Entrepreneurship can be a roller coaster. There are hills and there are valleys that you will face as you attempt to build a brand from the ground up. Sometimes, those valleys can be deep enough to result in a failed business. In the same way, the hills may not be enough to overcome the depth of the valleys.
All this is to say that building a successful business is very hard for solopreneurs. There are often high barriers to entry that drain your savings just to get started. The competition that has been around for years has a significant head start with the target audience. The logistics of operating a company can be overwhelming if you are not prepared.
Before you make the massive decision to pursue your dream of building a business, let’s take a look at why half of small businesses fail within the first five years so you can craft a stronger strategy for success.
Lack of Vision
Starting a business, because you want to make money and be your own boss tends to create a weak foundation for growth. You will not make much money, if any, in the first few years, unless you get incredibly lucky. However, pursuing something you are passionate about can give you the proper motivation to keep pushing.
Having a vision is one of the golden rules of entrepreneurship. If you cannot dream about where your business will go, it will be very difficult to take meaningful steps that take you in the right direction. Spend time imagining the future of your brand and how you might get it there.
You could have the best idea for a product in the world. It will not matter a lick if no one ever hears about it. Marketing is a pillar of business success and many entrepreneurs fail to develop a coherent strategy. It starts with understanding your target audience. What do they need? What habits do they have? What problems do they face?
A clever marketing plan involves audience research so you understand how to communicate with them. In the early days, you may focus deeply on building brand visibility. This can be accomplished with social media campaigns and promotional products like branded tote bags. Getting your name and logo out there is critical in the early years to build a solid customer base.
Earning Market Share
Market share refers to the percentage of a particular market that a brand owns. Names like Apple, Google, Amazon, and other giants own massive market shares in their respective industries. Carving out a market share for your business is a top priority. This is one of the biggest obstacles to success for entrepreneurs.
You need to build trust with the audience to develop sufficient market share. Trust can come from reliable products, great customer service, and effective marketing strategies. What makes a good market share hard to achieve is that it often means taking away customers from established businesses. To do this, you must show that you are better equipped to meet customer needs than the competition is.
Money is usually the top reason why new businesses fail. They are not generating enough of it to cover expenses or pay workers sufficiently. In many cases, small business owners have to take out loans or recruit investors to cover their initial costs before they turn a profit. It also makes growth difficult to finance.
If you do not have a solid plan to secure funding, or the business fails to make enough sales, then the brand will be at risk of bankruptcy.
Sometimes, entrepreneurs simply get tired. The hours can be long, and the pay can be poor in the early years. Not many people can survive for years in that state. Even if this venture is a side hustle, it will still require a ton of time and energy to get off the ground.
The long hours and the drain of energy result in many new brands failing simply because their leaders are burnt out. It takes a certain type of person to be able to push through this obstacle and visualize the future when circumstances may be better.
Do You Have What It Takes?
This question is important to ask yourself when dreaming of a new business idea. Do you have what it takes to make it through the first years of your business? Can you afford to make less money and spend more hours in the coming years? Do you have a vision and the motivation to achieve it?
Entrepreneurship may be part of the American dream for many individuals, but there are reasons why so many new businesses fail early on. Understand the potential causes of a failed company so that you can make better decisions to avoid those obstacles or, at the very least, mitigate their effects.