Statistics have shown that many first time business owners fail in their first attempt. While there are many firs-time successful business owners, the probability that your first business is going to fail is very high. That is why it is good to prepare for such eventuality if you understand the WHY so you can avoid the likely pitfalls of first-time business ownership.
Some of the biggest names in the business community, from Bill Gates to Walt Disney, and even Steve Jobs, failed in their first businesses before evolving into the super successes they did become because they learned from their failures and took correction.
Below are some reasons your first business may fail
1 You lack experience
As a first timer in business, you may likely want to gamble through the process if you don’t have a mentor who has failed his way-up. Experience gives birth to skills and knowledge, therefore you need to latch on the experience of others who are successful in your chosen field.
2 You are not bold enough to take risks
First time entrepreneur are more likely to be risk-shy than experienced ones. They are more conservative than their experienced counterparts. This is partially due to first-time entrepreneurs’ lack of confidence, which stems from a lack of experience. It’s also partially due to the fact that first-timers have access to fewer resources than their more experienced counterparts.
And that means they’re less capable of tolerating financial instability, and have more riding on the success of the business. The conservative route can potentially lead to success, but risk-taking sets you apart from your competitors.
3. You don’t have enough contacts.
Even if you’re outgoing, it’s likely that you won’t have a very large network when you start your first business, and your professional network will play a major role in the ultimate success of your business. Your contacts will provide you with potential clients, partnerships, suppliers and even employees, and if you’re lucky, maybe even investors or mentors who can give you advice.
Without a strong network in place, you’ll miss out on these benefits and lag behind competitors who have stronger connections.
4. Your instincts are untested.
When properly developed, your instincts can actually be a valuable tool for strategizing and decision-making. “Good” instincts are usually the product of experience; grandmaster chess players can “feel” which moves are correct because they’ve played thousands of games and can read the board almost unconsciously.
In the same way, seasoned entrepreneurs can sense which options are better than others, and have a stronger likelihood of leading their respective businesses in the right direction.
5. You’re too excited.
When you start your first business, you’re nervous and excited — but that enthusiasm may end up being a hindrance. If you’re too excited, you may get pulled in too many different directions at once, chasing different ideas simultaneously rather than focusing on the single items that your company needs most.
You may also invest in expansion and growth too early, or overspend your resources in a big push to get to market faster.
Finally, failure breeds success while the fear of failure makes you a loser. Go ahead and fail your way up, take calculated risks and shoot for the moon, even when you miss, you will land among the stars.