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Why Most Entrepreneurs Fail (and How to Break the Cycle)

It’s a well known fact that many entrepreneurs, start-ups and businesses fail within the first five years; some sources reporting an almost 90% failure rate. The big question is… why? If there are so many multi-million dollar corporations out there, with CEOs and founders who started at the very bottom of the food chain, why are the rest of us not right up there with them?

It’s simple. Most of us have no idea what we’re doing! Argue with me if you want. Heck, if you’re easily offended, go ahead and stop reading right here! Because you won’t like what you’re about to read. But if you want to really take a hard look at yourself and your business, and become a better, smarter, more informed, and more successful entrepreneur, read on.

1. We go for what’s popular, and not what our true passion is.

I know, I know, I sound like an idealist with my head stuck in the clouds, right? Well, before I lose you, think about this; everyone thinks they can be entrepreneurs in anything. And as true as that is, its also…well, not true. You can be successful in anything. But that anything has to be what you know, do, and most importantly love the most. So many entrepreneurs start off with the thought… “what can make me the most money?” The next one that comes to mind is “what’s popular and what do people like?”

How to succeed:

Its absolutely true that you need to ask yourself these questions at some point. But before then, you need to ask yourself what it is that you’re good at, what you know the most about, and what you’re passionate about. Maybe it isn’t something that happens to be trending on social media right now, but here’s the thing; what’s popular right now, might not be tomorrow.

So, I’ll say this again; go for what you’re good at! Its the only way to build a truly sustainable and successful business model. Besides, who wants to start a business and then a few months (or years) later, realize their heart isn’t really into it?

2. We think we need to (and can) do it by ourselves.

If there’s one ridiculously common misconception that entrepreneurs have about entrepreneurship that I hate the most, its the idea that you have to go it alone to be successful. If you’ve got this idea in your head, drop it. Immediately. I talk a lot about entrepreneur moms on my blog, and one phrase that comes up often is ‘it takes a village to raise a child’. Well, guess what? It takes a village to run a business, too.

I know I made this mistake several times in the past. I started projects and had big plans. I thought I could do it all. Then I started to run into road blocks over and over again. But because I was doing it on my own, and hadn’t bothered to network or make contacts, I had no one to turn to help me get over these obstacles. So my plans failed. Repeatedly. Until I actually started to put work into networking and making a list of knowledgeable contacts and sources. Only when I had a team of amazing and dedicated entrepreneurs and support people behind me, did I start to see some measurable success.

How to succeed:

We need support, creative input from others, advice, and knowledge. No business has made it to the top because of one person alone.

Let’s face it, most of us aren’t versed in every area of running a business. Maybe you’re great at sales, time management, organization and budgeting, but you have no idea how to market, or design a great website. These usually aren’t skills we can learn over night. So have a team, or at least a network of entrepreneurs who have more experience than you do in certain areas. Networking and surrounding yourself with goal-oriented, knowledgeable people is essential to starting and running a successful business.

3. We never make a (written) business plan.

In the day and age of smartphones, portable hot spots and computers that can do… well, almost anything for us, we forget how important it is to actually sit down, and make a plan. I don’t mean spending an hour on a Friday night thinking up great business ideas you could implement, either. I mean a thorough, thought-out, A to Z business plan. What is your niche? What are your short-term and long-term goals? What is your budget for PR, branding, patenting or copyrighting? What is your plan B, C and D if the first one doesn’t end up working to your standards? What is your plan?

Starting a business without a written plan is like going on a road trip with just a vague destination in mind, but no idea how to get there. Your business plan is your map. It’s going to show you where to go, how to get there, what to do if you make a wrong turn, and most importantly, what you’ll need to start and then see it through.

How to succeed:

This should go without saying at this point. Have a plan. Write it out. Look it over regularly, and make changes as needed. Be thorough, and put as much time and effort into it as you can and need to. Answer every question you could possibly have, before you have them. Explore the ‘what if’s’ and have predetermined solutions wherever possible. Remember, this is your road map to success. Entrepreneurs do not succeed on talent and determination alone. It also take preparation. A lot of preparation.

4. Our initial expectations tend to be way too high.

This might be fourth on this list, but its just as important as the first three. Entrepreneurs are, by design, dreamers. We are idealists. We’re following our dreams. We expect to become successful quickly, because, well, that’s why we’re doing it! But this can also be our downfall. When we expect everything to happen immediately and exactly the way we plan them, we become impatient and discouraged when they do not. But failures, mishaps and uncertainty is a big part of the business world.

How to succeed:

Understand that success rarely, if ever, happens overnight. It takes hard work, effort and a ton of patience and flexibility. Don’t expect everything to go according to plan or think you’ll be in Forbes Top 50 Entrepreneurs in the next six months. Instead of focusing primarily on your long-term goals, put them in the back of your mind and focus on short-term, attainable accomplishments.

Then, when you reach these small victories, celebrate them. Set the bar high, but don’t forget that success is at the top of the ladder, and you’ll need to climb every step to reach it.

5. We don’t bother to educate ourselves about the parts of the business world we don’t know.

I already wrote about how important it is to have knowledgeable colleagues and sources. But even when you do, the whole point of having them there is to learn from them, not just delegate tasks. When you go into a business venture knowing only a quarter of what you need to, you can expect to fail at at least another half of the time. There are probably hundreds if not thousands of individuals who have done this; started their business, thinking they know it all, and soon realized that they probably knew a lot less than they realized.

Welcome to the quickest way to run your start-up right back into the ground.

How to succeed:

Keep educating yourself every day, and about everything possible and relevant to your business. Elon Musk (Tesla, SpaceX) has admitted to being an avid reader and educating himself as much as he can, about absolutely anything. In fact, he once said “…the important principle is to be dedicated to learning what you need to know…”

As entrepreneurs and professionals, it is our responsibility to stay informed and educate ourselves. Read. And keep reading. Stay informed and aware of current events and think about how they could affect you and your business, and the world around you. Even if you don’t use every bit of the information you learn, you’re better for having learned it in the first place.

6. We try to wear too many hats, instead of just the ones that fit us best.

Even though its best to educate yourself, especially the way I just discussed in the last section, a big mistake many entrepreneurs make is trying to wear every hat and fill every position they need. While this may, for some, be feasible for the short-term and in the initial stages, it isn’t sustainable. And sustainability of business is an important concept in this article.

How to succeed:

Again, educate and inform yourself. But realize that you can’t be a one-person circus. If there’s a task or position that you aren’t necessarily an expert in, delegate it to someone else who can do it better. This goes back to that whole ‘it takes a village’ thing. Once you find those individuals who have the skill sets you need and admire, work with them.

Branch out when you can and need to, but be sure to spend the time growing into the roles you already fit best, as well.

7. We don’t spend enough time and effort into marketing our business (or ourselves!)

Marketing, marketing, marketing. It is perhaps the most overlooked aspect of the beginning stages of entrepreneurship. Failure to market your brand means failure to allow and prepare for growth. It means being invisible in the business world and more importantly, invisible to millions of potential clients. And when your business is invisible, you aren’t gaining revenue or maximizing profits. How could you?

How to succeed:

…Market your brand. Its as simple as that. Put the time, energy, effort, and yes, money, into a marketing plan. Then implement it. Not an expert in marketing? That’s why you have your network and your team. (See how this is progressing, now?) Marketing is one hundred percent, absolutely necessary. Whether its social media ad campaigns, real world/physical advertisements, reward and referral programs, or even

8. We aren’t marketing to the right people, so we aren’t making sales.R

Remember when I talked about marketing and how important it is for brand growth? (If not, you aren’t paying attention. Please refer back to #7). Well, I was referring to targeted marketing. Marketing isn’t just about finding a great photograph of your product and putting it through Facebook Ads Manager. So many small businesses make this mistake, and ultimately, the only results at the end of the day include a lot of money and time wasted, and very few products or services sold.

How to succeed:

Do your research. Seriously. Did you really think owning a business meant that you’d never have to do your homework again?

Find out who your audience is. Look into their demographics, buying and shopping habits, correlating interests, family dynamics, and other pages and brands they follow. See which of your content they interact with the most, and tweak your marketing strategy. When you market to the correct audience, engagements are converted into sales.

9. We try to grow and expand our business too quickly.

Growth and progress is pretty much the point in starting a business. Kind of… the problem is that when we see opportunity for growth and expansion in any way, we tend to take it. Even if we really can’t handle it yet. This, in and of itself, is a recipe for disaster. If there aren’t enough resources, funding, or (wo)manpower, we literally just can’t expand.

How to succeed:

Weigh the pros and cons of these opportunities carefully. Every chance to expand is great and all, but do you have the resources and time? Do you have enough space on your schedule, or someone to delegate tasks to? If not, what can you do meet these needs? Now, I’m not saying to turn down every growth opportunity you get. I’m just saying, that slow and steady wins the race. You and your business will grow on its own timeline, no one else’s.

10. We give up when the going gets rough.

We’ve all done it; some of us more than others. We tend to equate hardship with the idea of imminent failure, and that’s not necessarily true. So, we give up before we achieve our goals, because we begin to experience some really difficult periods of time. But all entrepreneurs would do well to learn one very important lesson; there are many failures on the road to success. 

How to succeed:

Remember that not every venture you take on will be a complete and immediate success. But that doesn’t mean you won’t achieve success in the end. Don’t define success by someone else’s standards. Instead, set your own, and strive to reach them. Not everyone’s idea of a perfect life includes fancy cars and extravagant parties. Some of us are happy just to live comfortably and take care of our loved ones. Having a goal, and a vision of the success you want, will make the inevitable hard times much easier to get through. 

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