Starting your own business can be exhilarating. It can also be scary and overwhelming. One thing that you need to keep on top off, if you want your business to succeed, is your mindset around it. Have the right mindset and you’ll quickly implement the essential business fundamentals, to ensure you’re off to the best start. Have the wrong mindset, and you’ll neglect those fundamentals and quickly fail.
A briefing paper on businesses in the UK makes for an interesting read.* In the UK alone, there are 5.7 million businesses, of which 5.4 million of those were micro businesses (employing 9 or less employees). However, it’s also stated that as many as 8 out of 10 businesses fail within their first 18 months!
Here’s an overview of the main reasons businesses fail, along with what you can do, to help ensure you have the right mindset and the right fundamentals in place.
They start a business for the wrong reasons
For some, the main reason they went into business was to spite the boss who fired them. They set up a competing business, in the hopes of getting even. Another, they want something that’s going to get them a quick return and a fast way to reap in cash. This kind of attitude isn’t going to give you the motivation to keep going, when things are tight or tough.
Having no other job opportunities is a business start-up reason that could go either way. It may give you the inspiration to get started – but running a company doesn’t suit everyone. Do you have the motivation and dedication to keep yourself motivated and to do what’s needed, to run your company?
Lack of knowledge or expertise
Most of the skills you need to run a business can be learnt, but if you don’t have the skills or knowledge to do what you’re offering – that’s a different matter. You may like the idea of running an online coaching business or graphic design agency, but do you have the expertise and knowledge in that area, to actually provide the service you’re offering?
Lack of research around need and customer
Market research is something that needs to be completed, before you jump into setting up your business. What initially feels like a good idea to you, may be something that no one else wants. You may also aim it at the specific market, but be totally off course. Without the need or the customers, you’re not going to have a viable business.
Lack of finance
Finally, a lack of money is another business sinker. Yes, you can bootstrap it, but you still need to have some funds to help grow your business. Whether that’s buying a website domain and hosting or paying for social media advertising or business cards etc, you are going to want some start-up finance – plus you’ll need additional money to tide you over until the clients come in.
There are a number of reasons why these businesses fail, but the majority could’ve been saved, if they’d got the mindset right and their business fundamentals in place, as detailed above. If you go into business with the right mindset, you know business is a long game, so you’ll ensure you get the fundamentals set up to support this new venture. But if you go in, thinking business is a short game, you won’t bother setting up the right support structure for your business. increasing the risk of it folding in the first year.
*Briefing paper No. 06152 from the House of Commons, direct download: researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf