The Entrepreneurial Sin That Can Kill A Business Before It Starts & How To Manage It (Pt.1)

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If you're aware that one crucial aspect has the potential to ruin your business, you might be able to avoid it before it happens. Here's how to manage this aspect to mitigate the risk of failure!

According to the European Commission “Entrepreneurship is an individual’s ability to turn ideas into action. It includes creativity, innovation, risk taking, ability to plan and manage projects in order to achieve objectives.”

It also asserts that small and medium-sized enterprises (SMEs) are the backbone of Europe’s economy, representing up to 99% of all businesses in the EU, responsible for the creation of around 85% of new jobs and provided two-thirds of the total private sector employment in the EU, in the last five years. The Commission also considers SMEs and entrepreneurship as key to ensuring economic growth, innovation, job creation, and social integration in the EU. However, only 37% of Europeans would like to be self-employed, compared to 51% of people in the US and China.

In the UK, on the other hand, there were 5.2 million private sector businesses in the UK at the end of 2014, up by around 330,000 since 2013. Records also indicate that since 2000, the number of businesses in the UK has increased each year, by around 3% on average. The proportion of businesses that employ people has also fallen since 2000. This decline has been attributed to the growth in self-employment. The number of businesses with no employees has grown by 68% since 2000, compared with growth of 51% in the total number of businesses. (Source: Economic Policy and Statistics report for House of Commons, 2014).

According to Dr. Paul D. Reynolds, Director, Research Institute, Global Entrepreneurship Center,

‘there are about 300 million persons worldwide trying to start about 150 million businesses each year. About one third will be launched, so you can assume 50 million new firm births per year. Or about 137,000 per day.’

That tells me something about the fact that the hunger and desire for entrepreneurship and self-employment is a major contributory factor in reducing unemployment rates around the world. Having said that we also know that a higher proportion of new businesses fall out through the cracks within a relatively short period – usually within the first two years.

To go into business for yourself is an exciting experience, and at the same time, business owners may become their own “worst enemy” by expecting too much too soon. Many aspiring entrepreneurs seem to overlook the fact that for every established business, there is a story behind its success or continued existence. The success stories we read about are the result of years of persistence, hard and smart work, adjustments, changes, fine tuning ideas and systems, and sometimes-near bankruptcy experiences. These factors help to define the business we are familiar with and patronize for products and services.

Tom O’Meara, Head of Editorial and Analysis at StrategyEye, couldn’t have said it much better:

“There might seem to be a lot of tech startups with eye-watering valuations, but that doesn’t mean building a billion-dollar company is getting any easier. It’s often as much about people, timing, execution and luck as it is that initial idea.”

Having worked with entrepreneurs and business owners for almost two decades, I believe that most, if not all businesses go through cycles. In my co-authored book (“You’ve Been Fired! Now What?”) we talk extensively about the Business Life Cycle.

A better understanding of this cycle can help a new business owner better manage their expectation from the start of the business to becoming a market leader. It’s not a must that every business goes through all the stages. The benefit of this lies in the appreciation of the process that is what makes all the difference.

In Part II we will take a look at the stages of growth in a business’s life cycle. I earnestly believe that an entrepreneur’s appreciation of this can significantly help curb your fears, to enable you have the clarity and patience required to steadily grow a successful business.



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