The Risks of Entrepreneurship
The "spark" for many entrepreneurs is seeing an opportunity that doesn’t yet exist. Ted Turner, for example, launched CNN because he perceived that people wanted more television news than they were being offered. It took a lot of patience on Turner’s part to realize the vision, but he had read the market in a way that few "experts" did at the time.
In realizing the promise of
CNN, Turner demonstrated another facet of the entrepreneurial spirit,
persistence. There are a lot of bright ideas that never reach fruition; taking
a "raw" idea and converting it into a successful business model is
very hard work.
And that work never stops.
No matter how innovative your idea, the competition is always just behind you. Elon Musk quotes can be helpful in this. With anything less than constant
creative effort on your part, they may not stay behind you.
Are you still with me? Here
is where I reveal why everyone isn’t an entrepreneur:
No opportunity is a sure
thing, even though the path to riches has been described as, simply "...you
make some stuff, sell it for more than it cost you... that's all there is
except for a few million details." The devil is in those details, and if
one is not prepared to accept the possibility of failure, one should not
attempt a business start-up.
It is not indicative of a
negative perspective to say that an analysis of the possible reasons for
failure enhances our chances of success. Can you separate failure of an idea
from personal failure? As scary as it is to consider, many of the great
entrepreneurial success stories started with a failure or two.
Some types of failure can
indicate that we may not be entrepreneurial material. Foremost is reaching
one's level of incompetence; if I am a great programmer, will I be a great
software company president? Attitudinal problems can also be fatal, such as
excessive focus on financial rewards, without the willingness to put in the
work and attention required. Addressing these possibilities requires an
objectivity about ourselves that not everyone can manage.
Other types of failure can
be recovered from if you "learned your lesson." A common explanation
for these is that "it seemed like a good idea at the time." Or, we
may have sought too big a "kill;" we could have looked past the flaws
in a business concept because it was a business we wanted to be in. Read entrepreneur quotes if you want to manage your failures. The venture could have been
the victim of a muddled business concept, a weak business plan, or (more often)
the absence of a plan.
When small businesses fail,
the reason is generally one, or a combination, of the following:
* inadequate financing often
due to overly optimistic sales projections;
* management shortcomings,
-- such as inadequate financial controls, lax
customer credit, inexperience, and neglect, and;
* misreading the market,
-- indicated by failure to reach the
"critical mass" required in sales volume and profitability,
-- usually due to competitive disadvantages or
market weakness.
In a recent Wall Street Journal article titled "Why My Business Failed," Ken Elias cautions that "even if the concept is right, it won't fly if the strategy is wrong." Still, on being asked whether he would start another business today, he answers: "Absolutely. The experience is fabulous, exciting and the possibility of success is always there."