During the first two years of their activity, the majority of companies experience failures. Some fail at start-up while others experience a few small moments of success before going bankrupt.
Any new business is more likely to fail than succeed. Sometimes the worst challenges of entrepreneurs are imposed on them by difficult economic conditions.
While the buzz of social media marketing and crowdfunding campaigns have made it easier to create new projects, the future may seem a little complicated for new entrepreneurs.
But more often than not, a business’s failure is linked to internal causes that can be avoided if the entrepreneur realizes this early enough to put in place corrective measures.
Below are the 7 essential tips for leaders to avoid entrepreneurial failure in 2020 and move your business forward in the right direction.
1. Lack of research and planning
Starting a new project without setting a clear strategy, without clearly defining your goal and without learning about your target market, is one of the main causes of business failure.
Where to start?
While these steps may seem simple at first glance, some entrepreneurs get started without first doing the necessary research and planning. Start by doing research:
- Do you know a successful business that you would like to emulate? Find its founders on Linkedin or other social networks. Read their content, ask questions, comment on their work, and learn from the experience of those who have been there before you.
- Meet entrepreneurs face to face: to avoid entrepreneurial failure as much as possible, having a mentor is one of the most important assets.
- Attending conferences is a great opportunity to meet other entrepreneurs who have already done what you intend to do, and learn from their experience.
Develop your business plan
Each business must have the capacity to briefly present your strategy. This is the role of your business plan the essential document with which everything begins! You must know where to set foot when launching your entrepreneurial project.
Your Business Plan is the formalization of your business project: it combs your business idea, your development strategy, your commercial ambitions, your Business Model and of course the demonstration of the financial profitability of your project.
Your Business Plan constitutes your roadmap and allows you to put all the chances on your side to avoid the failure of your business.
Your plan will constantly change and you must be able to adapt. So, you can start by following a plan that seems perfect but which, in three months, will be obsolete.
Planning your budget is the best way to anticipate risks and stay secure as your business evolves.
Financial crises are a threat faced by all new businesses. Being short of money is a dead-end due to capital that is spent too quickly or insufficient capital from the start. Besides, the first causes of failure to start a business are poor cash management and a lack of security funds.
To ensure the success of your business in 2020, here are the plans you need to start with:
- a clear and precise forecast budget, with reliable data.
- Your projected cash flow: this is the key tool for your solvency. By using a forecast cash flow plan in the form of a table or graph, you forecast your payment deadlines and ensure that you are able to meet your financial commitments.
2. Financial mismanagement
Even if you have the most precise budget possible, you will not get anywhere if your accounts are out of balance. Lack of management is one of the main causes of entrepreneurs’ failure.
Remember to set up performance indicators to regularly check your financial balance.
You must know precisely your income and expenses to identify the corrective measures to be implemented as soon as possible. You must regularly compare your actual performance with that initially planned, to adapt your strategy and control your costs.
3. Poor hiring and management procedures
You have an infallible business plan and good cash management… But are you also certain of having a good team to guarantee your success?
It all depends on your team. This is why you should always be attentive during the recruitment and job interview phase. Unfortunately, we don’t always have the opportunity to do it at start-up, because we have to act quickly. Once you have gathered a team around you:
- When starting out, entrepreneurs often wear a multitude of caps. They develop overloaded task lists instead of delegating. This can obviously help them succeed in the short term.
- But long-term goals only materialize with the joint efforts of an entire team.
- If you manage to delegate as much as possible, your team will feel that you trust them.
- If you assign tasks to your employees and you continue to observe and supervise them at each step, you will spread negative waves and implement a dynamic of lack of confidence.
One of the key factors of your entrepreneurial success is the satisfaction of your employees. In business, communication between an employer and its employees should not be overlooked. Employees like to know if they have a place in their team and are considered an asset.
Creating a framework and an atmosphere where employees feel comfortable expressing their opinions, positive or negative, not only makes them feel valued, but gives the employer the opportunity to continuously improve.
If you manage a team remotely, there are also simple ways to involve your employees in order to be effective: for example, federating your team around a corporate culture or even setting clear and time-bound objectives.
4. Fear of taking the plunge
There are many who want to become entrepreneurs but who let themselves be overcome by a blockage. This blockage is an obstacle to business creation.
This fear of the unknown takes holds especially of those who start the entrepreneurial adventure at a young age.
You should know that today, very young people manage dozens of companies around the world.
Progress is much more important than perfection. So don’t let perfection block your entrepreneurial path.
If you get stuck, you will kill your progress and probably your business even before you reach your full potential, and sometimes before you even start.
5. Marketing strategy
What plan should you follow to spread information about your offerings and let the world know that your business is there?
One of the causes of the failure of young companies is the lack of relevance to marketing. Even if you start with a certain number of clients, there is no guarantee that you will easily attract new ones in the medium and long term.
A marketing strategy is not a secondary element, it is essential to the success of your business project.
Depending on the specifics of your business, your strategy may include traditional marketing tools: advertising or emailing.
However, regardless of your field of activity, you will need to incorporate digital into your marketing plan:
- Take advantage of social networks: LinkedIn, Facebook, twitter.
- Bet on SEO & content marketing: blogging, e-books.
- Set up digital advertising: Google Adwords, Social Advertising.
- In short, apply the latest marketing trends to always target your customers better.
“Convince and Convert”, consider asking an experienced marketing consultant to help you write a plan that will best meet your needs and help you reach your goals quickly.
6. The volume of work
A new entrepreneur should forget the concept of a workday that begins at 9 a.m. and ends at 5 a.m. As of today, know that you will be working from 7 a.m. to 11 p.m.
Many people would like to be entrepreneurs to benefit from flexible hours, work from home or in exotic places, or even by watching their child’s performance at the school, theatre.
It is a luxury that has a price and this flexibility is often compensated for by devoting a lot of time to one’s professional activity.
Entrepreneurial success requires some sacrifices. Keep in mind that when you miss a few family events, the rewards will be very important.
7. The strength of will to succeed
Sometimes certain decisions are difficult to make, but entrepreneurs must be motivated by passion and will to make their dreams come true.
If you prepare a Plan B or a Plan Z, as soon as things start to get complicated, you will probably give up everything. So cut the spare ropes and go for it.
Your Plan B will distract you and hinder your efforts. Everyone can doubt, from time to time, no matter how successful. The important thing is to understand why, and the most important is to know how to get out of it.
Are there other obstacles that an entrepreneur may encounter? Of course!
But if you take your best chances by following our advice, and if you are truly convinced that progress is more important than perfection, you are already ready to take the path to success.