entrepreneur failure

The market research firm CB Insights recently did a post-mortem on 135 failed startups. As part of that effort, they asked the people involved in each startup why they thought it had failed.

The study surfaced twenty reasons, with most startups citing multiple reasons. The reasons cited, however, fall into seven categories, each consisting of a specific emotional or intellectual limitation:

1. Arrogance (85%)

Successful entrepreneurs are always overconfident and that’s a good thing. Without overconfidence, nobody would ever buck the odds to start their own business.

Overconfidence turns into arrogance, though, when you’re so sure of the wonderfulness of your ideas that you don’t bother to take the pulse of the market. Arrogance causes startups to fail through:

No Market Need: 47%
Product Mis-Timed: 13%
Need or Lack of Business Model: 17%
Not Using Network/Advisors: 8%

Fix: Temper your overconfidence with the humility to accept criticism without becoming defensive.

2. Shortsightedness (55%)

Startups can’t afford “paralysis by analysis” and it’s simple good sense to realize that can’t anticipate everything in an undertaking that inherently involves the unknown.

That being said, there’s truth in the corny old quote “failing to plan is planning to fail.” Shortsightedness causes startups to fail through:

Running Out of Cash: 29%
Pricing/Cost Issues: 18%
No Financing/Investor Interest: 8%

Fix: Maintain some reserves so that you don’t crash and burn the first time you hit a speed bump.

3. Hubris (47%)

All too many entrepreneurs believe that “if you build a better mousetrap the world will beat a path to your door.” That’s classic engineering hubris that results in treating sales and marketing as if they were of secondary importance.

Sadly, though, the history of business is full of excellent products have failed due to weak marketing or poorly-planned sales efforts. Hubris causes startups to fail through:

Getting Outcompeted: 19%
Poor Marketing: 14%
Ignoring Customers: 14%

Fix: Pay as much attention to hiring marketers and salespeople as you do to hiring your engineers.

4. Egotism (36%)

Startups require talented, experienced and energized employees who have specialized knowledge.

However, building a business is always a team effort and all it takes is one prima-donna for a team to fall flat on its collective face. Egotism causes startups to fail through:

Not the Right Team: 23%
Disharmony on Team/Investors: 13%

Fix: Read the newly-published book Team Genius, which contains team-building rules based upon actual scientific research.

5. Sloppiness (34%)

When big companies do a slipshod job, they can float on their brand reputation or throw money at the problem.

Entrepreneurs must be meticulous and make certain that nothing falls through the cracks. Remember: “genius is an infinite capacity for taking pains.” Sloppiness causes startups to fail through:

Poor Product: 17%
Bad Location: 9%
Legal Challenges: 8%

Fix: If you tend to be a “big picture” person, partner with somebody who’s detail-oriented.

Related Post: Failure – an inevitable part of success

6. Imbalance (30%)

Thousands of articles and books have been published about the lack of work/life balance creates stress and leads to bad decisions. And yet many startups try to operate in round-the-clock crunch mode. Imbalance causes startups to fail through:

Loss of Focus: 13%
Lack of Passion: 9%
Burning Out: 8%

Fix: Exercise or meditate every day, turn your phone off when you go to bed, eat right, etc. You know the drill; now just go ahead and do it.

7. Inflexibility (17%)

The most important advantage that a startup has over an established firm is freedom to be nimble.

However, there’s a natural human tendency to continue to pursue a course of action after it’s been proven unworkable. Inflexibility causes startups to fail through:

Pivot gone bad: 10%
Failure to Pivot: 7%

Fix: Plan from the start that you’ll need, at some point, to radically change direction. Welcome rather than resist the inevitable change when it comes.

Image credit: Emptyengine

Achieving your goals and dreams is not always easy. This is especially true when it comes to building a business. Building a business is one of the hardest things anyone can do. It takes years of absolute dedication and effort to truly make a business thrive. The whole process of starting a business is physically, emotionally, and financially draining. And oftentimes we invest all that energy just to see the business we built fail. And that happens quite a bit. According to the Wall St. Journal, 3 out of 4 ventured-backed startups fail. And that’s just venture-backed startups. Bootstrapped startups, with no starting capital, have a higher failure rate. It’s a difficult thing to face for startup founders; seeing something you’ve put your blood, sweat, and tears into crumble. So the question for founders of failed startups is—how do you stay motivated keep going after the failure of your startup? Well here are four things to keep in mind to keep your spirit and motivation up after flop of your startup.

Take Comfort in the Fact that Most Startups Fail

Those who start businesses are extremely smart and talented (for the most part). But even with the talent and intelligence, you cannot get away from the nature of startup heartache. As a founder, you should take comfort in the fact that most startups do not succeed. The reasons for a business failing is plenty and many of today’s top entrepreneurs have emerged from previous startup flops. Andrew Mason, the founder of Groupon, actually founded The Point prior to his successful multi-billion dollar coupon site. Never heard of The Point? That’s because it never took off. Bill Gates, prior to founding Microsoft, was also the founder of the now-defunct Traf-O-Data. Sir Philip Green, the billionaire British businessman, went through at least three startup failures before making his first million in his thirties. So as you can see, startup failure is not an exception, it is almost a rule. Failure with your initial startup is almost a rite of passage for startup success. So take comfort in that fact. Take comfort knowing that even the brightest and richest have failed. Knowing that will give you the motivation to move on and try again. Because, as the famous Albert Einstein would say, “you never fail until you stop trying.”

Also read: 10 Reasons why Entrepreneurship is awesome

Have your End Goal in Mind

I’m sure one of your biggest goals was to make your startup a smashing success. But I want you to think bigger. Reach down deep to think about your ultimate goal. What is the purpose of starting your business? Why did you want to build a successful startup? Was it to provide a valuable product to society? Was it to support your dream lifestyle? Was it to give your family and loved ones the life they have always wanted? The startup isn’t the goal itself; it is a means to getting to the goal. So if one startup doesn’t work out, there are plenty of other opportunities for you to succeed and achieve your goals. Looking at the big picture and having the end goal in mind is an important element to keeping your motivation after startup failure. Without seeing the big picture and the end goal, you will be knocked down by every little mishap.

Also read: 8 Things Entrepreneurial People Do Differently

Giving Up is for the Weak

Being a business owner is a whirlwind adventure. You will feel the ultimate highs and the ultimate lows. It takes emotional resilience and grit to be able to be a successful business owner. And if you are planning on giving up after failing a few times, then you are not meant to be a business owner. So if you want to build a successful business, you have to be willing shrug off the lows. You have to be resilient and keep going. Otherwise, startup life is not for you. Essentially, giving up just means you don’t want it bad enough. And when you don’t want it bad enough, you will not survive in the competitive culture of business. You have to want to succeed enough to want to pick yourself up after momentous failure and embarrassment. Just like the hip hop preacher Eric Thomas said, “When you want to be successful as much as you want to breathe, then you’ll be successful.” So do you want success as bad as you want to breathe?

Experience is the Best Teacher

Your startup’s demise is temporal and momentary. It does not define your whole life and it does not mean you are a failure. Rather you should take the experience learned from the failure of your startup to do better the next time around. You can read as many books as you want or go to a thousand seminars; nothing can teach you as much about business and life as experience itself. Learning from the school of hard knocks and low blows is the ultimate vehicle of learning. So let the failure of your startup be your teacher and learn from the mistakes made during your failed startup to do better the next time around. And remember, many entrepreneurs failed at multiple businesses before finding a successful and thriving business. So take that experience and make something useful out of it. Let that experience motivate you to do better the next time. And trust me, you will.

Putting Everything in Perspective

It hurts to see something you invested so much time, money, and energy into just crumble. It hurts a lot. Because you have so much invested, it can hurt much more than losing a job or even losing a house. But in the end, you need to put everything in perspective and take a look at the bigger picture. Looking at the bigger picture and putting everything in perspective means that the chance of you succeeding with your first couple of startups is small. And just because your first startup flopped does not mean that you have failed. If you are smart enough, tenacious enough, and gritty enough, you will eventually build a successful business. You just need to keep motivated and keep going. You only fail if you stop trying.

Conclusion

Instead of being disappointed that your startup has failed, and start writing a new resume so you can get a job, think twice and learn from failure. Starting a business is not always easy, and it requires patience and a lot of experience.

Also read: The 15 Characteristics of Effective Entrepreneurs

This article was originally published in under30ceo.com

Image Credit: www.entrepreneur.com

Tag: entrepreneur failure

The 7 real reasons why startups fail