“One thing is certain in business: you and everyone around you will make mistakes.”
-Richard Branson The truth is, out of the millions of startups that are launched annually in the U.S., over half fail within the first five years. While this sometimes happens due to catastrophic circumstances, often it’s because of a simple, fundamental flaw in an entrepreneur’s approach. In this article, we outline four major mistakes too many business owners make that cause them to burn out or outright fail.
1) Developing a Product or Service Without Proven Demand
It’s not enough just to be able to conceptually answer the question “what gap am I trying to fill?” -- it’s all just guesswork until proven demand is on the table. It doesn’t matter if you solve a problem no one cares about, or offer a solution no one needs, regardless of how innovative it may be.
Finding demand isn't difficult or expensive if you approach it in a methodical way. It's important that you include demand as an integral part of your business plan.
If you’re unfamiliar with the concept of a business plan, check out our top 7 business planning tools for some helpful information. Having a solid business plan is essential, as it’s the map of your goals, finances, resources, and many other important details about your business.
2) Failing to Focus On a Niche
The jack-of-all-trades approach to starting a business may seem like an excellent idea, but in reality, the risk of failure is much higher when unfocused. While catering to a wide audience sounds quite attractive, it’s extremely difficult and very few people manage to do it well. Companies that try to be everything to everyone end up being nothing to anyone.
Finding a narrow niche to fulfill with your new business is a much smarter approach. Step back, evaluate your targeted niche, and come up with an ideal client persona in order to focus your efforts and avoid wasting precious time and resources.
3) Selecting the Wrong Niche
You would be shocked how many entrepreneurs jump into niches they don’t understand or downright dislike. Sincere passion is the most powerful driver of hard work -- with passion comes purpose, and with purpose comes perseverance.
In order to manifest sustainable success, it’s important to choose a niche that exists within the realm of products/services that you enjoy and are familiar with.
4) Expecting Too Much
The first couple of years in business are usually the most challenging, especially in terms of revenue generation.
We encourage you to keep your hopes high -- but don’t be discouraged if your expectations aren’t met right off the bat. Expect problems to arise, and remember that they’re often essential for every kink, wrinkle and bug to be worked out of the system. Planning for and persisting despite these challenges is all part of having a healthy, realistic perspective on entrepreneurship.
Wrapping Up: Onward & Upward
The entrepreneurial journey requires perseverance and dedication in the face of inevitable ups and downs. However, there are some fundamental mistakes that simply aren’t worth making -- including the four outlined above.
For more information on how to start and sustain a healthy business, check out our state-by-state business formation guides.