(Originally publsihed at AfroDaddy.com - The Black Man Survival Guide)
Congratulations you are a smart guy! You have graduated from high school and maybe even college and now you are ready to start your own business. You have a great idea, little competition and you see an opening for a very successful business. Everything is lined up for you and yet 80% just like you will fail.
Thousands of articles on the web talk about how to start a business or tell you the success stories of individuals. Very few articles talk about the 80% that fail in their startups. Why? People don’t want to tell you the real story because failure is not sexy. Fortunately for you we don’t care about sexy. We care about telling you the real story, so here it is. Use it and maybe you won’t be in the 80% failure category.
1. Starting a Business Without Passion
First of all you must realize that starting a business is harder than you thought it would be. There will be long days and nights, lots of doubts, lots of fear and a ton of frustration. The main thing that will see you through these dark times is that you believe in your idea and you have a lot of passion. If you start your business just to make money but don’t have passion for your idea you might as well give up now because you will almost certainly fail when times get tough.
2. Lack of Funding
This is the obvious one that people talk about, but they don’t really dive into the real truth about funding. 90% of startups do not receive enough “initial” funding from banks or investors to survive. The word “initial” is key to understand because most funding comes in several rounds. The first round of funding usually comes from “angel investors”; those that believe in your idea and will give you “seed money” to get your idea off the ground. This funding may get you started, but if your business is to ultimately succeed you will most likely need additional funding along the way.
You must also understand that getting seed funding is almost impossible unless you are revenue generating and your business plan “guarantees” that you will make millions of dollars. If you have a more modest business idea (ex: owning a restaurant) you will need impeccable credit or else you will waste all your time chasing funding that is just not available to you.
3. Hiring Staff that Doesn’t Perform
You have your strategy, your plan AND your money and now you are ready to hire staff. Choose carefully because if you blow your initial investment on staff that doesn’t perform you will lose your money and your business will suffer. Even worse, you have just shown your investors that your business premise was not valid and getting another tranche of funding will be almost impossible. Carefully screen your initial hires as they often will mean the difference between success and failure.
4. Underestimating the Time to Complete Tasks
There are some rules of thumb that have stood the test of time when it comes to business. One of them is that “it takes 20% of the time to do 80% of the work”. Another is “always add 50% to the time you estimate to complete major tasks”. Being the smart individual that you are you probably calculate the time to complete all the things you need to make your business start off great and hit the ground running. The reality is that in business NOTHING goes exactly as planned and EVERYTHING takes longer than expected. The last 20% often delays the schedule. If you stubbornly stick to your “calculations” you will misread the funding required, critical hire dates, and other key elements and your business will fail.
5. Overestimating Your Own Ability
You ARE smart, talented, resourceful and any other positive adjective you can think of to describe yourself. Even as you read this you may be thinking “this doesn’t apply to me” or “I have this covered already”. Let me be the first to tell you “bullshit”. Stop drinking the kool-aid and face reality – you are not the first person to have a great idea. Many others smarter than you have tried and failed because they did not enter the startup with enough humility to realize that they don’t know everything. Take advice from every successful AND failed business owner that you can and you will have a much better idea of what to do and what NOT to do.
6. Overestimating the Help you Will Receive
We save this for last as this is probably the most important of all. When you start your business you are 100% committed to your idea, you are 100% sure it will work and you are convinced that everyone will love it. These are all great qualities and are necessary but you MUST understand that everyone will not share your enthusiasm.
You will email and call people and they will ignore you. You will talk to people who say they will support you and they will never get back to you. You will get great leads from supporters who will completely blow you off. This will frustrate the bleep out of you but don’t hate on these individuals. It is not their fault. They simply are people with their own lives and their own concerns and are not mentally, emotionally, physically and financially invested in your idea to the extent that you are. You may have to push them a little.
You may have to call them two or three times before they respond. You may even have to go to extreme measures to entice them to pay attention to you. It could be as simple as buying them a cup of coffee or as extreme as offering them a stake in your company but whatever it is you have to realize that people will not run to your doorstep to help you – no matter how good your idea is.
You are smart, determined and you have a great idea. With a little humility, some luck and lots of determination you have a fighting chance of beating the odds and having a very successful business.
written by Roger Madison Jr. , August 17, 2012