The frightening truth is that 90% of startups fail, even many startups that were built upon seemingly exceptional ideas and even more brilliant founders. What were the flaws in their plans, and how can they be avoided?
By looking at trending traits that seem to be consistent among failing businesses, we find that most of the poor decisions that lead to a company’s downfall are a result of overconfidence. These failed entrepreneurs didn’t necessarily start their businesses on a bad idea—they had reasons to be confident. But a few small decisions made with that overconfident mindset, kept these entrepreneurs from coming out on top.
Little mistakes can make a world of a difference. Some mistakes are accidental or cannot be prevented, but others you can watch for and catch before they lead to worse consequences. Here are 5 mistakes to look for that even the most intelligent entrepreneurs make.
They Feel Entitled
It is necessary for entrepreneur’s to have confidence in themselves, but that overconfidence can lead to a sense of entitlement. If as an entrepreneur you believe that you or your product deserves special treatment, then it’s likely you’ll fail to work for the rewards you think you deserve without earning them. Any startup requires effort and diligence. Expecting problems to work out on their own is wishful thinking.
They Don’t Know How to Sell Their Idea
You believed in your business because your idea stood out from the rest. It was something that hadn’t been done or hadn’t been done right and you saw your opening. But getting others to see that is the tricky part. We can feel entitled about ourselves as entrepreneurs, but we can also feel that way about what we’re selling. It’s easy to fall prey to false ideas that because we believe something is good, others will inherently believe that also.
Not everyone thinks the way we do, and believing that they do is not a wise move, no matter how brilliant your idea is. One CEO put it this way, “Most entrepreneurs have passion and they fall in love with an idea. But not all of them have the necessary skills to make the market fall in love with that idea.”
They Will Not Listen to Other’s Opinions
“Sticking to one’s guns” might be glorified in the movies, but in the real world it can be a risky move. A business is never built by one person alone. No matter how intelligent the entrepreneur may be, without the proper help and guidance from others, their business may fail without them even knowing it.
You need someone around who is going to ask you the tough questions or let you know if you are missing red flags warning you of huge mistakes. Anyone in a position of power faces those people who try to get into their inner circle by being a yes-man or -woman. But those aren’t the people who will give you the opinions you need to keep your business alive.
They Don’t Pay Attention to the Market
As an entrepreneur, you need to be constantly looking at your competition, finding a unique spot in your chosen market. Your brand won’t stand out on its own without you helping it along, but that requires you to keep up with how the market works. For example, one advertising strategy that may have dominated your industry years ago now may be losing it vigor. But if you don’t keep up with market trends, you may miss that and suffer from it.
Over 40% of companies fail because there isn’t a market need for their product. Don’t get so caught up in your brilliant idea or how well you’ve dealt with past hiccups that you neglect to keep up with the ever-changing market. Luckily, there are strategists you can hire who are trained to notice when you need to alter your business plan and adapt to keep and expand your pool of interested customers.
They Disregard Important Financial Decisions
The second largest reason for why startups fail is that they “run out of cash.” But if the founders were smart enough to create the startup, shouldn’t they have been aware of their finances enough to notice if they were running out of cash? Successful entrepreneur, Neil Patel, said on this subject that the reason these companies run out of money is because they aren’t taking the opportunities to grow. He says, “ If your startup can grow fast, you can effectively bypass some of the biggest startup killers.” Too much growth too fast can also result in running out of funds, but Patel assures that, “Rapid growth early on is a sure sign of future success.”
Keep confidence in your business endeavors, but be humble enough to make changes when needed. That humility can allow you and your company to find those opportunities for growth and to be ready to go after them.