|For every business that makes it, there are hundreds of brilliant ideas that never see the light of day. We see dozens of startups register each week in search of help to accelerate their business. Many of these have great ideas, so why do so few startups ever make it. Here is a short list of a few possible reasons.|
1. Right Product – Wrong Time
Being the first to market is not always best. In 2004, serial entrepreneur David Cohen launched the beta version of iContact, a social network for mobile phones. After 18 months of trying to get phone carriers to distribute his software, he had to shut iContact down and return 80% of his investors’ money. What happened? David, along with many others, thought that mobile and GPS were at their tipping point of acceptance and that mobile carriers would jump at the chance. Unfortunately, they didn’t and his timing turned out to be 4 years too early.Right Product – Wrong Time.
2. Need some help
Every entrepreneur needs a mentor. They have been in your situation before; they can provide access to valuable contacts, and help to keep you on track. That being said, a single mentor is not enough. Entrepreneurs need to find several (at least 2-3) business advisors that can help them strategically think through critical decisions for the business and challenge them when needed. The best advisors will be an honest sounding board for entrepreneurs, providing their expertise and applying their experience to your business in a way that benefits both your startup and their own professional development.
3. Keep the costs down
Overhead is the one area where a small business owner actually has control. So why does this consistently become a challenge for so many? One of the primary ways that startup businesses get into trouble is the need to have enough inventory or people “just in case” demand suddenly rises. The cost of holding excess parts or unnecessary labor can add up fast. If £20,000 is spent on inventory, and that inventory sits in a warehouse for several months, that’s £20,000 that could have been spent on other aspects of your business.
4. Rush to show revenue
Warren Buffet has been known to say that he has two rules of investing: “Rule one – never lose money. Rule two – never forget rule one.” Understandably, an entrepreneur may feel pressure to put up big revenue numbers to prove to investor(s) that they have made a solid investment. Be realistic. All new businesses go through stages of growth, and a good investor knows this. The birth of a new business involves a lot of giving without expecting anything in return (at least in the beginning). Entrepreneurs need to come up with reasonable annual goals with milestones they should hit along the way toward reaching those goals. Communication to investors about progress against those plans is critical. Keep your eye on the big picture and focus on the present.
This list can easily be expanded and argued. It’s not easy to succeed as an entrepreneur. If there was a fail-safe success plan to starting a new business, a lot more brilliant ideas would make it to market and there would be many more amazing success stories than the ones we hear about. But, as we know history is likely to repeat itself. So entrepreneurs, learn from the failures of those who have gone before you and apply those lessons (such as those above) to your own startup.