It’s the age of the internet startup. There are so many people trying their hands at making it online that it can be dizzying at times. Of course, when there are so many new ideas being tried out all the time that means there have to be failures as well as successes. In fact, the common wisdom has it that there are nine that don’t make it for every 1 success.
Naturally, you want to belong to the latter, not the former. The first step towards doing exactly that is understanding the ways that you can fail. There are a lot of them. Here we’re going to explore the biggest problems that you very well might run into. In that way, you can be prepared. For – as Louis Pasteur said – opportunity favors the prepared mind.
1. You don’t have enough experience
There is a common misconception in the world that information is knowledge. If you just read enough, then you’ll become wise. That isn’t true. Some things can be understood perfectly well intellectually and then still go horribly wrong because you don’t get them on an emotional level. And that means that you make mistakes that other people, who know more, might well have avoided.
There is really only one thing you can do to prevent this and that is to get that experience. Yes, that does mean you might very well fail in your first attempt. That’s okay, though. Failing is not the same as being a failure. In fact, most people fail their way to success, by using their failures to learn, calibrate and advance.
2. You don’t know enough people
The quote ‘it’s not what you know but who you know’ might be very cynical, but that doesn’t make it any less true. Often, knowing the right person will allow you to learn a lesson before it takes you down, get you access to resources that you otherwise might not have access to, or warn you about a problem before it becomes insurmountable.
In truth, to be successful as a business, you’ll need to know a lot of people. The thing is, often the only way you can get to know them is by running a business.
Of course, you can add fuel to the fire by going to functions and events where there are other people you can get to know. That’s always a good idea. For the rest, it’s just a matter of meeting and greeting.
The solution here is a lot like what I mentioned above. You have to wade in, try your luck and keep in touch with the people that you meet along the way. You never know when somebody is going to be useful to you, so make sure you stay connected and remember who they are.
3. You aren’t as exceptional as you think
We see the world from our own perspective and not other people’s. For that reason, we often believe that the ideas we have are better and more unique than what other people are trying. Unfortunately, that’s rarely true. It is truly rare to come up with an idea that is truly unique.
For example, you’d think something like writing essays for students would be a rare thing, but if you check out some reviews on the Internet, you’ll see there is a lot of competition already.
And when an idea isn’t unique, then you’ve got a lot of competition to deal with. Some of that competition might have a better idea than you. Some won’t be, but will be more established and will, therefore, have advantages as we prefer what we know, which is something referred to as the ‘mere exposure effect’ in psychology.
And that can mean that despite your passion and your best efforts, your business can still fail.
The way to counteract this is to do the right market research before you actually launch your idea. Know who your competition is. Know what edge they’ve got and how established they are. Only then can you make the moves to stand out.
4. You’re too passionate
A lot of people believe they should do what they’re passionate about. That’s not actually always the case. Passion can be a real problem, as it means that you lead with your heart instead of with your head. That can mean that you don’t have the right business plan, that you take on far more than you can possibly handle and that you leap before you look.
Nobody ever says ‘my business failed before I knew too much’. So be sure that you do the research and make sure that just because you’re passionate about it, you’re doing something.
And remember, if you’re incredibly passionate about something, then chances are other people will be passionate about it as well. Like food. Everybody is always starting restaurants, when the return on them isn’t actually that good.
So check your head with your heart and choose something that might not make you as passionate, but will give you much better chances of success.
5. Not taking enough risk
When you’re small you’ve got a lot of disadvantages. For example, you don’t have as much financial depth. Bad luck will hit you harder as you generally don’t have as many streams of income. And if a competitor decides you’re getting too uppity, they can move in and crush you by running at a loss for a time – something they can afford but you can’t.
To avoid that, you often need to push and push hard. That means taking well-considered risks.
A lot of new businesses are afraid of that. And with good reason. They are inexperienced and don’t know what risks to take. That means they might well turn down the good opportunities and take up the bad ones. And yet, you have to take that risk in order to get out of the early day danger zone.
The best way to do so is to find other people with more experience and ask them for advice. If that’s not possible, do a rigid risk-reward analysis (how many percent chance does this have to succeed, how much money am I investing and how much are the returns).
When you’re making an analysis of how like a venture is to succeed, by incredibly cynical. This is important as you’ve got a lot of natural biases to overcome. Only if the risk still has positive returns then, should you take it.
That does make for some depressing reading, doesn’t it? Relax, take a breath. It isn’t as bad as you think. The red line here is that even though your first attempt might fail, that doesn’t mean that you’ve failed. You’ll have learned a lot of valuable lessons that will make you far more likely to succeed on the second run through.
That’s what you focus on. Don’t invest everything in your first venture. Have a fallback plan in case the project fails. And try to learn as much as you can. Then, if you are one of those 9 that don’t make it, you can try again. The second time, those odds are going to be a whole lot better.
Don’t forget about these reasons and your startup will rise one day!