Entrepreneurship is not just about owning a business but it is lot more than that. Everyone wants to be their own boss rather than work under a boss. But just the desire of it won’t make you a successful entrepreneur. Entrepreneurship is a bit tricky and difficult to be in the list of successful one. There is always great risks involved in entrepreneurship in its initial stages. The chances for failure are always higher than the chances of success. According to a research, that only 10% of all new ventures reach the second year of their existence and most of the entrepreneurs often end up in the first year itself. Let us have a look at the top five reasons behind the failure of the entrepreneurs.
- Problem in Securing Funding
Funding is the first and the most basic requirement of any new venture. It acts as a backbone for any venture which provides the capacity to survive, grow and flourish among their competitors.
All though there are many funding options available such as banks, investors, crowdfunding, private money lenders etc. in spite of these many options, many of the entrepreneurs are not able to secure a funding for their venture. Lack of knowledge and lack of proper business plan are also the reasons due to which the entrepreneurs are not able to get the funds. While lending, all the lenders want to be sure about their repayments and hence want a good business plan based on which they can decide the repayment capability of the applicant and assess the risk involved in lending. A majority of the startups fail to secure funding just due to the lack of a proper business plan.
- Operational Mismanagement
Operational mismanagement is also one of the major reason why new ventures fail. In many cases, it has happened that the entrepreneurs failed to manage the nuts and bolts of running the business in an effective and efficient manner. The reason behind this is many entrepreneurs often do not involve themselves in running the business and leave the business on others to take care of. Sometimes operational mismanagement happens even because of lack of proper knowledge. To avoid mismanagement, an entrepreneur should handhold the business himself and should remain involved in every important process.
- Market Invisibility
Even if your venture is going good and is efficient to fulfil the customer’s need, you can’t grow your business without proper marketing. Many entrepreneurs often fail just because their company is invisible to the world as they underestimated the scoped and need of marketing. Market invisibility can also be due to lack of funds as, generally people think that a successful marketing requires lots of capital investment and hence they ignore it as they can’t afford it. Spending much on polishing your products and services until they shine in the best way possible is a waste of money; even the most innovative product is useless if nobody knows about it. A smart entrepreneur is the one who takes both product quality and its marketing side by side. It’s a world of digital media and digital marketing where much can be done with small amount of money.
- Being Unaware of their Competition
When one starts a business, analyzing the competition is the first and foremost thing that one should do. You need to be aware of the market: what is going on and how your competitors are working and about their products too. Neglecting market analysis and developing a product without considering the existing competition, failure is almost certain. Market research and competitor analysis provides an in-depth vision of what exists, what’s missing and what exactly does the market wants. If these are researched properly and addressed in the best way possible, definitely the outcome will be the best product in the market, which is definitely going to succeed.
- Staffing Issues
Being understaffed also contributes to the failure of a startup. As against the common misconception, a startup needs to be adequately staffed. It is also critical that all the hired staff are quality hiring, which can be ensured by hiring an experienced HR Manager who can properly understand the requirements about the staff you need to hire. Overstaffing is also equally as bad as understaffing. Hiring too many staff/ resources more than the requirement is also a bad thing as by overstaffing you will end up spending so much more on the salaries. Hence, it is suggested to analyze your requirements properly and then hire your staff.