The Foundation for Success Is Learning From Our Failures Uncorrected errors of judgment cause more business failures than lack of financing or market upheaval.
By Thomas White Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Each day we are provided with list of things we can do to be successful as entrepreneurs. We are given examples of very successful entrepreneurs who exemplify these traits. Then why is it that most people who embark on an entrepreneurial path don't succeed?
We ignore how we learn as humans. Our greatest lessons come from our mistakes and failures. In fact, if someone says he or she is a very successful entrepreneur and has never failed, you know they are lying.
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Having trained many entrepreneurs, I know the key for those who succeed is their ability to honestly appraise themselves. They reflect on the outcomes of their decisions and act with discipline to correct errors. One of the measures of entrepreneurial success is when a business is still around after four years. Here are some facts on startups:
- 25 percent fail in the first year.
- 36 percent have failed after the second year.
- 44 percent have failed after the third year.
The most common reasons for these failures are Incompetence of the owner, going into business for the wrong reason and lack of clear focus. Note that rarely do startups fail because there is too little capital available. So what can you learn from this?
1. If you are going to start a business, get clear about the skills needed to run a successful company in that field. After the financial crisis of 2008, there was a flood of people staring new business because they lost their jobs. One of the common misunderstandings I hear is, "How hard could it be to run a business anyway?" It's not necessarily hard, it's just not what you think.
Related: Richard Branson on the Secret to Success: Failure.
2. Now, make a clear assessment of your level of competence in the areas needed for success. This is critical. You shouldn't trust just your own perspective. Get three or more advisors who are successful business people and ask them to evaluate you. It may be uncomfortable but it may save your new business.
3. Determine what areas you are going to work on to improve your competence and what areas you are going to find someone else to provide the expertise. You don't have to have all the answers. Maybe you are great in sales but not good at accounting. Then you need to make sure you hire an accountant who gives you strong feedback and accepts accountability for this area.
4. Develop a monthly practice of reconciliation of your business. Lay out your assumptions at the beginning of the month for sales, marketing, products, people and finance. When the month is over, see what you accomplished and the lessons learned. Then incorporate this learning into the assumptions for next month.
The road to success isn't hard. It requires discipline and honesty. If you rigorously practice these simple steps, your chance of success with a new business will be greatly enhanced.
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