Why Startups Fail & What You Can Do To Succeed

So you’ve started your own business. What are your motivations for doing so? Perhaps you’ve been downsized and being unable to find a job in this economy is forcing you to start a business. Perhaps you’re tired of being an employee -- you hate your boss, can’t stand your colleagues, don’t believe in your company’s goals -- and think it’s time to leap into entrepreneurship. Or maybe you have an innovative product or service that you think might be the “next big thing” to take the world market by storm.

Whatever your motivation, starting a business is the easy part. According to the Small Business Administration, an estimated 627,200 businesses were birthed across America in 2008, while 595,600 businesses closed. Thirty percent of businesses fail within the first two years, while fifty percent survive five years. Rather grim statistics. Yet why do start-ups fail and how can you ensure that your business is amongst the ones that survive and thrive?

1. Expecting Quick Successr
It’s easy to be attracted to the idea that we should be successful if we’ve invested some time, money and energy into a business. For example, placing one advertisement or sending out one sales letter and expecting clients to pound at your door. When quick success doesn’t happen, self-doubt arises, taking a stab at much-needed confidence, causing you to lose faith in your business.

To be a successful entrepreneur who makes it past the 5-year mark takes resilience -- the ability to turn around a bad situation, to profit from your mistakes, and to bounce back from failure.

This mistake can be avoided by taking a 360-degree look at the steps needed to grow your business, implementing a well-researched plan, and having enough financial reserves that last at least 18 months when you start a business.

2. Not Applying Sales & Marketing Fundamentalsr
Do you have a negative reaction to the word “Sales”? Many entrepreneurs dread sales because of old images of “snake oil peddlers”—manipulative con artists who convince others to buy things they don’t need.

The reality is nothing happens until a sale is made. As such, the first fundamental is to have a healthy mindset about sales and marketing.

Other sales and marketing fundamentals, like having a target market, knowing who your ideal client is, having a sales process, the 80/20 rule (that 20% of your marketing activities will generate 80% of revenue), the 7-touch-or-more process prospects go through before becoming a customer, the need to have a marketing plan, the necessity to invest at least 10% of revenue in continued marketing, may seem run-of-the-mill. The truth? They are applied in businesses that succeed, and are absent or sporadic in those that fail.

Some successful entrepreneurs may even go so far as to say a business owner’s main business is marketing, and not the product or service they are offering. While you might not agree with this view, the point is: constantly exploring new marketing methods, testing them, repeating what works and discarding what doesn’t, will ensure your business’s survival.

This mistake can be eliminated by mastering the sales and marketing fundamentals, really weaving them into your business, and continually testing marketing methods. As always, strategies you’ll learn work only if you work them.

3. Not Mastering The Mental & Emotional Gamer
If running a successful business were as easy as knowing what to do and doing them, why aren’t there more successful business owners around? It’s usually because people haven’t mastered the inner game of winning in business.

To win, you must be aware of the types of behavior that are self-sabotaging, deal with them and hold on to your vision until the finish line. At the same time, you must continually nourish yourself by connecting to your belief in the success of your business, and truly owning the difference your business is making on the world.

An example of self-sabotage is the inability or refusal to learn from your mistakes. It’s the tendency to repeat self-destructive behaviors even though you repeatedly end up being bumped in the head. An entrepreneur I worked with was close to shutting his business down, because like the previous business he started, he didn’t embrace sales and marketing, and let sales dwindle until it was too late. He was avoiding the real issue -- his discomfort with selling.

This mistake can be eradicated by budgeting for a coach like you would an accountant, and having her assist you in uncovering your blind spots and developing an unstoppable mindset. “You can’t see what you can’t see” is the reason sports legends like Tiger Woods and Michael Jordan work with their coaches. A good coach not only can point out what you don’t know that you don’t know, she is probably one of few people who is 100% dedicated to your success. You are taking on the challenging yet rewarding entrepreneurship game after all, and you deserve all the support you can get.