According to a recent survey in the United States and in Canada, 75% of new start-ups die in their first year of launching, and the reason for this is not far-fetched.
1. Shortage of funds: I am a victim of this phenomenon – I lost my first business to shortage of funds within three months of launching. Why? The initial capital outlay of $1,000 or N150,000 I had went to waste when I had no more funds to invest into my business and the start-up died a natural death within months of launching. The major mistake most entrepreneurs make is to think that the initial capital they have for investment would carry them through the business to the point of making profits. This is never the case. You still need to continue to pump in some little funds here and there to cover overheads and unforeseen demands until your business is nurtured to maturity – if you have only the initial capital outlay but lacks the extra funds for ongoing needs, then your new start-up will sure end up dead within its first year of launching.
2. Lack of time and resources: Many people go into private business without really having the time to commit to it. Imagine working as a salaried employee somewhere and setting up a start-up without the necessary time to nurture it and make things work – then you can be sure the business is headed for failure. When you lack the personal time to oversee things for yourself, or lack the resources to make things happen on your behalf, then you must be certain that your new start-up is only waiting for its obituary to be announced.
3. Not advertising: “Advertising is the soul of business,” have you heard that before? Well, it is very true. Advertising brings your product and services to the notice and attention of your target customers. Hundreds of businesses fail because none of their target consumers is aware of the existence of such products. You can’t be in business unless you’re making sales, and you sure can’t make sales unless the right people are aware of what you sell. Not advertising your business or product is like gesticulating or making a sign-language to someone else in the dark; the other person won’t see you or know what you’re doing and your efforts will have been wasted trying to communicate to him.
4. Hiring the wrong staff: This cannot be buttressed enough – you can single-handedly run a successful business – and you need capable and reliable workers who share your passion and ideals. But hiring the wrong breed of staff will be counter-productive to your business goals and culture, and bring great damage to your dream business unless of course you overhaul your workers. Workers with the wrong attitudes, qualifications, or personalities will do you more harm than good and the earlier you got rid of them the better before they shut down your business.
5. Inability to be flexible: The inability to adapt to new challenges and demands as they surface puts a great restraint on your business. You must learn to be flexible and have Options B and C in case things go wrong so that you won’t be affected beyond recovery. But if you have no alternative options and still lack flexibility to challenges, then your business crumbles fast. It is not wholly possible to foresee everything in business, and so you must be able to respond to needed changes without compromising on your business goals.