The concept of entrepreneurship is discussed in one way or another—all day every day. Successful entrepreneurs are frequently mentioned in the press all over the world.
Entrepreneurship spawned the popular television series Shark Tank. Business schools across the country have annual business plan competitions. Colleges and universities are offering courses on entrepreneurship, and some even have departments of entrepreneurship. Online MBA programs on entrepreneurship are also available.
The internet has provided a wonderful opportunity for entrepreneurs to develop one app that is better than the last one. Jeff Bezos has become the richest man in the world based upon his entrepreneurial capabilities.
However, there are many more entrepreneurs that struggle and fail than those that are successful. Let’s explore the typical entrepreneur’s journey.
Classic entrepreneurs like Bezos, Steve Jobs, Elon Musk, Ralph Lauren and many others have seen the future and have developed products that customers did not realize they needed until they saw them. The fundamental basis for entrepreneurship is a faster, better and/or cheaper solution to a problem.
Today we cannot imagine life without our smart phone. Pretty soon you will wonder why you did not get an electric car earlier. Smart cameras are watching your every move and you can see what’s happening at home, at the child care center and elsewhere remotely. Your car can now detect movements in front, back and on each side as you are driving and alert you—or even automatically maneuver to avoid accidents.
A lot of people have ideas but lack the entrepreneurial ability to explore them. Others with similar ideas are would-be entrepreneurs and actually try to convert their ideas into commercially viable businesses. You can see many of these people on Shark Tank and also view the disappointments many have because they have not planned properly, or at all.
This gets to the root cause of failure in their entrepreneurial journey. A lot of would-be entrepreneurs just don’t understand business. You can have a great idea but if customers don’t need it, don’t get it or can’t afford it, how good it is doesn’t matter. This obviously should be the first fundamental lesson—whatever you are proposing as a solution must have a unique value proposition that customers can easily understand and value.
Secondly, you have to be able to explain your unique value proposition clearly and succinctly so that it engages and educates prospective customers quickly as a faster, better and/or cheaper alternative to what they currently are using.
Success with any new concept requires an in depth understanding of marketing and changing customer requirements, as well as knowledge about similar competitive offerings. This kind of research is often the root cause of failure for many would-be entrepreneurs—and frequently highlighted by the Sharks on Shark Tank.
Lastly, money is the other major reason would-be entrepreneurs fail. You would think that anyone starting a new business would have a plan, right? Wrong! Most entrepreneurs start their new ventures without doing a through break-even analysis for their first year of operations and including that important information in a business plan.
The result is that most new businesses fail in the first 12 to 18 months because they run out of money.
Lesson: Nobody plans to fail…they just fail to plan.