What do the number really mean?
You have probably heard the statistics, 80% of new businesses fail within the first year. Of the ones that make it, 80% of those fail within the next five years. I don’t know if those numbers are accurate, but that is what I’ve always heard and it seems believable. So why do businesses fail? You may have heard that most businesses fail due to undercapitalization, basically they run out of money. It could be due to competition or changing economic conditions or any number of ‘reasons’, but if a business can’t cover their operating expenses, they can’t continue to operate.
Is it about running out of money?
Most businesses need some amount of startup capital that includes operating expenses while they build their market base/clientele. You have to have money to ‘keep the lights on’ while you work to increase your sales. The more operating capital you have and/or the lower your operating expenses, the more time you have to build your base and become profitable. Having more time for a slower growth curve can reduce to pressure to grow quickly. This can be a good thing or a bad thing.
Online business vs. Traditional business
There are a couple of points I want to make about this. First, running out of money is primarily an issue with traditional businesses not online businesses. Traditional businesses need a lot of startup capital and are expensive to run. Why do businesses fail? Running out of money is a key issue traditionally. However, online businesses are much less expensive to set up and operating expenses are lower. The reasons they fail have more to do with the owner giving up. The owner might get distracted and not put enough time and focus into the business.
The mindset of the business owner
The second point I want to make is that with any business, it is the mindset of the owner that is the biggest factor in determining the success of the business. If the owner stays committed and focused, they will find a way to be successful. In the early days of a business, it’s very fragile. Think about a tree that is just beginning to grow. It may have the potential to grow deep roots and grow tall. But in the beginning when it is small, it is vulnerable and can be easily uprooted. The business owner must be the driving force in growing the business to a point that it is stable and then working to maintain it.
An emotional roller coaster
In the book, The Entrepreneurial Roller Coaster, Darren Hardy explains that businesses fail, not because they run out of money but because the owner basically gives up. He explains that starting and running a business is like being on an emotional roller coaster. There are thrilling highs and devastating lows. You have to be able to manage your emotional state and handle the highs and lows. Why do businesses fail? Businesses fail when the owner becomes too overwhelmed to deal with problem they are facing.
The ultimate resource
People often say that they failed because they lacked resources, capital, clients, income, etc. Tony Robbins talks about resourcefulness as the ultimate resource. He explains that ultimately, people failed because they gave up and didn’t tap into their ultimate resource. He explains that if you are committed to succeeding, you will find a way to make it happen. If you need more clients, sales, investors, etc., you will find a way to get them. As long as you are committed and able to tap into your resourcefulness you will be able to push through.
How can you be successful in your business?
In order for any business to be successful, you need a proven business plan. It doesn’t need to be complicated. In fact, the simpler it is to understand, the better. You also need to commit yourself to making it happen. One of the best ways to ensure your success is to have a support system. This is why people join mastermind groups and hire coaches. It starts with the desire to do it. Then you need to believe that YOU can do it.
Next your need to pursue the specific knowledge you need and take action. As long as you keep wanting it, keep believing in yourself, keep getting knowledge and taking action, you will keep making progress toward your goal. I know you can do it! The best resource I can share with you on your journey to becoming a successful entrepreneur, is the link below. Jeff Lerner has put together the resources that new entrepreneurs need to become successful.
