6 Reasons Your Great Startup Business Is Doomed
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Francis Lim M L There are many people who have great ideas and the spurt of ambition to pursue their dream of working for themselves. Unfortunately, many of these same people have also gone bust — even before getting their business up and running. If you have been toying with the idea of starting your own venture, you should take time to evaluate what you think running a startup is really like, and what it means to be in business for yourself. (See also: Freelancing: A Beginner's Guide to Doing It Right)
1. You Think You Can Bootstrap It
There are many that go into a business idea without a dime to their name, utterly convinced they were going to make it big. Before telling your boss to take your job and shove it, you should really work through the realities. No matter what your business idea is, there will be overhead expenses to be covered until your business makes money, which can take years to happen. Consider working fulltime for a paycheck until you can truly stabilize your side business.
2. You Don't Believe in Business Plans
As a writer, I’ve been asked to create a lot of different types of material. To date, my least favorite inquiry was from a couple who wanted me to write their business plan.
At first I thought they meant "rewrite" their plan into something more professional. What they actually meant was for me to create a business plan for their proposed trucking company. This couple had not a single clue about what it would take to get the business up and running. They had absolutely no idea how to deal with the immediate future of their company let alone the long-term vision or profitability.
Whether or not you plan to seek the financial assistance of investors, you need to work through a business plan. If you cannot answer the questions common in every business plan, do not open for business until you can answer those questions clearly and confidently.
3. You Are All Talk
Again, in my line of work, I deal with a lot of startup companies looking to cement their presence on the Internet. There are some who will ask for 20 quotes for web content and in the end never do anything about it. It’s one thing to feel excitement about a business idea, but if you are unable to see the project through to completion, starting your own business may not be the best move for you.
4. You Cannot Follow Through
There are some people that are so full of ideas but rarely does one stick around long enough to see it through. Jumping from one idea to the next can be dangerous, especially if you are putting forth your hard earned money for something that is going nowhere. Sort through your ideas in writing and sit with them for a while to see if any stick. Then consider pursuing that idea.
5. You Don't Understand the Business
There are some businesses that fail right off the bat because people fantasize about what the business would be like rather than researching the realities. For example, opening a bakery may look great on television, but it would be to your advantage to really see what it is like on a day to day basis. You should make an effort to talk to owners of businesses you are interested in starting for yourself and find out what really happens. You can even shadow a few business owners for real life experience.
6. You Rely on Others to Do the Hard Work
As a business owner getting ready to launch a startup, it is important to realize just how much of the actual work falls on your shoulders. You wear many hats, especially during the first few years when paid help may not be a viable option. You have to be committed to doing all of the hard work and seeing it through or you will be closing the doors soon after they open.
You also need to really consider your target audience. If you are planning to open a jewelry business and think having only your friends and family as customers will keep you afloat, you may want to reconsider your business plans and keep your jewelry-making skills as a favorite hobby.
Not everyone is cut out to be an entrepreneur. Surely there are things that can only be learned through trial and error, but when you are investing your own time and money, you may not be able to afford too many errors. Do your research, complete a full business plan if only for your own benefit, and really consider the pros and cons of what you are venturing into.
Have you gotten your startup business through the difficult first few years? What do you know now that you didn't know then?
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Great article, and I think it's completely true! Quitting your job before you can pay out of business funds is foolish! I tried that, too, and that business (years ago) failed miserably. And it was very, very stressful.
I did bootstrap my second business, but my husband is able to cover our living expenses. I have just hired my second employee, and I still am not making quite enough for my husband to quit. :) (Everything is on a part-time basis since we also have kids. I make half the money I need until I can work full-time. But that's okay because I'm where I want to be.)
My best advice for starting up a business is to treat your customers as they want to be treated. And consider that as well, when choosing a business.
One of the first things you should establish is what kind of relationships they want from you - purely professional, friendly, etc. My customer base requires that I be very friendly and friend-like to my customers (though only rarely have I become friends with any of them.) But to be honest, I like that. It suits my personality, and I love chatting with my customers. But if your personality was purely professional in my field, it would be *much* more difficult to gain and keep customers.
I've encountered #2 as a writer. Like you, I've been asked to write a business plan but the potential client really meant create a business and marketing strategy, model, and plan (generally out of thin air). I wasn't inundated with these requests but got enough of them that I developed a list of 20 (or so) questions based on a business plan book; when approached to "write" a plan, I asked the client to answer the questions and then we could proceed. I never got a taker.
Now, I think you could start a business without a plan, perhaps start on the side, experiment with different models, etc. until you are ready for a full-scale launch. But if you are borrowing money or need loads of cash to get started, a business plan is needed.
I think that most people fail in business due to one or more of the following reasons:
1. Lack of proper planning and no goals for the business
2. Too much debt and poor money management skills
3. Improper market research, before and after startup
4. Laziness; not willing to put in the work required
5. Not serious and dedicated to running a business
Hi Tisha, Such a simple yet effective post, you really do get right to the crux of it. Your point about business plans sticks out to me- no business can get off the ground without a business plan. How can any start up move forward without clear goals, aims and understanding? Thanks for sharing!