Lack of business knowledge

Nowadays there is a lot of information on the Internet about how to start a business. There are webinars, experts sharing their experience in one way or another, technical documents, all kinds of free or paid tools to help you run a business and a lot of other resources. You can also see what the competition is doing in real time, as well as access sophisticated online tools for market research and all kinds of online marketing campaigns. Even so, statistically new businesses have a high failure rate in the first 3 years.

Most people who start a business are not only looking for independence and to improve their economy, they are also very passionate about their project. Most of them do not lack knowledge in their field, they can even be very good professionals and experts in their area. It is the general aspects of running a business that they do not know or have no experience in. They underestimate the level of responsibility, the number of roles they will have to take on to get their idea off the ground and the time it will take. People do not want to fail and are afraid of making mistakes.

Most common causes of business failure

The most common causes of business failure are:

• Not having landed the idea of the business: what everyone always repeats as fundamental aspects and even so many times it is not taken into account, or it is not done correctly. The mission, the ideal client, the product or service, the competition and the vision of the business.

  What specific need is going to be covered? What is going to be offered that has value for the market? Who is the target audience? Who is your ideal client, what does he do and where is he? How much is he willing to pay? What benefits does your product or service have for that client? Who is my direct competition? What need does the competition not cover? What does my competition do well and badly? Where do I want to be in 5 or 10 years? What do I have to take into account to get there?

• Poor choice of sector: the sector in which you are going to develop your business must be thoroughly researched. Analyze if you have enough experience in the sector. Investigate if there is indeed a gap to position yourself in that sector according to what you are going to offer.
• Not doing a SWOT analysis: not really and deeply analyzing the strengths, opportunities, weaknesses and threats of the business. And once done, not using the results effectively in planning. For the entrepreneur it is also essential to analyze what his strengths and weaknesses are, if he has the necessary skills and competencies to face the type of project he chose.

Planning problems:

• Not planning expenses and costs in detail, and overestimating income.
• Lack of alternative plans for different situations.
• Failure to plan in detail the strategies to be implemented.
• Failure to control the budget.
• Lack of financing: being unable to obtain adequate financing in time.
• Lack of administrative knowledge: not being prepared to manage the administrative process of the business, especially in the financial and accounting areas.
• Not being well accompanied: in the case of not starting alone and having the capital to hire personnel, it is important that the team members are competent in their functions and know how to work as a team. Be equally careful if you are going to bring in a partner or investor to inject capital.
• Underestimate the need for marketing: although a product or service has quality and a market that needs it, it does not sell itself. Time, money and resources must be invested intelligently in expanding the visibility and reach of the business. Develop a marketing plan as detailed as possible and implement it.
• Exhaustion: you will have to dedicate a lot of time and energy to your business for an undetermined period of time.
• Lack of attention to the customer: ignoring complaints, not adapting services and products to the customer, not working on customer loyalty are mistakes that are costly in a highly competitive reality.
• Stagnation: it is necessary to keep updated, to be aware of changes and new trends in order to be able to adapt the business to new circumstances quickly.

Seek help if necessary

Starting a business from scratch is not an easy task. People tend to face problems when they are upon them, they tend not to be proactive.

The opportunity to contrast opinions with someone with more knowledge and experience, to have a support, to consult doubts, to clarify ideas, to be trained in a specific subject or to subcontract a specific service that we are not good at has an important advantage, to save a lot of time and to avoid making mistakes that can diminish the initial capital. That is why entrepreneurs who can afford it, decide to hire the help they need at this stage and consider it a worthwhile investment.

If they need a guide to advise them, share their experiences, valuable information and pass on their knowledge in a very personal way, they may opt for mentoring.

If you need an expert to take care of one area so you can focus on other business functions, a consultancy may be the solution.

If you are still not quite sure what you want and how to get it, or you need to clarify your ideas, make sure you are making the decisions that will bring you closer to your goal, develop a specific skill, define your objectives or overcome your doubts, a good coaching will help you find your way.

The important thing is to be consistent and persistent. Do not fall prey to discouragement and overwhelm. If you fail in this opportunity, you will always learn and there will always be an opportunity to try again.