As an entrepreneur, it’s not always easy to see the forest for the trees. Running a startup is hard: You’re pouring all your time and energy into something you’re sure will change people’s lives — but at the same time, you’re struggling just to keep your team afloat and make ends meet.
According to the U.S. Small Business Administration (SBA), about 70 percent of all small businesses close their doors after just two years in operation; and more than half are gone within five years.
Why do so many entrepreneurs fail? It’s not because they lack ambition or vision or talent; it’s because they don’t understand what it takes to succeed as an entrepreneur.
Here are some common reasons why most entrepreneurs fail:
1) Poor planning and execution. Entrepreneurs need to plan their business from start to finish, including what they’ll sell, how much it will cost, how much money they’ll need, where they’ll get it and how much time and energy it will take for them to grow their business. If you don’t know what you’re doing, you won’t have a realistic idea about what’s involved in running a successful business — and that can lead to disaster down the road.
2) Lack of capitalization (money). If you don’t have enough money in the bank or enough credit available, then there are limits on what kind of business you can run and how successful it can be over time — not to mention what kind of lifestyle you can live while running it! You don’t want to run out of cash before your business starts generating income; otherwise, things might get ugly fast!
3) They don’t understand their customers’ problems. Entrepreneurs often go into business because they want to solve a problem they’ve experienced themselves. If they’re not solving their own problem, then they’re solving someone else’s problem — but not very well.
4) Poor product development. A lot of new businesses fail because they produce a poor product or service that nobody wants to buy. This is especially true for new companies that sell products rather than services (like insurance companies). If you don’t have a good product, no amount of marketing will help you sell anything! The same goes for service-related businesses: If your service isn’t top notch, people won’t come back for more!
5) Poor business skills. Many entrepreneurs have great ideas about what their business should look like and how it should run, but they lack the skills needed to make their vision into reality.
The entrepreneurs’ game is a difficult one. But if you’re armed with the right knowledge and understanding of the challenges that lie ahead, you’ll be more likely to come out on top, and create the business empire of your dreams. So, the question you need to ask yourself is this: are you ready to take on the challenge, or will you be another statistic in an increasingly crowded graveyard of failed businesses?
