5 Causes that can ruin your business and how to avoid it
The new post-crisis era has managed to become an ecosystem generator of opportunities in key business projects. In this post we explain the five main causes why your business may fail, which are applicable whether you are an entrepreneur or a project manager in a large company.
The desire to build a new business project doesn’t always means success, and even less so on the first attempt. In fact, 50% of business projects fail before reaching their first birthday. Being an entrepreneur is exciting, but very hard. In any case, failure can be an opportunity for improvement and is often the seed of future success.
Among the main causes of early failure for business projects, we see:
- Deficit of conceptualization: First of all you must have clear vision of where you want to go and the four or five goals you want to achieve. Write them down, organize meetings with stakeholders and try to readapt that vision based on the feedback you receive. Often, the project begins to fail at its firt stage, because it is not sufficiently novel or different from what the market offers or because it is not possible to put the focus on the real needs of the potential clients. In order to avoid this, you have to involve your potential clients in this phase of the project. A useful tool is to employ the “design thinking” methodology.
- Lack of methodology: Remember that organizing the steps to follow and keeping track of them should be one of your main priorities. This way you can identify if expectations and deadlines are being met and where more resources are needed to complete them. In the modern management of projects there is a concept that stands out above the others: Agility. As Xavier Marcet says, “Agility is looking for shortcuts responsibly, using automatisms and simplifications that allow us to move faster without violating the essence that inspired the processes.” To achieve this you can use agile methodologies (Scrum, Kanban, DevOps, etc.).
- Team selection: To achieve your business goals, you must choose partners with interests and expectations aligned with yours. Remember that all the people who make up your team must have the responsibility to ensure that the project will be successful.
As a manager, the coordination of human capital should be your priority, because it will directly affect the result. To do this, don’t forget to use adequate levels of delegation, active listening and shared knowledge management with all members of your team. You can read more about this subject in our post ‘Five ideas to achieve a high-performance team’
- An underestimation of resources. It’s essential that the associated cost estimates be realistic from the outset. As you know, when the economic resources are depleted, the project stops. To prevent this, it is necessary to keep track of expenses and be very active in the search for financing. Remember that as sources of funding you can turn to the traditional credit market or turn to increasingly active alternative sources. In this sense, crowdleanding, crowdfunding or business angels can be very suitable formulas. And do not forget to ask for help from different public agencies promoting entrepreneurship or the capitalization of subsidies (such as unemployment).
- Not enough importance given to marketing and sales plan. Leveraging your marketing strategy solely on word-of-mouth may be sufficient during the first weeks or months, but there needs to be an efficient and innovative strategy to get more clients and ensure the project makes money. But you will need an efficient and innovative strategy to have more clients and guarantee the solvency of the project. Adopt an inbound marketing strategy as part of the project and you will ensure an adequate integration of the marketing plan into the project’s own strategy.
In short, just being creative with a great idea is no guarantee of success for the business project. Most of the time, business success depends on your personal skills. The good news is that skills can be developed, so the challenge is to consolidate the appropriate level and adapted to the business environment.
Currently is Deputy General Director at Asepeyo and vice-president of the Association for People Management and Development in Catalonia (Aedipe).
He’s also member of the Human Resources Advisory Board of EAE Business School, of the GVC-GAESCO Advisory Board, and chairs the Governing Board of Asepeyo Corporate University. He also serves on the Governing Board of APD and is a co-founder of WEKOW Business Community.