Business Startup Success - Why Do So Many New Businesses Fail?

There's certainly no shortage of people wanting toand of itself, it does not guarantee success. I've met
start their own business, and even more so in today'smany Entrepreneurs who bring the most incredible
economy. There have always been a certain group ofenergy, passion, and enthusiasm to their endeavors.
people that wanted to "go out on their own" and beThey believe they can overcome any obstacle
their own boss. In good economic times or bad, thisthrough the shear strength of their will. All impressive
group should be considered the Core Entrepreneur.beliefs, but these same Entrepreneurs didn't last long in
They have a certain passion and fire in their belly thatbusiness.
propels them forward, and for them, owning their ownSo what does make a business successful, and why
business is the only possible outcome--they simplydo so many businesses fail in the first 12 months of
refuse to work for someone else. In fact, as theexistence? While there certainly isn't one magical thing
saying goes, they work 80 hours per week to avoid athat you can do to guarantee that your business will
40-hour per work job.succeed, there are many things you could do (or not
Interestingly, as the economy worsened, and as thedo) to virtually ensure your business will fail.
social "contract" with large corporations disappeared, aThe number one thing you can do to ensure that your
new class emerged of "reluctant" Entrepreneurs whobusiness has a chance to succeed is to start with a
have been forced to conclude that they now want tosolid strategic framework, or foundation. Many
own their own business. They might have snubbedwould-be Entrepreneurs believe that I'm talking about a
their noses at it before, from the comfort and statusbusiness plan. Sadly, most Entrepreneurs do not have
of their prestigious corporate jobs, but now that theya written (let along well thought out) business plan. And
are unemployed with no remaining severancewhile I believe business plans are critically important, the
package, they have become more enthusiastic aboutstrategic foundation I'm talking about here should
going out on their own and starting a business.happen BEFORE the business plan. In other words, this
Well guess what? Starting a new business iswork needs to be done FIRST.
awesome! In fact, it's more than awesome. It could beSo many Entrepreneurs get an exciting idea in their
considered one of the great adventures of a lifetime.head, and they immediately start executing against this
Perhaps a part of the American Dream. But justidea. They conclude that because they like their idea,
because it's awesome doesn't mean it's easy, and itthat it must be a great idea, and that everyone will like
doesn't mean the business will succeed. Take it fromit and pay for it. But they are skipping the most critical
me--someone who has "been there and donestrategic steps in the process--steps that are tried and
that"--just because you want to be an Entrepreneurtrue and established as the best practices of the
and start your own business doesn't mean you should,biggest and most successful companies in the world.
and if you do, then there are certain rules that must beAnd that is, to evaluate the idea within an established
obeyed.framework that determines:
One of my favorite sayings is that "Just because you
want to be an Entrepreneur doesn't free you from the1. Who is the Target Customer for this idea?
laws of business." You are subject to the same laws2. What problem is being solved and what unmet need
of supply and demand, of economics and pricing, etc.is being addressed by this idea, specifically for the
as the big companies. It's funny (not in a laughing sortTarget Customer?
of way), but I've met so many would-be or aspiring3. Testing the idea as a concept with the Target
Entrepreneurs who believe that because they are soCustomer to determine viability of the idea.
passionate about what they want to do, they simplyFor some, just identifying these 3 steps is enough to
cannot fail. Many of them have a framed print on theirget them to change their thinking and get them heading
wall that usually depicts some inspiring image like a baldin the right direction. Others may need a bit more help
eagle, or a ship at sea, and the caption: "Belief fuelsand guidance, and I'll write more about each specific
passion, and passion rarely fails."step later. Of course that are many other steps to do,
Well guess what? Passion does fail. Let me be veryand this short article can't address them all, but the
clear--passion is a wonderful human emotion: it drivesbottom line is that these steps form the foundation of
us, and fuels us, and has been the cause of manya strategic framework from which a successful
great accomplishments throughout history. But passionbusiness can be developed that can minimize the risks
DOES NOT make a business successful. It can be aof failure.
great catalyst or enabler of business success, but in