”All men dream: not equally. Those who dream by night in the dusty recesses of their minds wake up in the day to find it was vanity, but the dreamers of the day are the dangerous men, for they may act their dreams with open eyes, to make it possible.” – T. F. Lawrence, Seven Pillars of Wisdom: A Triumph
According to Dun & Bradstreet, 33% of all new businesses fail within the first 12 months. Half of new businesses fail within their first two years of operation and 75% fail within the first three years. In essence, businesses continue to increase their odds to fail!
Why does this happen? It is because start-ups often fail to ask themselves the right questions before they launch their businesses.
The ones that fail over and over again are being dishonest with themselves and I suspect they fail to ask themselves the tough, emotional questions until it’s too late.
This failure to ask these tough questions could be due to underlying issues of a fear of failure and the shame that could bring.This fear of failure is set up in our culture from an early age and extends through to even the savviest of entrepreneurs, who operate without little protection.
Take bankruptcy laws for instance.
Bankruptcy laws can paint the entrepreneur negatively. If an entrepreneur borrows $10K for a shot in business and goes broke, he is then ostracised through bankruptcy.
When you consider that a corporate high flyer could lose $100 million, but have the resources and corporate backing to sweep his problems under the carpet and still come out a hero, it seems hardly fair.
Most entrepreneurs do understand that failure is only a problem if you don’t get back-up when you fall, but fear is always at the back of their mind. This is because there are so many consequences to failure:
• Family and personal relationships collapse.
• Poor health and self-esteem.
• Bad credit rating.
• Negative reputation.
• Collateral damage to family members and friends.
If you are an intuitive entrepreneur, you would have asked yourself the following questions before you started:
1. Do you believe that you can be successful running your own business?
2. Are you confident of your own abilities?
3. Do you prefer not to have a boss telling you what to do?
4. Are you willing to work longer hours and harder for yourself than you would for a boss – without immediate additional financial rewards?
5. Are you happy working alone on a task from beginning to end?
6. Are you a self-starter able to set your own objectives and make decisions?
7. Can you organise your day and your workload?
8. Can you start right away?
9. Are you prepared to study in your spare time to master business techniques?
10. Do you want to determine how much you earn, instead of relying on a set wage?
11. Do you aspire to do what you do whenever you want to do it without having to answer to anybody?
12. Is personal freedom and liberty important for you?
The following is a case study conducted with a client who learnt his lessons the hard way. Here’s what BCI BRANDS director Arthur Esteban had to say.
What mistakes did you make when first starting up the business?
I would say the biggest mistake I made personally was to choose the wrong person to go into business with. If you have to go into business with someone else make sure from the start that you are choosing the right person as it cost us plenty of time and money. This is not the only mistake we made but probably the one mistake that set us back a little. Another mistake we made was finances. Our business has been pretty much self-funded and I think we would be further ahead if we did that differently and used others’ money and not solely our own. I truly believe we would be further along if we could have found someone to back us!
Why did you make these mistakes?
We decided to get a partner in the business to share the workload and have someone in the business that had different skills to us. We started the concept of what we were doing but decided to get a partner in to take some of the workload off us. That wasn’t happening and we were still doing all of the work, so it was a big mistake. As far as the finances went we didn’t know any different. This was a new industry for us so we never knew you could go out and find investors to help fund your business if you had a compelling enough story to share with them.
What did you learn from these mistakes?
We learnt a lot from these two mistakes. Firstly, we learnt to back ourselves more. Give yourself a lot more credit as you will get through it without a partner if you have the passion to do it. In time, you will find the right people to fill the gaps that you cannot do through lack of time or expertise. Also build on your business to make it solid so people will want to invest in you and your vision.
Do you feel you were ready to start the business?
I had just sold another business for seven figures and I had to occupy my time a little better. I was ready to start the business because I was bored at home doing nothing. Also having built another business from scratch I was hungry to do it again. I suppose it’s the thrill of the challenge that keeps me doing it!
What would you do differently?
I would keep the control to myself in the business for as long as I can. I understand to grow bigger I might have to let go of some of the ownership but I know how to grow businesses so I would like to do it myself at least for a while….
Excerpted from an article originally published in the February/March 2014 issue of Think & Grow Rich Inc. magazine. If you are a subscriber to Think & Grow Rich Inc. magazine, you will receive this article in your February/March 2014 issue of TGR. If you are not a subscriber, click here to subscribe.