Starting a business is not an easy task, and as an entrepreneur, you may face many challenges and obstacles. Want to become a great entrepreneur? Want to make million dollar company or a billion-dollar one? But have you ever experienced being stuck in a cycle of repeating processes? More often you start the process amidst your tight commitments, and after some days to months, when you look at your progress, it would nothing fall shorter than your unmemorable initial steps. Right? If yes, then this article is for you.
No significant outcomes! And the habitual pitfalls occur! This is to help you out with your mundane work ethic! Are you living on autopilot, or actively shaping the life you want to lead?
I have classified the business failures into two major segments, Core Mission critical failures, and non-core mission-critical failures.
Fine. I am going to start with non-core mission-critical business failures. Get your belt on!
Many entrepreneurs fail hard in their ventures, and the reasons can vary from poor market demand to lack of cash management, and from poor vision to inadequate self-awareness.
Non-core Mission Critical Reasons
Habit and Discipline
Do you know what? The biggest obstacle in the way of your success is you!
One of the most significant reasons why entrepreneurs fail is the lack of discipline and consistency in their habits. Entrepreneurs who lack discipline and consistency tend to lose focus and direction, leading to sub-optimal results.
For instance, an entrepreneur who is not consistent in their marketing efforts may fail to generate enough leads and customers. Similarly, an entrepreneur who is not disciplined in managing their finances may struggle to maintain a healthy cash flow.
But consistent marketing efforts and maintaining a healthy cash flow aren’t the whole thing for success. However, the degree of consistency along with lifestyle changes matters.
We both know entrepreneurship works on the principle of long-term growth but still too many entrepreneurs couldn’t realize the importance of lifestyle & behavior changes that contribute to business growth. But how significant are these lifestyle & behavior changes helping businesses?
I actually have a basic principle in my life, I used to gather information on whatever I begin to use, the purpose of its creation, proper usage, and finally the pros and cons. I will rather go for the cons first to escape from optimistic bias.
I call this principle – PULE (Purpose, Usage, Limitations, Extensions) where extensions are advantages or optimized utilization. It applies to my life on my body. I know but don’t worry I won’t lead you to existentialistic themes. Entrepreneurs can adopt this principle to know about their physical bodies. Mainly focus on your brain and its function of thinking. Because it is our first enemy if not used properly. We are prone to biases and judgments, of course, we cannot escape them completely but can be aware of them completely. By being aware we reduce the risk of decisions influenced by biases. To get a thorough understanding of biases you can go with Daniel Kahneman’s “Thinking Fast and Slow”.
By this, I insist you focus on physical, physiological, and mental lifestyle changes accompanied by a consistent work ethic that contributes to accomplishing the aspired business growth. Wholly, it is for one thing – Make your body effortlessly work for your entrepreneurial will. (long-term focused)
A habit is making your body effortlessly work for your will
Ashiv Mana
Self-Awareness
Another critical factor that can contribute to the failure of entrepreneurs is a lack of self-awareness. Entrepreneurs who lack self-awareness may struggle to identify their motivations, and they lose drive more often (mostly at the initial stage) causing them to intervene with their duties. At later stages, the consequence is famously called “ineffective leadership”. Self-awareness is the ability to perceive the alignment between your thoughts, emotions, and actions.
By developing self-awareness, entrepreneurs can better understand their emotions, motivations, and thought processes. They can also identify areas where they need to improve and seek help from mentors, coaches, or advisors. Self-awareness can also help entrepreneurs manage stress, build resilience, and maintain a positive mindset.
To build a habit and discipline, you need to be self-aware first. Again, being self-aware according to my standards is, being aware of biases too. Because biases are the key to most failures. There still are many non-core mission-critical key reasons for failure that come under self-awareness including Hubris Syndrome, burnout, dependence, Inconsistent direction, etc., I will discuss these in our next article.
Core Mission Critical Failures
Poor vision
The main reason why entrepreneurs fail is poor vision. Entrepreneurs who don’t have a clear and well-defined vision for their business are likely to struggle to gain traction and succeed. A lack of vision can lead to poor decision-making, misaligned priorities, and an inability to communicate effectively with customers, employees, and investors.
Most companies don’t possess a good vision, and even if they have it, mostly it is not lucid enough. Most businessmen and entrepreneurs fail to understand its importance, they develop a vision based on various insignificant factors but fail to understand that it must be from the deepest motivation of their subconscious mind. Leaders have it inherent though!
Lack of market demand
One of the most common reasons for business failure is the lack of market demand. Entrepreneurs may have a great product or service, but if there is no demand for it, the business will not be sustainable. According to CB Insights, 42% of startups fail because there is no market need for their product or service.
Typically, not all the deliverables of market research are going to be true. It is again because of the subjectiveness caused by researchers’ biases. Most market research is not psychologically analyzed. I would prefer checking with the more sophisticated psychological market demand to derive deeper insights because most modern-day products are quenching the psychological needs of humans.
Insufficient capital
Starting a business can be expensive, and many entrepreneurs underestimate the amount of capital required to get their business off the ground. Without enough money to cover expenses, a business may not survive. In fact, a study by U.S. Bank found that 82% of businesses fail due to cash flow problems.
Ah ah! Yes again, it is too common though. Of course, it is hard to raise capital but with the right leadership, it is quite easy to raise human capital to work on your vision – all you need is the right vision and a great strategy – in case you can’t raise fiats.
Poor management
Good management is critical to the success of any business. Entrepreneurs who lack the necessary skills to manage a business effectively may struggle to keep their company afloat. According to a study by Harvard Business Review, poor management was a factor in 23% of business failures.
It is directly linked with Self-awareness!
Competition
In many industries, competition is fierce, and businesses that fail to differentiate themselves from their competitors may struggle to gain traction. A study by Statistic Brain found that 19% of failed businesses cited “being outcompeted” as a reason for their failure.
Choosing the right strategy with visionary leadership can help it. However, it is extremely subjective!
Legal issues
Legal issues can be a significant challenge for entrepreneurs, particularly those who are unfamiliar with the laws and regulations that govern their industry. Failing to comply with legal requirements can result in fines, lawsuits, and other legal problems that can quickly sink a business.
Lack of planning
Without a solid business plan, entrepreneurs may struggle to make informed decisions about their business. According to a study by the Small Business Administration, businesses that have a plan are more likely to succeed than those that do not. That’s very common, isn’t it?
To overcome these challenges, entrepreneurs need to develop a growth mindset, embrace uncertainty, and stay agile and adaptable. They need to be open to learning, seeking feedback and trying new things. They also need to be resilient and persistent, recognizing that failure is a part of the entrepreneurial journey. For any leadership or strategic advice you can go with Toolfe. We have a plan for everything at every stage of your business.
Toolfe uses state-of-art technology to provide you with deeper insights and gives you a better approach to your business with neuroeconomic principles.