I often read all the stats about business failures and they mostly seem rather lacking in enough detail for me to really believe them, much in the same way I don’t believe in people going the other way and offering get rich quick schemes.
Neither seems right in my gut – Business isn’t that simple. Businesses don’t simply fail due to cashflow issues and making a million overnight just doesn’t happen unless you play the ‘lottery’.
In my humble opinion there are many underlying reasons so many businesses fail across the world and they are not about money, race, environment, business type etc. Sure you are more likely to fail in a high risk business like catering (restaurants), or if the economy changes or a tidal wave hits your region but in the run of the mill town why do all the others fail so often?
I think its actually mostly about motivation – dig deeper into some of the stats and you seen vast numbers of businesses close without leaving debts or stranding staff, they simply wind down and stop trading.
These businesses have obviously been closed by the owners under their own volition and not under duress of the bank or creditors.
My view is that far too many people start businesses on a whim or because they feel they must for a variety of reasons from family background to redundancy but in all the cases I think that many of the entrepreneurs could have carried on and become successful or indeed do so later on after the one idea is dead.
This approach to starting a business seems quite universal, I found myself doing it in my early days and I find almost all my mentees trying to do it – they have an idea and just jump in with both feet.
What they don’t seem to do often enough is any long range life planning to match with their business goals, they simply seem to split these two areas of their life – business and life goals in two and not make a conscious connection between them.
In these instances, as I have found myself, starting a business is like getting a new boy/girlfriend – its all infatuation for the first phase of the relationship and then as time goes on that feeling fades and the hard work of relationship building starts! The same with a business, we all get carried away and then a few years down the road (or less) we wake up one morning and realize that the business seems to be running our lives (often in the wrong direction) and we wish we were doing something different or going a different way but by then its too late.
Much like with a relationship that’s gotten tired or that baby has suddenly arrived, the same goes with a business but with often larger consequences – so sometimes we feel trapped – but in both cases we feel that we wish we had thought it all through a bit more at the beginning!
However, if we end up with a great relationship this can be because it grew out of a friendship and lots of mutual passions and a single life vision.
Well you can think of a great business idea in the same way – did I live with the idea for a while and test it out before committing 100%? Did I consider my life goals for now and the future and then try and match those to the business idea? Did I work out my own needs, strengths and ambitions and make sure that our business changed to meet these rather than the other way around?
If we did all these things then we are more likely to get through the ups and downs, to still have the ‘passion’ and juice a few years in and we had the enthusiasm to make it through when we may have given up in the past?
This is my theory as to why businesses fail – they make the wrong decisions early on and then regret them all years later and then decide to close down their businesses…and this explains the very high failure rate.
Make sure you are not one of these “statistics” by planning and thinking before you leap.
Why not try looking at my book that’s designed to help with this process: