I sit on the board of an entrepreneurial empowerment and networking non-profit organization. Part of the mission of this organization is to decrease the high fail rate of early entrepreneurs and businesses -- some statistics have this as high as 9 out of 10 failing within the first three years of inception.
The question always ends up being, “Why?” And during our conversation several reasons were brought up but my take is that the following three reasons top the list:
1. Burying your head in the sand about numbers – lots of people hated math growing up and many entrepreneurs seem scared to even look at their numbers. Sometimes, the default with fear is to look the other way, but being ignorant to your numbers is a sure-fire way to run your business into the ground.
Instead, be aware of your costs so that you can create the largest profit margin. You must know what’s going out and what’s coming in, even if you have someone doing your bookkeeping for you.
For example, when pricing your product, don’t just look at your market and pluck a number that seems average or reasonable. Take into consideration your time, your overhead, your advertising, your team, your tech and most of all, don’t forget the cost of acquisition of a customer or client.
2. Let failures or past define them – all too often the voices in our heads are the meanest we’ve ever heard. The problem is that your own voice is the one you believe the most.
If you’ve ever failed at something, then you know it takes more out of you each time you try again, however you can choose to reframe each failure as a learning experience. Ask yourself, “What was I supposed to learn from this? How can I do better next time?
Remember how many times Edison failed at choosing a filament for the light bulb? Or how many tries Dyson had at a new type of vacuum cleaner.
Your failure never defines who you are, but what you do next shows the world your character.
3. Lack of knowledge in marketing – rarely can a business survive without marketing. Your customers need to know you exist before they can buy from you. All too often marketing gets nixed as an expense because entrepreneurs are unsure if the strategy they’re thinking of deploying will be fruitful.
They decide that the least amount of risk is the best decision but without some smart marketing risk there is no reward.
Instead, they decide to just print business cards, throw up a website, or put a sign up on the side of their car.
The best strategies are created with the end in mind. Determine the desired outcome and reverse engineer the steps to get there. Every good marketing strategy starts somewhere and then gets tweaked along the way so be prepared to deploy, evaluate, change, deploy, evaluate, change and keep doing that until you have a system that works.