An Entrepreneur is a person who creates a new and innovative business and bears all risks and rewards. The entrepreneur plays a vital role in an economy. A successful Entrepreneur provides employment to many people, solves many problems, and improves society’s lifestyle.
But becoming a successful entrepreneur is not at all easy. More than 90% of entrepreneurial businesses shut down in just one year. An entrepreneur has to work more than 14 hours a day in the initial years to become a successful Entrepreneur like Steve Jobs, Bill Gates, etc. One of the most common skills of an entrepreneur is learning from others’ mistakes. So before starting your entrepreneurial business, you must know some common mistakes new entrepreneurs make and how you can avoid failure in an entrepreneurial business.
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How to Avoid Business Failure?
Almost every entrepreneur says that failure is a part of a successful business, but why face failure if you can avoid it. So below is the list of some common mistakes entrepreneurs make to avoid becoming successful entrepreneurs.
#1 Make a proper business plan
Many entrepreneurs fail to make a proper business plan. A good business plan must middle sight economics, social, cultural, and legal analysis. An entrepreneur must do a SWOT and PESTLE analysis (SWOT- Strength Weakness opportunity threat, PESTLE- Political, Environmental, Social, Technological, Legal, Economical) before making a business plan and analyzing previous events and trends in an economy.
A business plan must be goal-oriented, time-based. Possible to achieve within the given time. I believe you must hope for the best and prepare for the worst. That’s why your plan must be ready to face contingencies like Covid-19, natural disasters, etc. so that you don’t have to shut down your business in bad times.
#2 Prepare and Analyze books of accounts
It is nothing but stupidity if we assume that a new entrepreneur will not make any mistake relating to money. Generally, a new entrepreneur does not record his business transactions like purchases, sales, etc., which costs him a lot in his business.
You can record transactions systematically if you have accounting knowledge. Otherwise, you can record as per your wish
For example, suppose you are selling a school bag for $10, and its cost of production is $8. If you are not preparing books of accounts, you will think that your net profit is $2. Still, if you are preparing books of accounts, then you will realize that you are also paying Rent of your shop, electricity charges, water charges, the salary of employees, and many more, and eventually, you figured out that Net Profit per sale is quite less than $2. After that, you can take proper measures to increase your profit.
#3 Do Proper Marketing
Generally, Entrepreneurs who are not from Management or accounting avoid marketing, which is one of the biggest mistakes of their life. Think for a minute how many unknown products you have purchased in your life ( unknown product means the product about which you have not heard before).
A consumer will always go for a product he knows and always hesitate to try an unknown product. So an entrepreneur must do proper marketing using various marketing tools like email- marketing, banner advertisement, etc.
#4 Analyze your competitors
Although the real meaning of an entrepreneur is an innovator. For a person who innovates a new thing, it is tough to find such a thing in which only you are working. That’s why you must analyze competitors. When you don’t have proper funds, avoid competing with giants like Microsoft, Tesla, Apple, Facebook, etc. Suppose you can make a social media platform 10 times better than Facebook and Instagram, but do you think a person using Facebook for more than 7 years. Now he will switch to your platform? I am not saying that you cannot beat Facebook; if you can make an app 10 times better than Facebook, then yes, you can beat it, but it will be challenging. Facebook will improve its app in few days after launching your app and making it better than your app because Facebook has brilliant manpower and investment. That’s why explore new markets and analyze your opponent because if your opponent is better than you, you will eventually fail.
#5 Initially Avoid taking debt
Avoid taking debt when you are at the initial stages of your business. First, make a proper plan and execute it. If you start getting some success and need money to expand your business, you can take debt.
#6 Satisfy your Customer Needs
The most common reason for a failure in a business is that they fail to provide good service to their customers. Customers are the king of the market. They will pay you money for your product, and if you fail to provide them proper satisfaction from your product, they will never repurchase your product or service.
For example, let’s say you are selling a coffee powder for $5 and your competitors are for $4 now. If you fail to provide at least 30% extra satisfaction to your customer, they will always prefer your competitor’s product.
Things to keep in mind to avoid business failure are:
#1 Make a proper business plan.
#2 Prepare and analyze books of accounts
#3 Do proper marketing
#4 Analyze your competitors
#5 Initially avoid taking debt
#6 Satisfy your customer needs.
Following all the above-mentioned things does not guarantee you success in your entrepreneurial business, but if you don’t follow them, it will guarantee your failure. Becoming a successful entrepreneur is not at all easy. You may fail many times, but always keep going, and one day you will be the next successful Entrepreneur on this planet.
Frequently Asked Questions
Who is an entrepreneur?
An Entrepreneur is a person who creates a new and innovative business and bears all risks and rewards. The entrepreneur plays a very important role in an economy. A successful Entrepreneur provides employment to many people, solves many problems, and hence improves the lifestyle of the society.
What is the full form of SWOT and PESTLE analysis?
SWOT- Strength Weakness opportunity threat, PESTLE- Political, Environmental, Social, Technological, Legal, Economical
Marketing tools an entrepreneur must use?
An entrepreneur must use email services and banner ads for marketing.
Which is the most common reason for a business failure?
The most common reason for a failure in a business is that they fail to provide good service to their customers. Customers are the king of the market. They will pay you money for your product and if you fail to provide them proper satisfaction from your product, then they will never buy your product or service again. For example, let’s say you are selling a coffee powder for $5 and your competitors are for $4, now if you fail to provide at least 30% extra satisfaction to your customer then he or she will always prefer your competitor’s product over yours.