For an entrepreneur, it is possible that his/her idea has not taken off as he/she expected.In spite of spending lot of money , effort and time, no one is buying his product. Here are few items that can go wrong in any venture.
- A required government clearance never comes
- Funding request has been denied by a VC
- Lead programmer has left your company and joined Google
- No one has purchased your product
- You have run out of money before your product has even hit the market
Failure hurts bad
Failure brings out the naysayers. Nobody likes to talk about failure and people have strong opinions on failure.
It often comes as a rude shock that our awesome idea turns out to be failure.The entrepreneur feels that he has wasted his time and money. He finds it hurtful to explain to everyone about it.
Fortunately, there something good that comes out of these failures.
Welcome to the club of failed entrepreneurs and there is a long queue
I can tell from personal experience that failure is very very beneficial. If an entrepreneur has not failed, he has not learned many things. Most of the startups fail and it is a fact. A lot of the corporate America’s today’s top companies started from garage or college dorms. Though many might have failed some of them such as Microsoft and HP became phenomenal successes.
If you ever read any of the Richard Branson’s book, you will be surprised to find how many business he had failed in. But today he is one of the most successful celebrated entrepreneur.
Failure is common and we can learn a lot from it
The point is entrepreneur do fail and there is nothing special about it. Challenges can cause setbacks to your business.
The idea however is not to worried about them but analyze the reasons of failure. It is a fact people who never quit( or serial entrepreneurs) have much higher chances of success than those who try once and quit forever. (You may read books on top entrepreneurs to substantiate my claim). If the entrepreneurs are aware of the fact that we can fail they can look at their failure from a detached point of view without making it very personal.
Here are some of the things, I feel are common causes of failure. Let us take a look at them
The idea is not well thought and researched
The execution is not planned well
Not enough networking
Not learning new things.
Products have not been marketed well
Positioning of the idea is wrong
Not listening to customer feedback and complaints
Product specifications are changed too often
The idea is too big for the budget
Not having enough dedicated people
Not having the right experience to take the idea forward
Failing to anticipate the competition
Entrepreneurs being passionate about their ideas are very eager to start their venture. Hence they probably do not put time and effort into completely analyzing the idea( pros and cons, cost, time etc.) . It may get challenging to continue a complicated and not well thought idea .
So if the idea is complicated, its better to plan and simplify it as far as possible. Also it would be good to do some market research before starting.
Planning is the most neglected aspect of a venture. Detailed planning involves knowing about marketing, procuring, hiring and other aspects. A good plan also documents all the risks of a project and strategies to overcome them when they occur.
As an example, in my own venture, I did not plan for hiring. Just as the venture was about to start, I found that I could not get skilled manpower within my cost range. I had to raise salary to hire them thereby increasing my costs.
Without networking, it is not possible for people to know about your product/service.Entrepreneurs are generally shy of networking. They believe a good product speaks for itself. It does, but it takes a lot of time to get popular. With smart networking an entrepreneur can get the word out faster.
People are scared of new things, mostly out of inertia. An entrepreneur who has a lot of inertia and refuses to learn new things, sets himself for failure. Flexibility and adaptability are the most important traits in this field.
An entrepreneur often tests the market with his new product. However due to fear of criticism and negative feedback, he sometimes holds back marketing his products and services. Less marketing means lesser knowledge about the products which indirectly affect the sales.
Product positioning is important. it might be difficult to sell a product that is placed in an already crowded market without any differentiation. In a crowded market, more advertisement is needed to make the product stand out from competitors.
When genuine customer feedback is ignored, product improvement suffers. If product suffers, sales suffer. Not listening to customer feedback and complaints means angry dissatisfied customers. Too many of them and entrepreneur is headed towards failure.
An entrepreneur who has less confidence in his product often changes it frequently based on suggestions from customers.Improving is fine but too many changes cause confusion. The sales team often finds it difficult to sell the product with features that are changing constantly.
Once I met a person who wanted to start a power plant based on renewable energy. Though the idea was noble and technology was great, I could not see how he could finance such a project. The project was too costly and it was not going to make money in next ten years or so. Sometimes the project does not fit into the budget and starting such a project may lead to troubles later on.
Initially, a project needs enough dedicated people. They should be dedicated for the success of the project. An entrepreneur usually hire people. Many times it is difficult to find such dedicated people.
Without domain knowledge, the entrepreneur finds it difficult to execute the project. He will also face scrutiny from his financiers and his customers about his ability to complete his project. It is important to either have domain knowledge or get somebody with the right domain knowledge.
Most of the time, an entrepreneur fails to see the competition. However it is there and may come either from the new entrants who are fast and nimble or from existing large companies who have huge resources at their disposal. Competition is always there and an entrepreneur can ignore it only at his peril.
So how does an entrepreneur make sure that he does not commit these mistakes. In a business there will always be challenges. However with proper planning and execution most of them can be overcome. Here are some strategies using which an entrepreneur can overcome the challenges that I mentioned above.
Become more adaptable, flexible and applying the leanings
Use customer feedback to improve your product
Go back to drawing board
Cut costs mercilessly
Network more, advertise more
Reposition your product
Develop mental toughness and ability to think for yourself.
By being flexible and adaptable, an entrepreneur is always ahead of the competition. He knows about the new technology and his customer appreciates him for that. He learns from his mistakes and apply his learning to improve himself and his product constantly.
An entrepreneur who does not bring his ego to the table is a winner. He engages with them and listens to them. He uses the feedback to improve his product and appears as approachable and understanding to customer. Learn to handle negative feedback
It may often happen that marketing strategy is not right or productions costs are high or product is not suited to market. A smart entrepreneur goes back to the drawing board and discusses all potential issues with his team. That way he can ensure that he is on right track.
Costs can escalate because of bad planning or overspending. Higher costs leads to poor cash flow. There are plenty of areas where cost cutting may help. For e.g. using email instead of printing on paper is a smart idea. Using public transport for traveling rather than own vehicle helps to cut the gas costs.
An entrepreneur should never shy away from networking and talking about his product. Networking helps to create the buzz about the product.
If necessary, advertising may also be considered to promote your product. If the entrepreneur is selling to consumers, you may decide to advertise in newspapers. If he is selling to businesses, advertising in trade magazines is a good option.
It is important to find the right niche for your product. Later on fine tune the product to fit into the niche. Once you are top entrant in the niche, start dominating it.
An entrepreneur needs mental toughness to overcome the adversities and unwanted criticism. Being in the company of positive people helps. Also he needs to have a lot of patience. All these things can be cultivated slowly.
I hope you liked the post. Please let me know your comments.