Why Start up Businesses Fail? Top 3 reasons from 3 top business mentors

I asked 3 leading start-up business mentors to tell me the top 3 reasons why they think start-up businesses fail.  I will straight away give you the reasons provided by each mentor,  as I haven’t however requested permission to identify them as the providers of this information I will simply identify them as Mentors A, B and C, note that between them, these mentors have over 40 years of mentoring experience. Fasten your seat belts.

Mentor A –

  • Lack of Planning
  • Lack of Passion and Drive
  • Lack of Experience

Mentor B-

  • Lack of planning
  • Lack of resources (not just financial)
  • Lack of persistence

Mentor C-

  • Poorly thought through decision to leave employment and get into business
  • No written business plan or financial projections
  • Unprofitable pricing structure (You need to calculate your break-even price and NEVER charge below this)

I am amazed at the common trend of ‘planning’, otherwise known as business planning or in it’s most simplistic format, a simple business plan is on thread that cuts across

I am amazed at the common trend of ‘planning’, otherwise known as business planning or in it’s most simplistic format, a simple business plan is on thread that cuts across. And I know how many aspiring business people might not generally like what they consider paperwork; but hey, that is the reason why several of the folks who have tried before us failed.

I have a documented business plan, but following this feedback, I will surely be reviewing it a lot more regularly than I do. Your business plan need not be war and peace, it could just be a 3 page document- it is quality over quantity that matters in a business plan.

Some guy named Osterwalder, created some nine building blocks of what is required for your business  or planned business to function, I have copied it down below for your attention courtesy http://www.entrepreneurmag.co.za/

Create a one page document that answers these questions in as much detail and as thoroughly thought through as you can, you will have your first business plan in place, no matter how crude. All the best!20151102_120501

9 Building Blocks of a Business Plan

  1. Customer Segments: Who are your mass and niche markets?
  2. Value Proposition: What are you offering and why are you different?
  3. Channels: Look at the phases your product goes through. This is everything from awareness and distribution to after-sales service.
  4. Customer Relationships: How are you building relationships with customers and is it working?
  5. Revenue Streams: Look at what you are charging and if you could be charging more. How are you receiving your payments and does it contribute enough to overall revenue?
  6. Key Resources: What resources do you require to function? These can include physical, human, financial and intellectual.
  7. Key Activities: Ask yourself what activities need to take place in order to deliver on your value proposition?
  8. Key Partnerships: Write down who your key suppliers and partners are and how they contribute to your overall goals.
  9. Cost Structure: Look at fixed and variable costs so that you can see what can be improved upon.

Learning Business….I seek a mentor!

English: James Caan, British businessman

English: James Caan, British businessman (Photo credit: Wikipedia)

I began to review the business plan for our business in December following some learning experiences I had in the last couple of months in 2012. I had gone to London for a business start-up event; apart from hearing leading business persons speak live like James Caan ( renown investor from TV series Dragon’s Den), Steve Bolton (UK real estate guru) and Caroline Marsh, star of ITV’s Secret Millionnaire TV show. I had the opportunity to chat and question several businesses and explore the support services they provide start-ups and small businesses. Among the many things I gained from this visit including one new client through a secondary contact, perhaps what I gained the most was the realisation of the urgency of the need to have a mentor.

Listening to these various successful business people I believe has taken my business some six months forward. I have seen the reasons why some plans I had were unlikely to work and I have seen where slight changes in my plans could potentially yield greater results.

I hold membership of our local Federation of small businesses and had realised just as soon as I had paid the initial dues that it was an organisation that was pretty laid back and the average age of attendees at the meetings were closer to my mother’s than mine. I did not do much talking during the meetings as I reasoned I was there to listen and to learn, but there is this guy, that every time he opened his mouth, there was always a fresh insight you never meet those kinds of people all the time. I took the time to get to speak to him and realised he has interests in several businesses and had run some national and multinational operations at CEO level and was simply now winding down with a consulting business. If I was going to have a mentor, I wanted it to be him!

I made him know I wanted him to mentor me; as that was what he did in his consultancy now, I would have to be charged a fee for it; when he told me how much it cost, I couldn’t afford him just yet. But I told him about a government supported mentoring scheme I was exploring, he was aware of it and apparently had been brought in by the private sector partners into being a mentor on the scheme; as the scheme was government supported, I could just about afford it I have applied on the scheme and specified who I want to be my mentor hopefully that should get closed in January; it runs for a year. And I am eagerly looking forward to how much I will learn about business from this man. I will hope to learn about his errors and mistakes and make sure  I don’t make them; I will listen to his advice and build it into my business, I believe he will save me up to two years of wrong judgement as I am new in this game.

As I write, I am on the train returning from London having just had a very fruitful 1 hour meeting with someone whom until today I had always only read of in the papers. You ask how I got the appointment and my simple response is that ‘where there is a will, there is a way’. I discussed with him some of my plans and without mincing words, he told me what I had to do. I had secretly hoped he would be impressed by my plan enough to invest; but no he will not be investing. But…the next stage is quite an extensive market research I should let him know when I hope to start, he would support by providing any human resource support that I needed and he has mandated his trusted staff to arrange access for me to at least two key personnel I will need to speak with in the course of the research folks I would not have had access to if I were doing things on my own.

The humility to submit oneself to advise and tutelage by those who have successfully gone ahead, I am realising could be a secret weapon to succeeding in business. And perhaps this applies in most other areas of life too; it was the model that Christ used to raise people into ministry (discipleship); it is the way the world’s leading manufacturers develop their future talent (apprenticeship); I am ready to serve a business apprenticeship and I am very hopeful for positive results.