Statistically, most businesses fail. Even so, if we take business ideas, thеn their failure is even more significant since only a small fraction of the current business ideas became a real business.
Why do most of the business ideas fail?
Below are seven underlying reasons that, in practice, can not appear only one, they are likely to appear as a combination between two or more of them.
1. The idea is not a good idea.
One of the most common reasons for the failure of a business idea is the quality of the idea itself.
What do I mean by good or bad business ideas?
Good ideas are the ones that offer real value to potential customers. They are solutions that solve a problem or meet a particular need for those customers. Everything else is just an idea, without the potential to be converted into a successful business.
2. It’s not the right time for that business idea.
If the idea is not something that refers to the time in which we live, the chance of failure will be higher.
Each business idea must align with the existing market situation and current trends in that market. If it refers to something that could be valuable for a time before 10 or 20 years, or too forward in terms of timing and views of potential customers, it will fail.
3. The idea is excellent, but the market is not the right one.
A good idea, at the right time, also can fail if it refers to a market that is not the right for a particular business idea.
Each market has its specifics that will characterize a business idea. For example, a market where predominates warm climate and heat, will not accept winter coats.
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4. There are not enough potential customers for your business ideas.
If your idea is for the right market, but the market doesn’t guarantee that there will be enough people who will buy what you will sell, still there will be a chance for failure.
Great business ideas and the right market at the right time require a sufficient number of potential customers in that market to succeed.
5. You don’t have an appropriate business model for your business ideas.
Although your business ideas can have all the previous features, however, the poorly designed business model that doesn’t guarantee the profitability of the business can lead to the failure of your business idea.
You need to align and realign all other elements of your business to support your business idea if you want to ensure success. Think about relationships with your customers, distribution, cost structure, revenue strategies, prices, etc.
6. Entrepreneur as a reason for business ideas failure.
We have already examined the characteristics of the idea and future business as reasons for failures. Still, the entrepreneur, as the core of every business, also in many cases, is a reason for failure.
If an entrepreneur doesn’t have adequate knowledge to implement the business idea, doesn’t want to work in such an area, doesn’t have passion for the business, or is unable to implement it, the chance of failure will be more significant.
7. Lack of a real team
And of course, finally, implementation of your business ideas will need a real team of people who will contribute to success. The task of the team is appropriately turning entrepreneurial vision into reality.
