Why Most New Small Businesses Fail.
I have tried one business and another, sold this and that but the end
has been the same. Why is it that every business that I have started
have not really made it? Many have reached the conclusion that business
is not for them. Could this be true or there are certain things that
most people who start business don’t know or don’t have.
Research has shown that about 80% of Start-Ups started with people without business experience fail in the first 3 to 5 years while the new businesses started with people that have more than 5 years business experience have an 80% success rate. Living in an economic environment where unemployment rates are at an all-time high and with everyone trying to do anything that puts food on the table many have seen starting businesses as the way to go. Zimbabwe has seen many people venture to try their luck in entrepreneurship if the great number of such can be called entrepreneurs.
A
USAID report on entrepreneurship that I read recently defined such kind
of entrepreneurship as Necessity Based Entrepreneurship as compared to
Opportunity based entrepreneurship. Whatever we may call it, a greater
number of people have started businesses from small, medium and a few
real business enterprises. Some had substantial amounts of capital and
access and youths and women received loans but that did not yield the
intended results. Why then is that the way of business has not worked
for many. Below are a few of the reasons.
The E- Myth
The first reason that I have noticed as the chief set back is what Michael Gerber in his book the E- Myth calls the Entrepreneurship myth. He says many people start businesses with the fatal assumption that if one understand the technical work of a business, then they understand the business that does technical work. Many people lost their jobs or left them trying to venture into business and with a lot of technical expertise thought they could continue and run businesses that provided products and services that they were experienced in. People repossessed farms and people bought their way into businesses but failed to maintain because the entrepreneurship and business world has its own thinking and way of doing things that is different from the technician or managers perspective. People really had never been exposed to generational business thinking as even the so called indigenous business people of yester year had nothing to really mentor young upcoming business people with. Most of then called entrepreneurs were all in transport and retail businesses such kind as are run mainly by discipline and management and little entrepreneurship muscle needed.
Money is never the motivation of most successful entrepreneurs
Most successful entrepreneurs globally will tell you that they did what they did not for the money but they found a need that they felt had to fulfil or they found something they were really passionate about and ventured into it. Many were looking for what everyone was doing and making money out of and then tried to follow. Need based entrepreneurship lacks the motivation and drive that forces successful entrepreneurs to stick to it when the going gets tough. Need based entrepreneurs just go via the path of least resistance and are in a hand to mouth business approach which does not have long term strategic approaches.
Get rich quick mentality.
After Zimbabwe’s hyperinflation period between 2007-2009 when people had gotten used to huge profit margins that were as big as 400% it has taken people longer to adjust and learn sustainable pricing and profit margins in a normal business world. This is clearly evidenced by the continuous lowering of prices that has been happening of late showing that greed had taken its toll and people who had gotten used to greedy driven get rich quick pricing have been falling out of the race. Successful businesses are built with proper planning and disciplined goal driven productivity. Because of lack of proper business understanding, low self-esteem and slave mentality people would quickly go for status and prestige by quickly spending unnecessary amounts of money on luxuries like cars, houses and gadgets that they fail to maintain in the end.
I could go on and on with some of these reasons why businesses have been failing but at the end of the day it’s important to learn how best people can get out of this dungeon. People should move away from the lazy mentality of looking for people to write business plans for them and lose out on the business mentality and understanding that one gets by engaging the whole process and consider the generations that are following behind.
The next generation that you will create will take your kind of thinking to a higher, developed and advanced level, so what kind of business culture are you creating- Coach Tarie: Arise Africa Cause.
Coach Tarie Coaching and Consultancy (COTACC) is there to help your become a real Entrepreneur as they take you through the development stages. Get in touch for Entrepreneurship Coaching, Training or Consultancy and give it one more try but this time from an informed launching pad.
Coach Tarie-Pastor | Life -Executive-Entrepreneuship Coach | Consultant | Leadership Trainer | Speaker |Blogger | www.coachtarie.com | coachtarie@ gmail.com | facebook/twitter/linkedin @ Coach Tarie | +263773 301 267/ +263 738 494 105
Research has shown that about 80% of Start-Ups started with people without business experience fail in the first 3 to 5 years while the new businesses started with people that have more than 5 years business experience have an 80% success rate. Living in an economic environment where unemployment rates are at an all-time high and with everyone trying to do anything that puts food on the table many have seen starting businesses as the way to go. Zimbabwe has seen many people venture to try their luck in entrepreneurship if the great number of such can be called entrepreneurs.
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| Why Most New Small Businesses Fail. |
The E- Myth
The first reason that I have noticed as the chief set back is what Michael Gerber in his book the E- Myth calls the Entrepreneurship myth. He says many people start businesses with the fatal assumption that if one understand the technical work of a business, then they understand the business that does technical work. Many people lost their jobs or left them trying to venture into business and with a lot of technical expertise thought they could continue and run businesses that provided products and services that they were experienced in. People repossessed farms and people bought their way into businesses but failed to maintain because the entrepreneurship and business world has its own thinking and way of doing things that is different from the technician or managers perspective. People really had never been exposed to generational business thinking as even the so called indigenous business people of yester year had nothing to really mentor young upcoming business people with. Most of then called entrepreneurs were all in transport and retail businesses such kind as are run mainly by discipline and management and little entrepreneurship muscle needed.
Money is never the motivation of most successful entrepreneurs
Most successful entrepreneurs globally will tell you that they did what they did not for the money but they found a need that they felt had to fulfil or they found something they were really passionate about and ventured into it. Many were looking for what everyone was doing and making money out of and then tried to follow. Need based entrepreneurship lacks the motivation and drive that forces successful entrepreneurs to stick to it when the going gets tough. Need based entrepreneurs just go via the path of least resistance and are in a hand to mouth business approach which does not have long term strategic approaches.
Get rich quick mentality.
After Zimbabwe’s hyperinflation period between 2007-2009 when people had gotten used to huge profit margins that were as big as 400% it has taken people longer to adjust and learn sustainable pricing and profit margins in a normal business world. This is clearly evidenced by the continuous lowering of prices that has been happening of late showing that greed had taken its toll and people who had gotten used to greedy driven get rich quick pricing have been falling out of the race. Successful businesses are built with proper planning and disciplined goal driven productivity. Because of lack of proper business understanding, low self-esteem and slave mentality people would quickly go for status and prestige by quickly spending unnecessary amounts of money on luxuries like cars, houses and gadgets that they fail to maintain in the end.
I could go on and on with some of these reasons why businesses have been failing but at the end of the day it’s important to learn how best people can get out of this dungeon. People should move away from the lazy mentality of looking for people to write business plans for them and lose out on the business mentality and understanding that one gets by engaging the whole process and consider the generations that are following behind.
The next generation that you will create will take your kind of thinking to a higher, developed and advanced level, so what kind of business culture are you creating- Coach Tarie: Arise Africa Cause.
Coach Tarie Coaching and Consultancy (COTACC) is there to help your become a real Entrepreneur as they take you through the development stages. Get in touch for Entrepreneurship Coaching, Training or Consultancy and give it one more try but this time from an informed launching pad.
Coach Tarie-Pastor | Life -Executive-Entrepreneuship Coach | Consultant | Leadership Trainer | Speaker |Blogger | www.coachtarie.com | coachtarie@ gmail.com | facebook/twitter/linkedin @ Coach Tarie | +263773 301 267/ +263 738 494 105
