In any economy, businesses are an essential component of the system. They are the primary engines of prosperity. The entrepreneurs and business owners behind the ventures expect to see their companies grow over time and receive the after-tax profits as a reward for their risky bets and investments.
Ideally, the faster that growth in revenue and profit happens, the better. But the path to realizing the initial vision or reaching goals for a business is never a clear and predictable one. On the contrary, various issues and challenges will keep arising over time. The ability of business owners and managers to weather those tough times is what sets those who attain continued success apart from those who end up shutting their business down.
For all the complexities and unforeseen situations that arise during business development, there are things within the control of entrepreneurs or managers. On the opposite side, external factors and influences beyond your reach may adversely affect your business and its operations.
Remember that businesses don’t always fail just because they are “young.” In most cases, it’s the human decision making that plays a greater role in their failure or success. Even for new ventures whose collapse can be traced to external conditions, such as industry saturation or weakness, the entrepreneur has to take responsibility. More often than not, they may have failed to accurately research the sector or ignored warning signs. However, it’s pertinent to admit that even with the most meticulous research and execution, external factors such as economic stagnation and government regulations could still cripple some businesses.
When you consider that a lot of newly-opened enterprises fail within their first years of operation, you may quickly get disheartened and hesitant to start your own business. It shouldn’t have a discouraging effect on your ambitions. Instead, you should see that as a raw fact rooted in reality to get you thinking carefully and be more thorough in how you evaluate and reach your decisions whether to pursue your chosen line of business.
To be clear, the primary objective of this article is to reveal essential things you must not ignore if you wish to minimize as much as possible the risk of failure. By implication, applying the wisdom of the points below will help you improve your odds of success.
1. Researching your market or industry is crucial for success
It would be easy to simply state here that you need to have a clear plan for your business before launching it. However, most new business owners do have plans. What many don’t have is a deep understanding of their target market and industry. It’s not enough to claim you know your industry because you’ve worked for years in it. You should do careful research based on market data and other signs you’re observing around you. You’ll be surprised at how many new things you’ll learn about your industry and customers.
In doing your research, ensure you understand the growth and profitability prospects of your sector. Based on your planned service or product, you should identify who your main competitors are, what they’re offering, and how they position themselves. Armed with this knowledge, you should be able to make an honest assessment of your strength and weaknesses. Does it make sense for you to launch the business given the facts you have learned? If yes, what will you do differently?
For example, if you’re looking to start a student writing help business, you should understand the market size (approximate number of target students) and how much they pay for college papers and other assignments. You can get a good sense of the pricing by researching some service providers you’re going to be competing against. The pricing information you obtain should help you decide whether to differentiate your service based on the price or other factors that also matter to customers.
This crucial point of market research cannot be overemphasized. Frankly, a colossal amount of money and time has been put into ventures that unravel quickly. Many of such business failures can be avoided from the onset with proper market research. Even when unfavorable external factors may be the primary cause of demise, the red flags they raise can be spotted early by paying attention to industry forecasts (projections) and the factors that usually precede them.
2. Assemble a well-rounded team of first-rate talents
Remember that the goal of this article is to help you increase as much as possible your chances for entrepreneurial success. Accordingly, having a team of seasoned professionals will go a long way in helping you outdo your competitors.
For one thing, a well-rounded team with camaraderie translates into an exceptional ability of your firm to handle the functions necessary for its operations even in tough times. Team members usually have different skill sets and qualities that complement one another creating synergy. It’s not bad if some are more experienced than the others. That will help the less experienced members improve. Without a doubt, one of the most profound ways you’ll observe the benefits of a great team is in the product or service you offer — they will be of excellent quality!
3. A new business requires great commitment and effort
Even after you’ve nailed your research and assembled a formidable team, you don’t automatically get a free ticket to success. Hard work and unwavering dedication, especially during the early months and years, will be critical determinants of your venture’s stability and eventual prosperity. You must be willing to put in long hours when necessary, sometimes at the cost of your social life.
You should honestly assess yourself and determine whether you are willing to commit lots of your mental and physical energy to the venture. It’s only your business, and most people really don’t care (that’s a bitter truth) until your company expands and becomes big.
Don’t be tempted to minimize the role you play simply because you have a strong team. Having them just lightens your workload by way of task delegation. As the captain of the crew, you’ll still have to steer the ship.
4. Experienced mentors can help you avoid poor decisions
A wise man once said, “no man is an island, and when you are traveling down the road, the best way to know what lies ahead is to ask those who are coming from the opposite direction.” As it applies to your business life, the wisdom of these maxims lies in having people who have previously established and ran businesses similar to yours act as your trusted advisers.
Typically, they will be older than you and have larger professional networks that can benefit you. Your mentor could be a family member or someone you can confide in for advice on how to tackle tough business challenges.
5. Have a fallback plan for worst сase scenarios
It’s an admirable quality to be optimistic and look at the brighter side of things. But making room for some eventualities is not unreasonable. To the contrary, it reflects proper planning for possible realities that happen more often than one would like.
There is no absolute guarantee of business success, even when you have played your cards right. Therefore, identify some of the worst scenarios that can play out and have contingency plans to deal with them. This should be a regular exercise for you even as your firm grows.