Reasons Why 90 Percent of Entrepreneurs’ Business Idea Fail


    Entrepreneurship has become the general dream work for both the employed and unemployed. Business opportunities are springing up everywhere. Enticing and calling you to make the leap of destiny into the wealth and affluence you’ve often dreamed about. It is also noticeable that 9 out of every 10 businesses collapse within 2 years of starting. Even the best of well-read gurus collapse in the face of numerous tests that would have heralded the enthronement of a celebrated businesses idea.

    Despite the numerous complaints about the challenges of building businesses in Nigeria, some are still transforming them into formidable forces of repute. It is there important to know the necessary factors that affect the entrepreneur, his idea, and his growing businesses.

    Not considering pests.

    Pests are crazy little creatures that cause immunity damage to food and materials in a house, shop or office. Ok, I am not talking about local pests, but in business, parlance means Political, Economic, Socio-Cultural and Technological environment; factors which are not unnecessarily within your control. Some other standard business books give their own academic variations.

    PESTLE / PESTEL : Political, Economic, Sociological, Technological, Legal, and Environmental.

    PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental and Demographic.

    STEEPLE : Social / Demographic, Technological, Economic, Environmental, Political, Legal, Ethical; and

    SLEPT : Social, Legal, Economic, Political, and Technological.

    This occupant’s external factors, which if not well considered, can suck the life out of any aspiring business. I remember Sokoa Chair Center (Nigeria) ‘s story in which they explained how the National Government’s ban on import almost ran them out of business. Her ability to navigate her business out of the murky waters of challenges became the foundation for the world-class enterprise she manages today.

    Political: political stability, security, freedom of press, regulation and Tax policy, and trade and tariff controls

    Economic: Stage of business cycle, economic growth, inflation and interest rates, unemployment and employee turn-over, impact of globalization (Global Financial Crises)

    Socio-Cultural: education and social mobility, market demand, public opinion, social attitudes trends,

    Technological Environment: Impact of emerging technologies, (automation, internet, e-commerce etc). Compaq recently launched a 24hr laptop battery, while DELL was busy putting finishing touches to launch their 16hr laptop battery, if DELL were a run off the mill company, they are grounded!

    Eating your investment, and not profit

    No sooner than a small business begins to level up in terms of income. Our wonderful entrepreneur begins to think of changing levels and status. He buys a new car, wardrobe, changes office space, all from the proceeds of the business which is actually the capital and not profits. When spending, it pays to separate personal funds from the business. The business pays you your money, and you must learn to live within that means. Problems occur when initial deposit is given for business only for our aspiring businessman goes to celebrate the huge success of his business.

    An entrepreneur seeking to build a business must understand the separation and marriage between business and personal life.

    Mismanaging reality

    When entrepreneurs venture out, they are usually motivated by a deep passion-either for themselves, their idea, getting rich, an opportunity or some other object of enthusiasm. Armed with such passion, they take risks and set sail against unexpected signs of reality.

    Yet passion tends to distort reality. The ability to succeed in business depends on the skill of adjusting the plans and dreams to the prevailing conditions. The idea that the challenges will bow to your plans and dreams will burn the drain the entrepreneur’s time, energy, and money pursuing an ill-defined endgame without a realistic path.

    Also, when the issues start pouring in expenses not turning into expected results. Potential customers are not that crazy about the product, missed deadlines, shortfalls in sales, – objectivity and reason become even further blurred by the mind-bending distractions of doubt, fear and disappointing responses to investors. Entrepreneurs are found to cave in under these kinds of pressures not knowing it is a bend towards the shining light of achievement.

    When personal failures affect businesses

    The personal faults, habits and failures of an entrepreneur are usually obvious. Especially, when he has a lot of people under him. Inability to manage funds, not being detailed and bad people management skills are some indirect factors responsible for the high rate of businesses’ failures.

    Entrepreneurs, like any pioneer, have their own lapses but must be able to manage them intensively. I know an entrepreneur who does not negotiate price but leaves it to his financial manager. This is because he never succeeds in negotiating a beneficial deal. Many successful entrepreneurs are in spite of themselves. The key is in working well, and enjoying, the full understanding of their weaknesses and mitigating the likely risks.

    Good at starting a business, bad at running them.

    This is very true of many entrepreneurs since most of them are powerful initiators, but terrible managers. Most are more interested in making money than it is to build businesses idea. Most technicians think because they understand their product or skill. They will automatically transform those ideas into business. Also, most of them have this great obligation to run their businesses and become a great manager.

    Working on a business and working in a business are two different worlds. While the entrepreneur works on his business, the technician works in the business. He feels if he cave in more, worked harder, profit will come. How untrue!

    These are some of the factors I have considered and will love if you ponder on them while thinking, planning, starting and managing your business.

    Do not forget also, out of the first 20 richest men in America, only 4 are employees.

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    Saminu Abass Ola who is popularly called ‘Mr. Possible‘ is a young motivational and inspirational speaker and writer, who is also the brain behind this wonderful blog. He is also passionate about Social Marketing. He believes in the abilities of others and tends to bring out the hidden potentials in people’s lives through his motivational articles and words of inspiration.