If you’ve decided to start a business, good for you. This is one dream millions of people have, but which few of them actually pursue. Regardless of how far you’ve gotten, you already know how important it is to come up with the right business idea. Even with the right idea many wonder why business ideas fail.
Whether you’ve chosen a product or a service, the idea has to have potential.
It has to be the right one in order to be a success.
But how do you know if your idea will fly?
Before you get too far along in your business goals, you need to take a good look at the idea itself.
In the first year, most new businesses fail.
Although there are many reasons for this, many of them fail because of problems with the original business idea.
Of course, many businesses fail because they run out of cash or from management problems.
However, if your business idea isn’t a good one, this can be the start of your failure.
This is one sure factor why business ideas fail.
After all, your business idea is the foundation of the entire business.
Hence, it has to be solid and fool-proof.
If you’re wondering why your business idea could fail, there could be many different reasons, and here are just a few of them.
Why Business Ideas Fail
Not Dealing with Real Live Customers Before You Start Your Business
Regardless of the product or service, you’ll be selling, you already know that you’ll be dealing with real customers on a daily basis once your business is open.
So start before then and interact with potential customers as much as possible.
Go to where your customers are and ask them questions about your product.
If you’ve already started the business, you have an even better opportunity to reach them, thanks to modern-day technology.
However, don’t just rely on social media and your website to communicate with your customers.
Get out from behind your laptop and interact with them regularly.
You need real, face-to-face contact with as many customers as possible.
Also, you must choose the channel of communication that is best for them, not just convenient for you.
Go ahead and talk to customers now, even though it is time-consuming.
This way, you can find out if your idea is just plain wrong before you spend a lot of time and money on it.
You’ll know right now, and this is always the best.
You Haven’t Communicated Your Idea Concisely and Clearly
This is another factor that exposes why business ideas fail.
It can be summed up in one statement.
You have failed to communicate.
For many people, there is a tendency to be wordy because that’s what they think customers want to hear.
This is rarely the truth, however, because customers want to hear your message without feeling like they have to spend 30 minutes deciphering it.
Make sure you tell them what you need to say succinctly because everyone is busy nowadays.
Execute a dialogue, not a monologue.
The latter is a good reason why business ideas fail.
The more you talk to a customer, the more you’ll learn.
Listen to what they’re saying to you, and then use those words right back to them so that they know you understand them.
You can also improve your communication skills by following these simple rules:
- Make sure they understand what you’re trying to say
If you have to, practice on a friend to make sure the idea you’re trying to communicate is clear and most of all, easy to understand.
You want them to understand what you’re saying quickly so they can respond to your business.
This starts with writing down what you wish to say to them so that it is perfect once you get in front of them.
- Get their attention
You want them to get excited about your product or service, not be bored by it.
You don’t have to do this by keeping them in front of you for an hour.
In fact, if what you’re saying is worthwhile, it can pique their interest within minutes.
- Don’t take too long to get to the important parts of your product
A short and straight-to-the-point presentation makes for a great message.
So, make sure you include just the basics.
After all, getting them to visit you again in the future to find out more is a great idea.
This is because you want them as a regular customer, not a one-time customer.
You Haven’t Learned from Others’ Successes and Failures
This is where a little experimentation is advised.
When it comes to business models, chances are good that other business owners have tried the one you’re considering.
It is best to learn from those people.
Not learning from others’ experience is another sure explanation of why business ideas fail.
If they used the business model you’re using and they are now a success, there is nothing wrong with copying their efforts.
After all, you don’t have to reinvent the wheel when trying to start a business.
You Don’t Have a Unique or Attention-Getting Value Proposition for Your Business Idea
A value proposition is simply a value attached to your business idea, although it can also apply to your entire organization.
It is how the customer values, or benefits from, the product or service you are selling.
The absence of this is another factor why business ideas fail.
This is why it is so important that your value proposition be unique and memorable.
Make sure you have a clear picture of what makes your business a little different than the others.
It may take some time, but when you find the right one, you’ll know it.
Write it down on a post-it note, and place it near where your computer is.
In everything you do for your business, keep the Unique Value Proposition, your UVP, in the back of your mind.
This way, it will be as familiar to you as your own home is, and that will soon shine through in everything you do for the business.
If you don’t yet know what your UVP is, then there’s a simple solution.
Go out and find it.
The more you study and build your business up, the easier it will be to center everything you do around your UVP.
This will eventually mean a business that sets you apart from all of the others, which greatly increases your odds of being successful.
Founder Dysfunction: Your Leadership Crashes Right at the Top
Poor decisions can cause even the most successful entrepreneurs to retreat into the background.
Also, when they fall, they usually fall very hard.
Poor decisions also explain why business ideas fail.
You can likely think of famous athletes and other celebrities that go off the deep end and do ridiculous and even illegal things.
It is not always heard that entrepreneurs do the same thing, but that doesn’t mean that it doesn’t happen.
It’s called self-sabotage, and it’s a dangerous thing.
It is usually caused by making the wrong decisions and weak leadership skills, but there is a solution.
First of all, you have to accept the fact that this business is your baby, and you are the leader.
Whether you are the only employee or you supervise thousands of others, you are the one in charge.
If you can’t relate strongly to other people, learn the skills to make that happen.
If you have anger issues, take an anger-management class.
Character issues like these explain why business ideas fail.
All successful entrepreneurs take regular time out for personal development, all of them.
Angel or venture capital investors don’t just take out their checkbook and start doling out money.
They always start by investigating the character of a business founder and that founder’s team.
You can have great ideas but still, fail because of dysfunction.
Fortunately, there are easy ways to prevent this from happening.
Did You Start Your Business for the Right Reasons?
This is a fairly common reason for failure.
There are both good and bad reasons for starting a business, but don’t confuse advantages with reasons.
If your only reason for starting a business is because you want to be your own boss, it may not be enough to keep your business successful.
True, these are some of the benefits offered by a successful business.
However, they are not reasons to start a business in the first place.
In fact, if you’re looking for the right reasons to start your own business, those which will increase your odds of success, here are a few of them:
You have made up your mind to do it.
You also have patience and think positively.
If those around you are throwing in the towel, you are the one who remains even more determined that you are going to succeed.
Although you don’t plan to fail, you know this is a distinct possibility.
If you fail once, you pick yourself up and try again, and you always learn from your mistakes.
Your entire business-building is considered a learning process, and you never stop yourself from learning more.
You absolutely love and adore your product or service and consider it a benefit to your customers.
You love what you’re doing and you strongly believe that your product or service fulfills an important need in society.
You’ve also based these beliefs on thorough investigation and educated studies.
You care about people.
You do not merely like others, you love them.
Furthermore, this love is shown through your integrity and your interaction with those fellow human beings.
You also get along with all types of people, even the difficult ones.
You value independence above many other things.
You also use this independence to take charge of a situation whenever necessary, even if you are under tight time constraints.
Reaping certain benefits of starting a business isn’t the same as those benefits being your sole reason for starting the business in the beginning.
Make sure you are passionate, disciplined, and focused before you come up with your business idea.
Then, don’t let anyone deter you from your goals.
Over-Doing It in the Beginning
Overexpansion can ruin your business before it even has a chance to grow.
Don’t expect to “have it all” in the very beginning.
Even successful businesses need time to grow, and the last thing you want is to decide to expand your business just because you’ve started making a little money.
This too is a reason why business ideas fail.
After all, expanding your business is not something you need to do right away.
The first year or two a business in existence is the toughest.
So, the chances of expansion being necessary or even possible are slim.
Always be on the lookout for expansion opportunities, but don’t expect it to happen right away.
Once you’ve determined that an expansion is necessary, however, it is best to identify who and what you need to add to enable your business to grow.
Put the right people and systems in place, and concentrate on your business’ growth instead of doing everything yourself.
Once it’s warranted, expansion should be planned carefully.
However, until that time arrives, it’s best not to concentrate on expanding.
You Chose the Wrong Location for Your Business
Everyone has heard the phrase, “location, location, location.”
It applies whether you are selling a product or a service.
Wrong locations are additional reasons why business ideas fail.
Even if your customers can be found anywhere on the globe, you still need to consider where to place your business.
Remember, local customers are always going to make up a big section of your customer base, so where your business is physically located is important.
If you’re not sure what to look for when you’re trying to find a building or facility to do business in, consider the following:
- Is the parking lot well-lit and easily accessible?
- What is the traffic like?
- Where are your competitors located in relation to your building?
- What is the ambiance of the area, and are there any special historical considerations?
- Where do most of your customers live in relation to where you’re located?
- Will customers feel safe in and around your building, or is it an unsafe area?
- Is your landlord offering any special discounts or other perks that might be attractive to your customers?
Studying and researching the area is always recommended when you’re deciding on the location for your business.
There is no such thing as too much preparation in this area.
You Ignore Your Customers’ Needs
You already know that your customer is your number-one concern, but do your business activities reflect that philosophy?
This is another reason why business ideas fail.
Lead by example, and realize that continuous communication with and attention to your customers is crucial to the success of your business.
This is a basic business concept, but it is amazing how many business-owners ignore it.
You can’t get tired of dealing with your customers, because if you do, they may lose interest in you as well.
After all, only the customer can tell you if you need to make a change with your product or if the price is too high.
Just like you will change over time, so will your customers, so make sure you always know what they’re thinking.
You Don’t Prepare for Certain Macroeconomic Factors
Once again, here are some business terms you need to know.
Things like recessions and even natural disasters can affect your business.
Though these are things you cannot control, you need to be prepared for them anyway.
You can prepare for them, but don’t let them define you.
In fact, some of the most successful businesses that ever started got their start during bad times.
Even bad economic times don’t mean you are automatically going to fail.
When you prepare for the unexpected, however, you can remain successful during tough times.
Reduce your working capital, delay your capital spending, and cut your operating expenses, these suggestions can help too.
If you haven’t yet started your business, the important thing is to remember that you can’t stop now.
Reduce your expenses if you can, but keep moving forward, because even the toughest times are usually temporary.
You Don’t Develop Ways to Keep Yourself Accountable
Above all else, you need to be accountable to your business goals.
Even if you are the only employee so far, you still have to hold yourself accountable, or you’ll never have a way to revise your goals until you achieve them.
Holding yourself accountable also keeps you on track as this also exposes why business ideas fail.
Below are other tips that can help.
- Building an advisory board
This means that other people besides yourself will hold you accountable.
Hence, making it less likely for you to slack off or not take your business seriously enough.
- Putting your goals in writing
It is important to write down your goals so that you can keep them in front of you at all times.
At least once a month, you should come back to them for another review.
- Finding an investor for your business
This could be a family member or a private investor.
Having someone that you are accountable to increases the odds that you will keep yourself accountable because you have a certain obligation to these investors.
Finally on How to Overcome the Fear of Starting a Business
Having a business idea is never enough to start a business.
You also need to make sure it is a good idea and avoid those reasons why business ideas fail.
The tips above can help you get on the right path.