Dreaming up a fantasy in which you’re so rich that you can afford the luxury of sleeping all day in your home is easy, but actually getting there is very hard.
Obviously, if you’re planning on starting a business, you need an idea and there are many reasons why your business idea can easily fail. However with careful planning and making sure the major reasons are all avoided the chances of failure can be minimized.
If the following 10 reasons are avoided then the chances of your business idea becoming successful multiply!
1. Too overwhelming
This goes without saying. If your business idea is too overwhelming to execute given the current resources that you have then it is most certainly going to end up a failure. Whenever a person tries to lift more weight than their body can bear, they either get hurt or end up dropping the weight – and then getting hurt.
Similar is the deal with the business idea.
If you find it too overwhelming from day one you will get demotivated enough to quit pursuing it somewhere in the middle and business ventures that stop in the middle of their lifeline have a reputation for never coming back to life!
So if you want to build a floating city atop a giant ship called the SS Gynormous, you should first attempt to build a floating house first. A smaller project will be easier to plan and execute and investors you would have immediate access to such as friends and family would be more than willing to pitch a smaller amount for a smaller idea which sees fruition early.
2. Technically complex
This mostly goes for product based business ideas that have to undergo a lot of engineering to come to life.
If the idea is too technically complex (contains too many sub-systems and electronics for example) making it will become very hard even if you’re an expert in your field or have a bunch of experts working on it.
Such projects mostly end up failing early as developers run into one problem after the other and the whole project falls into development hell.
In today’s world being so competitive, a missed deadline is bad news for everyone involved and with powerful corporations around you that have much larger R&D departments and the capacity to withstand a loss, proceeding with a technically complex idea can be quite risky.
It is much better to address a smaller component first and devise your business planning in such a way , that you’re able to market the sub-component independently, allowing you to raise funds and not get demotivated along the way.
3. Not innovative enough
If your business idea is not innovative enough, well then you’ll have a hard time succeeding as you’re just another face in the crowd.
The whole definition of a startup is a company that is going to provide a completely new product or service or is going to attempt an existing idea in a new way. Once again, remove the innovation element and chances to fail multiply by a 100.
Going down the path of non-innovation will make it much harder to find investors and develop a market for your product or service unless you have a huge amount of experience in the field and people trust your name enough to risk going for a new entrant instead of the older and larger companies that already dominate that particular market segment.
4. Premature launch
The most common mistake that is made by people with a new startup is the non inclusion of extensive testing before they launch their product.
There are various kinds of testing that every product or service when deemed market ready and even before that should undergo.
This includes the very basic functional testing which merely determines that the product works, to the kind of testing that emulates a customer’s usage of the service or product.
It doesn’t matter whether it’s a product or a service, everything has to be perfected before you go onto the market and spending money on testing will never not pay off in the long run. Unfortunately most entrepreneurs want to go for the quick buck and will forsake testing of their product or service leading to a huge eventual failure of their whole business.
5.Wrong target market
This again goes without saying and is a very common mistake many people don’t realize they are making with their business idea. They simply spend all their efforts attempting to plan for and market the right product to the wrong people.
Or they attempt something much worse – attempting to market the product to everyone!
This is why it is critical to identify the market “niche”. The “niche” (pronounced neesh) is that tiny little bit of the market segment or those few people that correctly fit the profile of your model buyer – the one for whom you developed the solution in the first place. A good way to identify the niche is to first characterize the ideal customer, one who would most likely have a NEED for your product or service and then figuring out where they would most likely be located.
Also, it cannot be stressed enough, that once you have identified these folks getting their feedback on your product or service and then acting upon it is of utmost importance!
6.Not enough marketing
Why does everyone know about large hypermarkets such as Walmart’s, Amazon and Carrefour (Hyperstar) ?
Its because they tend to splash their advertisements everywhere!
If people don’t know who you are then how would you expect them to buy your product or service? If they don’t even know that you exist on planet earth? Before they know how authentic your Afghan carpets are they at-least need to know that your selling them first!
Although it is true that you will not be able to match the advertising budgets of the big-wigs it is still important to advertise yourself wherever you have access to, which includes spending some money on targeted advertising channels available from many service providers nowadays such as Facebook, Twitter and Reddit.
Most wannabe entrepreneurs want their product or service to somehow magically sell without advertising and unfortunately are guilty of setting up shop with little to no marketing effort.
To quote a not-so-good example, most large scams and ponzi schemes are successful in ripping people off due to this very reason – a lot of marketing.
7. Idea validation
In all honesty, this reason should have been on the top of the list.
This is by far, the most important aspect and a wide majority of business ideas fail even before they start due to this very reason.
As a budding entrepreneur you need to first identify two rationalizations for your business idea along two fronts – the first one being whether there is an actual requirement of the product or service idea that you have and the second being whether you have the correct resources for that particular idea’s execution.
Many people get highly demoralized when they discover what they thought was good idea, was not exactly everyone else’s requirement and this leads them to eventually give up on all kinds of business and fizzle out, which is not exactly a good thing for anyone!
Remember to validate your idea first, and the best way to do that is through feedback. Not only feedback on the idea itself but also on the expected price at which you will market your product or service.
8. Entering a crowded market
Jutting into a crowded market is not the right move, even if you have a product or service that you think is the best for the consumer in that market. Here, crowded does not refer to a market which has a large number of consumers but instead refers to a product or service idea in a market in which a lot of players already cater to.
With these many players already having worked over the years to build a repute among customers and working hard to dominate the market by making sure no competition survives it generally is a poor decision to enter into this kind of market with little knowledge and experience regarding it.
This is not to say that it is impossible to out-compete big-wigs however; many people have done it and so can you, it only requires a different kind of strategy – mainly experience working for the competitors and knowing all the ins and outs of industry. Only then would you be able to discover a feasible idea for a product or service that doesn’t already exist and have enough links and knowledge of inner workings to be able to market it.
Remember, that although it is not wrong to set ambitious goals, it is always better to tackle them using smaller, smarter moves!
9. No business modeling
When an engineer wants to build a system, whether it is mechanical or electrical, he or she will often model the system first in a simulation and then test it out. This is done in order to know what kind of problems the system can face and whether it will work or not as per the designer’s intentions.
Similarly, there is a process many ignore involved in the validation of a business idea which is called business modeling.
In business modeling, every aspect of the business is covered, right from how the product or service is manufactured to how it will be delivered to the customer and finally how payment is made and the money re-invested to keep the whole loop going. Without a model, it will become very hard to determine any sort of plan for the business and thus chalking out a strategy will be based on brute force rather than strong effective planning.
10. No monetization plan
Surprisingly come as it may, many folks unfortunately dont have any kind of monetization plan for their product or service – and that is the case with the majority. This is why a large chunk of would be entrepreneurs are not even able to raise any seed money – they have no monetization plan for their product or service.
If you didn’t want to make any money from your product or service then you should have registered a non-profit company instead of a startup. Businesses are set up for making money, and there is a kind of entrepreneurship focused on solving social causes called “social entrepreneurship”. Entrepreneurs such as Zehra Ali of Ghonsla is an example. Her startup manufactures low cost insulation for undeserved markets.
It is vital that the entrepreneur figures out how he/she will make money from their product or service and whether or not it is too over priced or under priced to effectively compete.
Although, there are many more reasons that can cause a particular business idea to fail, this list covers the most critical ones. Using the above as a checklist and making sure that you have filtered your ideas through it makes it easier to be able to conceive a good business idea – It can be said with utmost certainty and confidence that any idea that passes the above criteria would be an idea worth investing in!
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