WHY NEW BUSINESSES FAIL (AND HOW YOU CAN SUCCEED)
You’ve most likely heard the grim statistic that most new businesses fail within the first few years—including businesses with significant capital, a solid team, and a well-thought-out business plan. This is an inescapable truth which you will have to come to grips with. But the corollary of this is a far more positive one: there are new businesses that will go on to achieve success, some for several years, many others for several decades.
Will your business be of the former type or of the latter?
The answer to that question depends largely on you. In reality, most business that fail, do so not because of poor planning but because their owners did not adequately prepare themselves for the real world of business. And so, before going any further, it’s important for you to take a step back and answer two key questions:
- H ow committed are you to making your business a success? Before you do anything else, ask yourself: how intensely do you want to achieve the business ideas that you have been dreaming about? Do these ideas provide only pleasant thoughts during idle moments, or do they burn within you like a fire that you can’t contain? The fact is, both starting and operating a business are exceptionally hard work, and the only business owners who succeed are those whose drive and motivation are equal to the challenge. 2. D o you possess the mental and emotional endurance necessary to succeed? Starting, running, and growing your own business will take your best effort, especially as challenges and setbacks mount—as they almost surely will. Regardless of the research you may have done or the conversations you have had with other entrepreneurs, you will never truly understand how taxing becoming an entrepreneur will be until you actually do it. On the same token, you will never fully comprehend your sense of accomplishment until you actually arrive. Don’t underestimate the time, energy, and money that your business will demand. Be willing to give the mental and emotional endurance that your new venture will require.
If you’ve answered “yes” to both questions, then the following pages will provide you a way to channel that commitment and endurance into a strategy for starting your business. As you read each section, take time to consider exactly how it applies to what you want to accomplish and then act. The worst thing you can do is nothing. Just ask the would-be entrepreneurs of the world, whose ideas were launched by someone else
Whether you are seeking to build a global technology company or a neighborhood restaurant, you will encounter an array of external, or “environmental,” forces that will help to determine whether your venture will be successful—and how successful it will be. Some of these factors you will be able to control, and others you will not. But individually and collectively, they will exert a powerful influence on your business.
These environmental factors are collectively referred to as your “market.” Now, the word “market” has a number of disparate meanings in business, and it’s important to not to confuse them. A market is often referred to as a business’s geographic reach. The market for the original Starbucks coffee store, for instance, was a section of downtown Seattle; today, each individual Starbucks franchise has its own local market in thousands of cities throughout the world. For online stores like Amazon and eBay, by contrast, the market is the entire world—and has been since their beginning. Another meaning of market, is a physical thing or a place where goods are bought and sold—a supermarket, for instance, or an open-air produce market or even an online marketplace. And the verb “to market,” as in “to market a product or service,” means to promote one’s business offering to members of the buying public.
While each of these phrases may have more or less meaning for your own particular business, the word “market” is broader and a little more abstract. As “the collection of external factors affecting your business,” your business’s market encompasses a variety of factors and elements external to your business, such as:
- Your customers • Your competitors • Physical geography • Economic infrastructure
While many other factors may affect your business as well, we need to address a more fundamental question: why do you need to study your market at all?
STARTUP 101: HOW EXPERTS DRIVE SUCCESS
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