Top 10 Reasons Why Entrepreneurs Fail

•June 1, 2009 • Leave a Comment

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It is common knowledge that the majority of new business ventures fail within their first year of operation. There are literaly hundreds of reasons why these business ventures fail, and it is simple enough to search the Web for the most common reasons. Luckily I came about a great site that lists the top 10 reasons for the failure of businesses better than any other site that I researched. The site can be visited by clicking on this link: http://www.sparkplugging.com/freelance-parent/ten-reasons-businesses-fail/

1. Money: Whether you don’t have enough to adequetly fund a business, or you just do a poor job of managing it, money issues are one of the biggest downfalls of a small business.

2. Planning: Lack of planning is only second to proper money management with new businesses. Business owners need to plan for where, when, and how much to spend in order to ensure that the doors stay open.

3. Competion: Not only should you research your competition in the planning phase, but you also need to keep current once you’re up and running.

4. Pricing: One of the hardest parts of starting your own business is knowing how to set the best prices.

5. Marketing: Marketing is a complicated beast, and most of us are fumbling about in the dark when it comes to marketing our small businesses. If you aren’t able to hire a marketing professional, build some basic skills through your local library and online resources.

6. Inexperience: This is one problem that can bite the entrepreneur in so many ways. Perhaps you don’t have any experience in your chosen field. Obviously, this can hurt when you’re competing against businesses that have been around for years.

7. Sales: Many entrepreneurs are great with ideas but somewhat lacking in sales abilities. In your excitement, you may also have overestimated how much business you were really going to get in the early stages of operation.

8. Business Records: Not only do business records help you stay compliant with government regulations, but they can also help direct the future of your business by creating a clear picture of where you’ve been and where you are.

9. Dependence: Too often, a small business will become reliant on one or two customers. While having a steady customer is a great place to start your endeavor (it beats not having any customers, after all), it’s not enough to sustain you for long. It is vital that you continue reaching out to grow your customer base.

10. Burnout: Once you get to the point of engaging in your business, you may find yourself working ridiculously long hours in order to build momentum. In some cases, the burnout leads to “entrepreneur fatigue,” and you end up procrastinating or just not getting things done. Both mean the death of your small business.

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Defying the Recession to Launch a Biz

•June 1, 2009 • Leave a Comment
Defying the recession to launch a biz (Click on image to read article)

Defying the recession to launch a biz (Click on image to read article)

I really like this article because it starts out by accurately listing some of the most prominent problems a would-be entrepreneur would face in this incredibly tough economic climate. But it emphasizes a point that I couldn’t agree with more; the need to be bold and make the first move towards self-employment in a tough economic climate. A poor economic environment with high levels of layoffs has a tendency to spark new life into once novel and risky business ideas, as the desperation for income generation becomes ever more prevalent.

But according to Tim Kane, who is an economist who studies entrepreneurship at the Kauffman Institute, “Self-employment rises in recessions, but entrepreneurship doesn’t necessarily rise”. This distinction between self-employment and entrepreneurship is one that I had never given much thought to, as I, just like many others had always made the assumption that entrepreneurship and self-employment went hand-in-hand. The article corrects this erroneous assumption by stating, “Entrepreneurship, in the classic sense, means starting a venture that eventually grows into a bigger company. Many of those going solo now will never expand their business beyond a sole proprietorship”.

In my humble opinion, one of the greatest business related advice that you can ever receive can be found in this article. According to Sloan of the StartupNation, “You need to be conservative with spending, and aggressive as hell with marketing.” According to him, this will have the end result of building your business on a solid foundation, which can only help you further as the state of the faltering economy takes a turn for the better.

Ultimately, this article emphasizes the importance of sticking to the fundamentals of business: minimize spending and costs, maximize profits through extensive marketing and sales activity, and staying vigilant, no matter how tough the economic situation may be.

The Credit Crunch and Small Business

•June 1, 2009 • Leave a Comment
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The Credit Crunch and Small Business (Click on image to read article)

The Credit Crunch and Small Business” by John Tozzi is a relatively current article that accurately and concisely conveys the current state of the credit crunch and its effects on small businesses. According to Dayton bankruptcy and workout attorney John Rieser, “In Ohio, banks are refusing to renew lines of credit and calling in loans made to decades-old family businesses that are current on payments”. Working in the banking industry myself, I can understand where the banks are coming from. It is just so unfortunate that well established family businesses who are keeping their credit products current are losing their hard-earned credit due to the mistakes of the big banks.

The article raises an interesting point. According to the president of Sterling National Bank, John Millman, he sees “the current crisis for banking giants as an opportunity for regional banks like his.” Sterling National Bank deals in small business lending. He goes on to state, “When there’s disruption in the marketplace, that creates opportunity for banks like ours who have lots of liquidity”. The irony of this statement is in the fact that the failure of some of the major American banks, which has forced many small business to close down, has at the same time created lucrative opportunities for smaller entrepreneurial banks such as Sterling. It just goes to show you that the over-used economic statement, “wealth is transferred, not lost” holds true in this case.