A bulb started glowing in your mind. You have got a great idea for a business. You are very excited and have started to talk only about this idea to your family and friends. You are confident that the idea is very new and will surely be a huge hit in the market. You found one enthusiastic and energetic friend, who believes in your idea and has complied to work with you. You have some more family members who are ready to do whatever you say. And finally you have decided to start your entrepreneurial journey and ready to do everything to make the idea work. Sounds like a textbook approach to entrepreneurship? It is, and its success depends upon the decisions you take and activities you do along your journey into entrepreneurship.
Do you know, statistics say 66% of businesses fail within eight years? Yes, it is true only one third of the businesses enter into their first decade. When I tried to understand the reason for this, the answers were different from being rationale. I assumed that the reason for failure might be lack of enough capital, location of the business, competition etc., but the truth came out was extremely different. The reasons were not from outside, but from inside.
So read on and implement preventive measures:
1.Understanding Product and Business.
When you get an idea to start a business, start with analyzing your product. Ask yourself a question “Is the idea, which I value so much, is sufficient to support a standalone company?” Sometimes, we confuse a new product and a new business. The idea can be a product, worse a feature to enhance the currently available product in the market. Before we venture into a new business startup, we should be really convinced that this idea will hold up to form a company. Make sure that your idea does not have any startup risks. From an investors point of view, risks like market risks, management risks or even finance risks can be managed but not product risk. So get your product from the lab to the market, only after you are thoroughly convinced.
2.Understanding the art of delegation:
Being the CEO of a startup, is an exciting job. Since it is your company and your idea, you will have an urge to be in the center of action of everything that happens inside the company. But this is not possible. You need to believe in teamwork. Recently I happen to see the video about pit stop in NASCAR and F1. It is said that the crew performs 72 different maneuvers in 12 seconds. How is this possible, tires are changed, fuel is refilled, windshield is cleaned, how can all these activities be performed in 12 seconds? The answer is delegation; the work is broken down into smaller parts and assigned to people who are experts in that specific work. This should be the key takeaway. Find the best person you can afford, for that particular process and let them excel.
3.Understanding that customer is bigger than the product:
You are the one who developed the product. You have burnt your mid night oil to perfect this product. And obviously you love the product. But this should not hinder you to understand the truth,” CUSTOMER IS KING”. Sometimes we try to sell the product by customizing the customer’s need, while the right way should be customizing the product to needs of the customer. Do it yourself, take any product, be it face cream, or an automobile, or wine or anything. Find out which the very best brand in these categories and the best-selling brand in the same category. Unfortunately the very best is not the best-selling most of the time. Like it or not, the fact is product excellence accounts to only 10% in a successful sale, unlike marketing and sales skills which contribute to 90% of a successful sale. There should be a paradigm shift in your mind. Start loving your perspective customer than your product.
4.Understanding Market reality:
Another business planning snafu, is overly optimistic assumptions. Claiming that a startup will penetrate the competition and conquer the addressable market in three – five years is not the plan someone will believe in. Take a successful brand like Apple, check the penetration of one of their most successful product – iPad, the market penetration is 30% to 40% in 7 years.
Just as dangerous as over estimating is seriously under estimating your market share for the future. By underestimating your future sales, you yourself send out notice to your investors saying, a) you have no complete confidence in the quality of your product / business plan, b) you have lesser confidence on your team.
5.Understanding the time to launch:
Another mistake entrepreneurs do, is being over cautious. Far too many businesses fail because of the delay in getting the business to the market. If you spend too much time in perfecting your idea and adding more features to the product. Instead, build your most valuable product, release it into the market and see how buyers take it. Based on the reaction try to add features and upgrade the product. In the end, its important to perfect your timing for launching the product, since features in the product alone, cannot build a successful business.
6.Understanding the power of networking:
Ultimately the success of the business pivots on who you know. If you miss out opportunities to be out there and talking with perspective customers, industry experts and marketing specialists, you are actually missing out valuable marketing opportunities. When your primary motive is growth (as it should be in a startup), networking should be in your daily to-do list. Grow your visibility as an entrepreneur. The easiest way to network is to first create a list of people to want to connect with. Its better if the list is relatively small. Find a way, to be of some help to that person. And then approach them.
7.Understand the importance of hiring:
This is closely tied with number two, but is very important and it deserves to be mentioned separately. When you are a startup and you always a tab on the expense, it is very tempting to skimp on the cost of new hires. The problem with this strategy is the cost saved now will be eventually out of your piggybank later. Low cost employees are obviously low-cost for a reason, they are more likely to be unskilled or unreliable or both. So always try to overcome the temptation and decide wisely on your first hires, since they are the pillar on which your success should be built.
It never easy to an entrepreneur, and being one, you should be really proud of yourself. And becoming a successful entrepreneur is like a long journey of learning. Mistakes will always be an inevitable part of this journey. But that doesn’t mean you should repeat others’. Take these valuable lessons and march ahead.