“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.” – Denis Waitley
Failure is a fundamental part of entrepreneurship.
Only half of new businesses survive the first five years. Move forward another five years, and two out of every three businesses have failed.
If you’re persistent, failure becomes just another lesson on the road to success. But in order to learn that lesson, you have to understand why you failed.
Or even better, you can learn why those who went before you failed and avoid their mistakes while minimizing your own.
So why do entrepreneurs fail?
That’s the question we sought to answer by seeking out 18 of the most successful entrepreneurs we know and asking them the following 3 questions:
What was the biggest failure of your career?
Why did you fail?
What did you learn from it?
We got some pretty incredibly responses, and we’re excited to share them with you today.
Let’s get started!
#1: Focusing On Things That Don’t Matter
One of the biggest mistakes new entrepreneurs make is getting distracted by things that don’t really matter, while ignoring the core pieces of building a business.
Business is ultimately just about sourcing something of value and then selling it to customers.
You can grow your Twitter account, take world-class headshots, and print a batch of stylish business cards, but at the end of the day, if you aren’t acquiring customers, you aren’t building a business.
#2: Partnering With People Who Have Similar Skillsets
Virtually every successful business person has a story to tell about how teamwork and networking propelled them forward in their careers. In fact, a survey by Salesforce found that 86% of respondents cited lack of team collaboration as a primary cause of company failures.
But as anyone who ever completed a group project in school can tell you, teamwork is only effective with the right teammates.
When you partner with the right people, you can leverage each other’s skillsets to grow more quickly and create something more valuable than you could ever accomplish alone. When you partner with the wrong people, things are guaranteed to go downhill fast.
When most people think of “bad partners”, they think of lazy, unmotivated, dishonest, or unfocused individuals, and while those qualities certainly make for a doomed partnership, sometimes the real cause of failure is much more subtle.
#3: Neglecting Your Customer Base To Chase A New Segment
Today’s global marketplace moves fast. To lead the way, you have to act quickly, adapt constantly, and persistently maintain customer growth.
Competition and innovation are rarely problems for entrepreneurs, but in the rush to the top, it can be easy to forget the fundamentals
One of the most devastating mistakes any business can make is neglecting its core customer base.
#4: Neglecting The Human Part of Business
There are a lot of intangible reasons to invest in your employees and facilitate a positive work environment. But even if we ignore the intangible and stick to the bottom line, companies with engaged employees see 233% greater customer loyalty and a 26% greater annual increase in revenue.
Simply put, your people are important.
#5: Failing To Anticipate Future Costs
Different business models have different needs. While certain models allow for slow, steady, organic growth, others require that you hit a certain critical threshold within a short timeframe.
Understanding your business model and your critical milestones are crucial to success. Failure to understand where you are, where you’re going, and what you need to get there can stagnate or even cripple your growth.
#6: Skipping Due Diligence When Hiring Key Players
Hiring will make or break your business. It’s not a matter of if but when.
You can get away with hiring a bad freelancer from time to time, but when it comes to key employees or major project outsourcing, getting the right people makes all the difference
While most entrepreneurs understand in this, in a fast-paced market, it can be tempting to cut corners, skip due diligence, and rush to execute on new ideas. This is especially true for newer entrepreneurs, who tend to severely underestimate the time and monetary cost of turning their ideas into reality.
#7: Neglecting Core Relationships During A Busy Season
There’s more to life than money, and while succeeding as an entrepreneur often requires sacrifices, the core relationships in your life shouldn’t be counted among those sacrifices.
Nurturing your relationships through busy seasons is a book unto itself, but ultimately, it’s all about keeping open lines of communication, taking personal responsibility for yourself, and maintaining awareness of the needs of those around you.
#8: Dividing Focus Between Too Many Projects
It’s very easy for modern entrepreneurs to succeed. There are a million ways to win, and you can find exact, proven strategies all over the web, many of them completely free.
Sometimes, however, this access to limitless information can paralyze us or cause us to divide our focus, jumping from one project to the next rather than focusing on one thing at a time
#9: Holding Back Instead Of Going All In
There’s a time to test the waters and time to dive in head first.
Many entrepreneur begin their journey while they are still fulltime employees. For these individuals, it’s good to identify a product/market fit, do some due diligence, and land a client or two to before ramping things up. But at some point after you’ve validated your idea, it’s time to lose the safety net and pull the trigger.
#10: Spending Money Carelessly Instead of Investing Back Into The Business
Let’s face it, we all love spending money. That’s a big part of what being a successful entrepreneur is all about: living the type of lifestyle we couldn’t before.
That said, entrepreneurship is usually a marathon rather than a sprint. One of the smartest things you can do with early wins in your business is invest that money back into the business.
#11: Following The Advice Of People Who Haven’t “Done It”
Sage advice and experienced mentoring can make all the difference for your business, but as soon as you experience some success, everyone and their mother will have something to say about how you should do things.
#12: Ignoring The Advice Of People Who HAVE Done It
While you should always be careful about who you allow to influence your business, it’s easy to waste time trying to reinvent the wheel.
Sometimes the best thing you can do is follow the exact steps of those who have gone before you and accomplished what you are wanting to accomplish. As Pablo Picasso once said, “Learn the rules like a pro so you can break them like an artist.”
#13: Getting Complacent And Taking Shortcuts
As popularized by Tim Ferriss’ bestseller, The 4-Hour Workweek, the web provides modern entrepreneurs with relatively easy access to business automation. If you know what you’re doing, it’s not difficult to build a profitable business quickly and then put it on autopilot.
When things are difficult, it pushes us to work hard and do things the right way. But when things get easy, we are often tempted to become complacent and start taking shortcuts.
#14: Wasting Time On Small Thinking
While most of the failures we deal with today involve some form of backward motion, sometimes failure is more about a lack of forward motion.
For example, what is worse? Losing 1 million Naira overnight or spending 2 years underperforming by 200k per month?
#15: Losing A Big Piece Of Recurring Publicity
There’s nothing worse than when you’ve fought hard to take a big step forward in your career and then you get knocked right back.
Responding to and learning from setbacks is what entrepreneurship is all about. There’s no avoiding this. You can either hop right back up or you can waste time bemoaning your circumstances.
#16: Failing To Delegate
Many entrepreneurs begin as solopreneurs, but at some point, if you want to grow and scale, you have to begin building a team.
#17: Trying To Be A Jack Of All Trades
When you are just starting out, it can be tempting to look for opportunities anywhere you can find them, and in some cases, saying “Yes” to everything can be beneficial.
But only for a season. Once you begin gaining momentum, it’s important to focus and develop actual expertise in one area versus trying to be a jack of all trades.
#18: Focusing On Minutia
There are a million things that can keep us busy as entrepreneurs, but only a handful of those activities will be the driving factors behind our success.
Identifying the “One Thing” we need to pursue and focusing on it will accelerate our success.
Conclusion: What’s Been Your Biggest Fail?
Thanks for reading this discussion of why so many entrepreneurs fail.
Our plan is to update this post in the future, and we’d love to include you. Just jump down to the comments below and tell us about your biggest failure as an entrepreneur.