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Reasons Why Businesses Fail

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According to Bloomberg, 8 out of 10 business fail within the first 18 months of their inception and the sad reality is, almost all the businesses fail because of the entrepreneurs who handle it.  While there are a multitude of conditions which could lead to a business failure, most startups which fail, make similar mistakes.  Here is a list of the top 5 reasons why businesses fail.

 

1) Starting a business for the wrong reasons

Most people start a business with a desire to earn a lot of money.  While this is a benefit successful entrepreneurs achieve after years of hard work, starting a business for money is not the right entrepreneurial mindset.  The driving force for your business should be your passion, not your desire for money. Entrepreneurship requires a lot of dedication, hard work and patience and if you lack passion, you will most likely lose interest in a few years and eventually end up failing.

 

2) Lack of proper planning

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Planning is an important part of running a business.  If you do not work according to a proper plan, your business is most likely to fail.  A good plan consists of definite short term and long term goals and will also define where your company will be in the next few years.  Lack of such proper planning will cause irreparable damage to your business.

 

3) Lack of funds

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The most common reason why startups fail is the lack of proper funds.  Budding business owners often do not understand money management and are likely to underestimate the amount of money they require to start a business and might even have unrealistic expectations about profits. As a result, the money spent on the business becomes more than the money earned by the business.  This leads to debt and when this debt becomes too much, they are forced to shut it down.

 

4) Lack of value

The heart of any business is the value it creates. The higher your value, the more will be your customer base and the more you will earn.  Your product or service should be more valuable than your competitors’. In other words, your business should be able to offer something new.  If your business lacks value, it is bound to fail.

 

5)  Early expansions

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It is rightly said that slow and steady wins the race.  New entrepreneurs are often in a hurry to expand their business to other markets and this is the leading cause for bankruptcy.  Expanding a business is good, but before you enter new markets, make sure you maximise your existing market. If not, you will most likely be forced to close your business due to bankruptcy.

 

As they say, failures are stepping stones to success and as a business owner, the success of a business mostly lies in your hand. If you ever failed trying to run a business, learn from your mistakes and start over again. Most of the billionaires today are people who once failed.

 

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Four Books About Finance Every Young Entrepreneur Should Read

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“You’ve got to tell your money what to do or it will leave.” — Dave Ramsey

Well, we could not agree more.  Entrepreneurship is not just about having a lot of money, it is about knowing how to manage that money well.

Money management is one skill without which it is almost impossible to succeed as an entrepreneur.  This, however, is very hard to master, especially if you are a beginner. Luckily, in today’s world, there are some really good books targeted at helping beginners understand how money works.

Therefore, if you are a new entrepreneur or aspiring to be one, here is a list of finance books you should read.

 

1) MONEY Master The Game: 7 Simple Steps To Financial Freedom

“What matters is that you master money and it doesn’t master you. Then you are free to live life on your own terms.”

Tony Robbins.

Written by entrepreneur, philanthropist Tony Robbins, MONEY Master The Game: 7 Simple Steps To Financial Freedom walks you through simple steps you can take to master your money game.  This book deals with the most important topic of money management—investment.  For beginners who just started investing, the book provides a lot of information about the highs and lows of investing.

Based on one on one interviews with various financial experts, this book gives you a complete blueprint to become financially independent.  If you have just started as an entrepreneur or investor, this book is totally for you.

 

2) The Millionaire FastLane: Crack The Code To Wealth And Live Rich For A Lifetime

“Go to school, get a good job, save 10% of your paycheck, buy a used car, cancel the movie channels, quit drinking expensive Starbucks mocha lattes, save and penny pinch your life away, trust your life savings to the stock market, and one day, when you are oh, say, 65 years old, you can retire rich,”—is this how you plan to lead your life?  Well then you are definitely on the ‘slowlane.’  

The slowlane might seem to be a risk free method to get rich, but by the time you reach, there you might be in a wheelchair.

Through The Millionaire FastLane: Crack The Code To Wealth And Live Rich For A Lifetime, author M.J. DeMarco introduces you to a new way of getting rich—The Fastlane.  Using various examples, this book teaches you how you can use various market strategies to your favour, find your wealth accelerator and make millions while you are still young, so that you can enjoy it now.

 

3) The Intelligent Investor

“People who invest make money for themselves; people who speculate make money for their brokers.”

Benjamin Graham.

Written by one of the greatest investment advisors of the 20th century, Benjamin Graham, The Intelligent Investor has been inspiring investors since 1949.

This book is basically the stock market Bible and teaches you every possible thing about investment.  The author succeeded in putting the hardest concepts of investment into simple terms, making it easier for beginners to understand.

Over the years, The Intelligent Investor has been revised into various editions to incorporate today’s market scenario.  Warren Buffet himself described it as the best book about investment ever written.

Have you read this book yet?

 

4) The Money Book For The Young, Fabulous And Broke

“Build a great career for yourself rather than settling for a job that does nothing for you but pay the bills”

Suze Orman.

Written by TV star and financial expert Suze Orman, The Money Book For The Young, Fabulous And Broke is targeted at teaching millenials the basics of the financial world.  This book is a fantastic piece of work which can help the younger generation to cope with various financial problems like student loans and the job market.  Over the course of ten chapters, this book could take you from being broke to a secure financial position. If you are a millenial looking to learn some basics of Finance, then you should definitely get your hands on  The Money Book For The Young, Fabulous and Broke.

 

Books are invaluable sources of knowledge.  For every problem you face in life, there is a book out there to help you get over it.  If managing finances has been your problem, then the above list of books can help you manage them better.

Which of these books are you planning to read first? Comment below and let us know.

 

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5 Essential Skills Required To Be A Successful Entrepreneur

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All the high net worth individuals in the world are where they are because they developed a certain skill set, which in turn helped them to reach their goals.  Mere knowledge of your niche area won’t help you become a successful entrepreneur. While you need patience to run a business, you also need to focus on developing some critical skills which not only help you run your business but also can help you solve any problems that might arise in your entrepreneurial journey.

Here is a list of 5 skills you should start developing if you aspire to become a successful entrepreneur.

 

1) Creativity

As an entrepreneur, you will face new problems every day and for entrepreneurs, creativity isn’t just about coming up with new ideas, it is about being able to adapt to new situations quickly and finding solutions for problems as and when they arise. You will also have to constantly improve and upgrade your products and services to stay alive in the market. Therefore, creativity is the most essential skill an entrepreneur should possess.  

The brand Apple is synonymous with creativity, thanks to the genius Steve Jobs. When the iPhone initially launched, critics came up with a 100 reasons as to why it would fail and it almost did. With his creativity, Steve Jobs kept upgrading the product and today, it is the best selling smartphone in the world.  Steve Jobs’ creativity was the driving force behind Apple’s product design and marketing.

 

2) Communication

Every entrepreneur needs to be an effective communicator. It is essential for entrepreneurs to be able to communicate with employees, customers, investors, peers and mentors. One simply cannot manage a great team or  provide a great customer service if one is not an effective communicator. Irrespective of whether a person runs a startup or a Fortune 500 company, communication is the key skill that he must develop.

Billionaire entrepreneur Richard Branson who himself is a student of communication, calls it “an art”.

 

3) Salesmanship

As an entrepreneur you should be able to sell sand in the desert.

Salesmanship is one such skill without which, it is nearly impossible to succeed as an entrepreneur. The soft skill of sales goes hand- in -hand with communication and is key to run a successful business.  An entrepreneur should be able to sell the business idea to investors, their products and services to customers.

Salesmanship plays a key role in building trust between the company and the customer.

Mark Cuban, an American businessman, investor and the owner of National Basketball Association often emphasises that salesmanship is the skill that made him millions. When asked what he would do if he lost it all, he replied saying that he would pick up a sales job and was pretty sure that this could make him a multi-millionaire again.

 

4) Money Management

If you cannot manage money, you cannot manage a business. Period!

Financial management is the most important responsibility of an entrepreneur, especially in the startup stage. Knowing your cash flow can make planning and budgeting for financial needs easier. This is a key skill to develop if you are aiming to be a successful entrepreneur.

Elon Musk, the 46 year old CEO of SpaceX and Tesla often states that he does not spend his $ 20 billion fortune on lavish vacations or expensive hobbies. Instead, he invests his profits back into his business for its development.

 

5)  Ability to find and manage people

Having great people on your team will make life much easier for you. It gives you access to new strengths while building a company culture of which people would want to be a part.  Hiring the right people is key to building a successful company. Along with hiring the right people, an entrepreneur should be able to manage them efficiently. He should be able to assign the right kind of tasks to people considering their strengths and weaknesses.

The world’s richest man, Jeff Bezos follows a three question method of hiring people for his company.  

  1. Will you admire this person?
  2. Will this person raise the average level of effectiveness of the group they’re entering?
  3. Along what dimension might this person be a superstar?

Only when he is satisfied with these answers, will that person work for him.

Being an entrepreneur is a complicated task and your success as an entrepreneur is the result of the small actions taken over a period of time.

If you notice you are lacking a skill or two, focus on nurturing those skills today so you might be able to enjoy success tomorrow.

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Character Traits Of Successful Entrepreneurs

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To succeed as an entrepreneur, an idea and money won’t suffice, you will need a lot more.  Over time, entrepreneurs develop some particular character traits which help them reach where they are.  From lifestyle and discipline to confidence, there are a lot of areas on which you need to work to succeed as an entrepreneur.  Here is a list of some character traits of successful entrepreneurs which you can incorporate into your life.

1) Discipline is one trait without which it is nearly impossible to succeed in any discipline in life, let alone entrepreneurship.  If you observe the work patterns of the world’s richest, you will find they are all extremely disciplined and follow a strict routine.  From waking up before the world does, exercising regularly and eating the right kind of food, to finishing up all the required tasks on time, they are disciplined in every aspect of life.  Discipline is hard to master, but if done, it can take you to new heights in life. An entrepreneur like Elon Musk starts his day as early as 5:00 A.M., and believes in scheduling the most critical tasks for the initial hours of the day.

2) Successful entrepreneurs are extremely passionate about what they do.  They love everything about their product, service or company. Passion is what drives them through the highs and lows of life and helps them stay motivated even in times of trouble.  Passion is the key to successful entrepreneurship.

3) Entrepreneurship in itself is an extremely risky venture and therefore, all successful entrepreneurs are risk takers.  Playing safe does not always lead to any commendable achievements in life or business. However, entrepreneurs do not take just any risks, they take calculated risks.  The most important part of being an entrepreneur is knowing what kind of risks to take and what to avoid. Larry Ellison, the founder of Oracle, takes risks like promising clients non existent products and then goes back to his team and asks them to work on the same.

4) Successful entrepreneurs know where they are is because of a team who helped them all along the way and hence they are team players.  However good you are at your job, you cannot succeed unless you have a team to back you up. Working together as a team towards a goal is the ultimate recipe for a successful business.

5) The world is constantly changing and entrepreneurs know the only way they can succeed in this world is by learning something new everyday.  Successful entrepreneurs spend a lot of time learning, from learning new market trends and new technologies, to upgrading their skills from time to time, entrepreneurs do it all.  To succeed as an entrepreneur, it is extremely important to be a fervent learner. Warren Buffet is an entrepreneur who keeps learning constantly to keep himself updated. In fact, Buffet read all the books about investment at his local library by the age of 11.

 

In this world full of competition, it is not easy to succeed as an entrepreneur.  However, if you are determined to do it, entrepreneurship is the most rewarding job and these are some of the many traits you should develop to succeed.

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