A business failure does not have to be a negative issue. You can transform that failure into a learning experience and a new opportunity. It is important to learn from your mistakes to take advantage of them and don’t keep running into the same brick wall. We understand that no one wants to make mistakes, yet, believe it is also important to keep in mind that in business failure is not only inevitable, but it can also be an opportunity. Failure can become a lesson that helps to make better decisions in the future.
Understand that failure is not the end of the road.
From the moment you decide to start a business, it should be clear to you that failure is an integral part of entrepreneurship. A dynamic business system is not built only with organizations that do well the first time. Of course, you have to do things and plan every aspect of the business activity before carrying it out. If for any reason, the results are not what you expected, you have to be able to see the failure in perspective. Where one activity ends and the other begins. The important thing is to analyze where the failure comes from and why it occurred. Then you can take advantage of it to become stronger and more experienced.
In general, respecting failure and knowing that it is something natural and that it can happen at any time, helps to reduce the fear of it, a fear that is often paralyzing, and the very trigger of failure.
Talking about failure
Many examples of successful entrepreneurs and ideas pay off and continue with their businesses afloat. Even so, some projects did not have the same luck and are examples to learn and not fail in the attempt to try a successful project.
“Failure” may be a forbidden word for entrepreneurs. But, thinking about failure is the best way to show them what they should avoid during the start-up business. These are some reasons to test and know the reasons why a business fails, as well as understand that it is enough learning inputs for entrepreneurs.
Lack of entrepreneurial culture
Many new SME businesses make mistakes when starting operations without considering their mission, vision, values, and strategy. Most new entrepreneurs are unaware of the impact that defined company culture has on a business. It is important for new and growing businesses to consider why they exist, where they want to go or how they see themselves at a certain time so they can work and operate with a clear goal in mind. Lacking a business culture can trigger confusion in the future about who the company is and where it is going. This will be reflected in their results and their link with customers, suppliers, teams, or employees.
Lack of strategic assessment
Another cause of the failure of growing SME companies is the lack of strategic review and analysis. Many leaders launch proposals that are not timely and much less meet the needs of the market. This is due to mistakes such as not choosing the right target, lack of innovative products, lack of analysis of competitors, shortage of skilled employees, etc.
Mismanagement
This is, in fact, one of the most common reasons why owners of growing businesses fail. Mismanagement refers to problems such as: mixing owners’ expenses with company expenses, lack of supervision, and non-compliance with accounts receivable processes, among others.
Lack of financial forecast
New entrepreneurs are mistaken for working on hunches and improvising in almost all they do. This is a severe mistake that in the short term leads to financial problems, poor planning and failure to determine the funds needed to operate is one of the main reasons new businesses fail to survive. Companies such as SMEs should clarify their financial structure. It’s one way to know what is spent and its benefits. Besides that, many new businesses start with funds from family or friends which not only leads to a lack of control in the percentages of benefits but also leads to other personal problems.
Lack of leadership
People want to start their businesses, but unfortunately, there are very few who have leadership and strategic thinking skills. Many new business owners would prefer to do everything and avoid delegating activities to their team members. This is one of the reasons why many entrepreneurs fail to survive. It is important that, as a leader, you are aware of the importance and contribution of your company’s collaborators. Value their work and respect their ability to carry out the processes. This is the difference between an enterprise that moves forward with goals and one that does not.
Need for control
The lack of controls is another reason why SMEs fail during their first years. This could be associated with the fact that most businesses are carried out in family environments and informal situations.
Lack of plan of action
Designing a plan of action is the key when we mean to start a business. This is a point that all entrepreneurs must take into account. Lack of planning is a barrier to the company’s growth. The realization of budgets and projections in the short, medium, and long term is necessary to maintain control of the business and be prepared in case of requiring external financial help.
Venture into entrepreneurship and don’t die trying
Knowing all the above points allows you to identify what risks can take and what decisions led to the closure of a company. Researching and knowing these factors can help you know how to handle these situations and analyze each of one the actions to take in the company.
It also helps to prepare to face adverse situations that may arise during the consolidation of the company. When you get ready and have knowledge of the results that can come out of the decisions you make, you have the opportunity to cut the impact that these decisions generate personally, professionally, and entrepreneurially.
As we indicated, it will help you increase your knowledge. The more questions you have and the more you want to know why a company fails, the more valuable data you can take into account during a venture. A company fails not only because a product is bad or because the person who led the project made bad decisions. There are other factors that you can find when you thoroughly investigate why it didn’t succeed.
Ask what they do next. It will also provide you with data and learnings on how they acted after realizing that the business was on the road to failure or there was nothing left to save the business.
Strategies for getting off on the right foot
One of the main causes that stop potential entrepreneurs is wondering if their business idea is going to work. Before aboard on the adventure of entrepreneurship, you should research the market. Also, you should look at the competition and the lines of management that you want to impose on your business. A business is a continuous journey and you can learn a lot from it. But you cannot stop researching to adjust each of your products or services to the needs of the client. Although no fixed rule indicates the success or failure of your business, some clues will help you take the first steps in the right way and without getting lost along the way. Here are 5 signs to know if your business is going to work.
Sometimes there is the idea that it is better to start anyway than not to start at all. To avoid a series of failures, it is advisable to investigate before and study all the possible risks of our future business. With these 5 signs to know if your business is going to work, you will be closer to achieving it.
- Know your competition. Keep in mind that having competition is a sign that there is an active market. Thus, the fact that your business has competition is a good sign to move forward. Remember, without competition, there is no business.
- Perform correct management of information and data. To know the situation in which our SME is going to be positioned, you must capture and process all the data related to your business.
- Know your keywords well. This means that you have very well-defined the business lines of your company. The Internet is an infinite source of information, so take advantage of it to know your market niche well: terms that are most searched for, keywords of the services or product you are going to dedicate yourself to…
- Pay attention to the topics that are being written about. You should know if there are books, reviews, or documentation on the topic of your interest. Besides giving you a clear idea of your interest in the topic, you will be getting closer to your target market.
- If it is a team proposal, avoid disconnection between areas. All members of the project have to work towards the same goal and work together to achieve it.
Also, to put into practice these 5 signs to know if your business is going to work. Don’t forget to keep in mind that every company contains risks that you should be aware of. A reality that should not stop you when it comes to entrepreneurship, but encourages you to check as best as possible all the strengths and weaknesses of your future business.
The golden rules for successful entrepreneurship
We know that being an entrepreneur is not easy and that it requires discipline and dedication. Too, each project is different and success depends on many factors that are beyond our control, but there are some principles that all successful entrepreneurs follow. Entrepreneurship is not difficult if you take into account the rules of all good entrepreneurs. Here we show you some golden rules that may help you in your way to thrive in your business.
Choose a good business idea that meets a need
When you want to start a business, sometimes the most complicated thing is to choose what you will dedicate yourself to. It is not as easy as it seems, because the first thing is to recognize an existing need that you can cover much better than existing competitors. You have to listen to the customer, know what their need is, and then develop a product that will evolve because flexibility and agility are key in the first phase of entrepreneurship.
A product or service that adds value. You should be careful when you get carried away by emotions and think about whether what you are proposing is profitable or at least viable. Above all, look for an innovative and competitive idea, something that stands out and offers something different from what is already there, which provides extra value.
An idea that has a future. Think of an idea that is innovative and has a future projection, a business that is not based on passing trends and that will not stop working in a few years.
How do you find a good business idea? Attend events, seminars and courses, find out how the business market is, and make an effort to create professional contacts. But, in the media or magazines, you can find good ideas to install on your business.
Do you have what an entrepreneur needs?
Do we all have the ability to be entrepreneurs or do we need to have special skills? In principle, yes, but you have to work on those skills by adding hard work, perseverance, and optimism. All aspiring entrepreneurs should be aware of the “emotional roller coaster” that awaits them. Before continuing, reflect on the personal and professional aspects that will lead you to success or failure. As well as become aware of the most important issues when it comes to entrepreneurship:
Knowledge of the environment. You must know the area where you want to take up. This area is where you will bring your training and experience and you know what are the strengths and weaknesses of your competition.
Entrepreneurial attitudes: Are you a creative, optimistic, ambitious, and persevering person? Do you consider yourself adaptable to change? Do you like working in a team? Are you good at communicating? If you face new environments and intellectual challenges with ease, allowing you to enjoy learning and innovating then you are on the right track.
Analyze the way
Study the environment, identify the market areas in which your business will be well received, and set your objectives. If you do not plan and have a clear goal, it will be difficult to achieve your objectives.
Think long-term, but we tell you not to set the bar too high because you can get demotivated. Start small and grow little by little. That way you will be able to measure the viability of your idea progressively and you will be able to correct mistakes and gain confidence.
Before launching into the market, you must confirm the business theories. Keep in mind ideas on your own, although they may seem profitable and innovative, are worthless if there is no need and no added value that makes them sustainable and viable. The most important thing is to go step by step, start with a viable product and test the market.
Be realistic in forecasting expenses
It’s possible that doing math doesn’t suit you and you think that you don’t need to take care of it personally. It is not enough to hire an advisor; you will have to understand all the concepts he is talking about and be the one to make the decisions.
Above all, be realistic and value the costs. Think that income is not employees’ profits. Remember to take into account your employees’ social security, taxes, services, material costs, and rent. This forecast may be the difference between a profitable business and a loss-making business.
Use the best working tools
You don’t need to pay high amounts to have good working tools. The market offers you professional alternatives at a good price, and even for free. There are some apps and tools that may be useful:
- Hootsuite
This tool allows you to manage your company’s social networks from a single device, scheduling publications and receiving current information about the reach of what you publish and the interaction you get.
- Google Analytics
This tool has established itself as one of the main tools to know the statistics of web pages in real-time: traffic of each page, tracking online actions, the number of visits, sessions, and traffic sources, or page views.
- Trello
It’s a work management tool that allows teams to track progress in a visual, productive, and rewarding way, design plans, organize workflows, and collaborate on projects.
- Evernote
This app allows you to organize your work by filing notes and almost any kind of information. In short, it’s like having your office on your smartphone. It is a notepad in which you can store all kinds of information in any format: personal notes, email addresses, images, videos, or any other content that you can copy and paste. With it, you will be able to manage to-do lists, reminders, share notes, or almost any action necessary for the organization of your work.
- Dropbox
This is the reference program for sharing large files. It allows you to log in to your online account from any device and access all documents, in any format, whether they are text, images, or videos, and share them with partners, employees, clients, or collaborators.
Friendly tech
Definitely, in the current context, starting a company and keeping it current takes more effort and requires much more connection with the world than before. Technology reduced the barriers for those who want to start a business. It allows new entrepreneurs to show the importance of their products or services quicker and less expensive than before. Access to social media, websites and so many other tools has greatly facilitated testing the market to find out if a product is in demand or not.
In a world where speed is the law, failure can come faster too.
The risk of failure is higher when we face frequent change and competition around. This can increase when it comes to 100% digital companies. So, recovering from falls and starting over is not something strange for entrepreneurs.
On the other hand, the possibilities of growing and generating earnings on what is invested are also greater. There is a risk, without a doubt, but if the execution is good, you have the ability to achieve success in much less time than the large corporations of today had to spend to develop.
Surround yourself with the best
Teamwork divides the effort and multiplies the results. So, one of your priorities should be to surround yourself with the best professionals to learn from them. Try to hire talent, look for experienced people and offer them the necessary incentives to identify with your company. A top-notch team is a key condition for success.
Take care of how you communicate
As a business person, you will have to interact with customers, suppliers, and partners. If you want to keep up to date with what’s happening in your area, you will have to take part in events and you may be committed to speaking. Don’t see this as an inconvenience, but as an opportunity to raise awareness of your company.
You don’t need to become an expert speaker but work on expressing yourself, being clear about what message you want to deliver, and doing it with confidence, determination, and trust. Practice some exercises to improve your diction and don’t forget your body language.
Don’t stop training
They say that the most successful people are those who never stop learning, and a good entrepreneur needs to always be updated. Being up to date is essential if you want to reach the top.
We usually use excuses ourselves for lack of time. Despite that think about the time you spend watching TV or social media… You’ll realize that, in most cases, it’s more a matter of organization and taking advantage of free time.
If you propose to divide 5 hours a week for learning something that allows you to keep growing — what activities could you develop in that daily hour from Monday to Friday?
Reading, attending a webinar, watching a tutorial, and developing that skill you’ve been wanting to learn for a long time. In short, make an effort to make time to get organized and keep up to date.
Create a good network of contacts
When it comes to doing business, referrals always work. A happy customer will bring another one because, in most cases, we prefer to buy something or hire someone we have heard good things from or with whom we have a common acquaintance.
The answer to this trend? The fewer elements of uncertainty we handle, the more chances we have of being right in our decision. Following this reasoning, we conclude that those who have fewer contacts have fewer opportunities to sell.
But besides having contacts, we must also take into account the importance of managing them and taking care of them. So also, to segment them and have all the contacts of our company under control to save time and effort, we must update the lists. Make sure the users who receive information from your company are potential customers of your product or service.
Pay attention to changes
A mistake of many established entrepreneurs is to think that everything is already done, so they end up “becoming complacent”. When you are starting your business, be clear that an entrepreneur must be trained, and attentive to changes.
The main traits of the innovative entrepreneur are openness to new ideas, a clear will to develop new projects, confidence in oneself and one’s ideas, long-term vision, and awareness of the implications of being an entrepreneur.
Reflect to draw conclusions
After a failure, it is important to stop and think about the causes of it. Especially because human beings tend to repeat the same mistakes, and it is vital to be self-critical to get out of that apathy. On the other hand, we must reflect on whether there were signs that anticipated that failure — Many times we silence our instinct because it is not very rational, but if you have a bad feeling you should trust it.
The key is to learn to recognize the signs of a shipwreck as soon as possible to be able to react faster and faster, which helps to cut the damage.
Speaking without fear and feeling encouraged to investigate the reasons why a business fails, can be the best input to start again. Business failure will always be an issue that will chase entrepreneurs and is a factor that they must live with during the creation and maintenance of a company.
The fact that a business has not turned out well in no way reduces the value of a person as an entrepreneur because only those who do not dare to try never fail. But beyond this, it is worth remembering that there is life beyond work, and that a setback at work should not be interpreted in personal terms. We must not lose enthusiasm, but know how to find mechanisms to keep stress away and enjoy the day-to-day.
– Carla Fattal
