtown furniture store even though the struggling local economy and steadily decreasing foot traffic has put a number of retailers out of business? You can, but only if you have a solid plan.
Taking a contrarian position is a great way to seize opportunities others ignore or miss, but only when you also have a plan to make those opportunities pay off.
5. Go James Bond. Occasionally people say, "I've got a great idea. I can't tell you about it right now, but just wait. My business will be awesome."
Why the cloak and dagger secrecy? They're afraid someone will steal their idea, but ideas are a dime a dozen. Implementation is everything.
Most people keep their ideas a secret because they don't want to hear conflicting opinions. Conflicting opinions spoil the dream. If your ideas can't survive scrutiny and criticism, they aren't great ideas. Talk about your ideas as often as you can. Drive your friends crazy.
At the very least you'll get helpful input. Best case you might even find a partner.
6. Let ego be your guide. A friend of mine freely admits he wanted to open a restaurant because he loved the idea of playing the big man as he walked from table to table chatting up guests. He didn't love the idea of cooking, cleaning, or hiring and firing. Another friend opened a winery because, well, he thought owning a winery sounded pretty sweet.
Many people start businesses with their ego as the primary driver. Sitting at the bar surveying your domain or strolling the vineyard on a cool fall evening quickly becomes meaningless when you don't enjoy the fundamental tasks and responsibilities of your business.
If you really need an ego boost, don’t worry. You’ll get a huge one after your business is a success.