More people are leaving their jobs in the post-pandemic era than ever before, so much so that the phenomenon has been dubbed the Great Resignation. Many are using this opportunity to change the way they work, whether in starting a business or pursuing alternative employment.
As Americans, we’ve always valued freedom as a right; the freedom to blaze a path of our own doing and of our own design. Starting a business is rooted in a desire to pioneer and achieve what most would not even consider trying.
No path fulfills that sense of freedom like owning a business. At a fundamental level, business ownership pays the bills and offers the chance for upward mobility. But it offers much more than monetary return.
The entrepreneur is fulfilling a sense of self-expression and pursuing their work with a sense of passion that a “job” just can’t offer. With every little — or big — success, the sense of achievement, validation, and pride is like no other. Business ownership for most entrepreneurs is nothing less than an extension of one’s identity.
However, starting a business is not for the faint of heart. While it’s true that most new businesses fail, it is within our power to shift the odds in our favor by starting with a solid foundation. Before launching a business, pay special attention to the most common reasons for failure:
Lack of funding
Before starting a business, you must develop a set of assumptions based on research that allows you to model and prognosticate its likely financial performance. The financial model should be built on what you believe will be the amount of capital needed to support it until it breaks even.
Be as objective as you can be and even err on the conservative side. It is likely that it will take longer than you predict to even get to a break-even point, and it will cost more.
Business idea lacked market opportunity
It is natural for an entrepreneur to be passionate about their idea, but it is critical to do your homework to ensure the opportunity is viable. Research the market to determine if there is true demand. Present the cost-benefit of what you intend to sell during any focus studies so you can be sure people are willing to pay the required price to get the desired value.
Even the greatest products have a threshold at which price sensitivity becomes the enemy. And make sure to consider not only direct competition, but indirect competition as well.
Failure to track key performance indicators
Before you launch your business, make sure your overarching goal or goals are clearly defined. Create a set of key performance metrics and milestones you believe you should hit if the business is truly performing the way you envisioned. Once you’ve launched your business, check the metrics regularly. If your actual metrics fall short of your projected metrics, adjust your plan, your execution, or both.