GEM Survey 2012, which had 198,000 participants from 69 countries, found that the 25-34 age range has the highest number of entrepreneurs. These young entrepreneurs have high education and are optimistic about their future. They do their research well and are ready to start their new venture. They share their ideas with their friends, and after receiving positive feedback, they decide to launch their business. Things look promising so far. Entrepreneurs often fail at this stage because they overlook many other causes. These causes are external because they are not part of the individual’s personality. These cases are caused by external factors. They are related to market conditions and cash levels, business concepts, and planning. Although there are many reasons for failure, consultants may disagree on them all. Here are the main factors that could cause a business to fail right from the beginning.
Entrepreneurial failure can be caused by major external factors:
1-No business plan:
There is a direct correlation between a lack of business plans and high failure rates for small businesses in America, according to numerous studies. A business plan is a crucial step for entrepreneurs. Without it, the project will feel more like a dream. A business plan is similar to setting a goal. The goal should be written in SMART terms. A business plan must include more details. The mission, vision, and values must all be included in the business plan. Not all business plans are successful. Although it is time-consuming, a detailed and comprehensive business plan can help you avoid unnecessary steps in the future. This will save you money. The business plan is your guide for your entrepreneurial journey.
Without enough cash, a revolutionary idea cannot be realized. For any venture to be successful, cash or capital is required. The amount of cash needed varies depending on the nature and size of the venture. A factory that requires large amounts of machinery will have a different cash requirement than a website that targets local customers. For all operational costs, including rents, marketing and licence fees, cash is essential from the beginning. Entrepreneurs need to have enough cash to cover their operational expenses for at least six months.
3. Lack of financial discipline:
Entrepreneurs tend to spend their money on impulse. Entrepreneurs can overspend. Many studies show that entrepreneurs who spend too much can lead to failure in their start-ups. Brian Tracy and other experts discuss the importance of starting a business using a cost-saving strategy. Spending on unnecessary things is another problem. Entrepreneurs spend a lot of money on unnecessary items instead of focusing on marketing and operations. Another problem is that entrepreneurs often spend cash generated by a project on their personal needs rather than using it for business operations. These behaviours can lead to the demise of a business.
Market conditions, changes in competitive behaviour. There are always new things about business, whether it’s new products, customer responses or changes in prices. To measure and adjust to these variables, entrepreneurs need a suitable feedback mechanism. Feedback is the key to future changes.
There are many other factors that can cause a business to fail, such as wars, natural disasters, and recession. Despite these challenges, many successful entrepreneurs have managed to overcome them all. The story of Soichiro Honda (the founder of Honda Motors) is a classic example.
Entrepreneurs can succeed, but only if they are able to recognize and avoid the causes that lead to failure.