When I was contemplating quitting employment to start a business, most of my friends advised me against it. They pointed out that most businesses don’t survive beyond two years.
I shared my feelings and fears with one of my business mentors and he told me that their advice was false. He explained that the statistics that are often quoted are from people who start business without adequate preparation.
He used the analogy of employment and asked me; “Looking at the high rate of unemployment and underemployment today, would you conclude that there is no need to go to college because you may end up jobless?
“If you select a good course and excel in it you are sure to enjoy the fruits of education. In the same way if you select a good business area in which you have competitive advantage, are well prepared and willing to invest all you have without reservation, then you will succeed.”
After that discussion I made up my mind to give it a shot and my only regret is that I should have started earlier. There are several causes of business failure but when all are analysed, they come to one main thing — lack of preparation.
The fear of failure which holds many people back is greatly reduced by good planning and having a mentor or someone to hold your hand as you navigate the startup challenges.
Business planning is taken for granted by many people when starting a business. Unless one is looking for funding or an investor it is tempting to skip a business plan. However, it is one of the most important tools that can significantly reduce chances of failure.
Some assume that a business plan is not necessary as a guide because many decisions are based on what is happening on the ground in real time. This may be true but does not render the process futile.
Writing out your plan helps you sharpen your vision: what problem are you trying to solve? Who are your target customers? What are your projected expenses, sales, and profitability?
Most new businesses typically fail because they run out of money and sales are low. These causes of failure can be reduced by two things: doing realistic projections of expenses and sales over a period of time and seeking advice, especially from those in your business line.
Do not do things alone or blindly. Talk to established entrepreneurs and ask their advice. Even with good planning it is easy to overlook some costs or exaggerate sales projections when starting a business but talking to people already in business will give you a clearer picture.