To be a risk-averse or to be a risk-taker won’t simply define your business’s course of success. It’s rather through years of learning and failures that you would eventually come up with lifelong lessons. In fact, if you are in U.S., the first five years of your entrepreneurship could come up quite hard on you.
These are the kind of statistics that really put down a lot of potential entrepreneurs from taking the road down to setting up their own company. Nothing can define your success—neither success, nor failure in the short-run. It’s the long-run that you should focus on to.
Let’s first look at some of the common reasons why most of the startups fails.
1. No or Very Less Prior Experience
It’s not just about doing what you love. It’s about learning and training yourself for it. If you are planning to spend you entire savings on to some new business, you better know the do’s and don’ts of that business. Having a professional degree and years of experience could lower your chances of failing in the long run. Trying out something new doesn’t have to be out of the blue.
Also, remember that failures won’t tell you what you did wrong. So you have to figure it out yourself. And when you do, you will come up with the right things in the future.
2. Not Enough Resources
Are you planning to expand into a new division? You better have enough resources to pull off the job. Most of the times, businesses tend to forget how to apportion their existing factors between the new and existing core business. That’s why, it’s always better to look at the available resources. Stretched up environment would lead to failure of both, your existing and new division.
Sometimes, it’s not too late before you can backdown. It’s alright if you have to, because you know you are doing it for the right reason: to save your core business.
3. Poor Hiring Decisions
Your company is built around your employees, and if you don’t hire with due diligence, failure is awaiting your way. Many startups don’t look up if the candidate is the right fit for their business. Your bad employees can cause long-lasting troubles even if they are no longer working with you.
Turn Business Failures into Success
Did you find something common with all of the aforementioned reasons for business failures? It’s the inability to forecast, and this happens only when you make exaggerated expectations about your business.
So what lessons have we learned?
Take time out to hire your staff, because 46 percent of the new hires usually tend to fail within the first year of the business. Have a clearly designed recruitment process that will save you the sanity.
If there is a poor performer in your company, let them go. Some times, you just have to be like this way to keep your business away from a bigger mess. But don’t be spontaneous. Let your employees know what you want from them and regularly appraise their performance.