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.

What You Should NOT Spend Your Money On


This is as straightforward as the title is “do not spend your money on holidays, fast cars, and clothes”.  I stand by this but I need you to read to the end before you decide whether or not I am talking rubbish.  The actual technical name of what we call money is currency,   the word that has it roots in the word current. Current by nature is characterized by movement,  that means your money moves.  It always has to move, and it fluctuates in value. It never stays with you forever you exchange it for something of some value to you. The job of every financially smart person is to hold down money into a place,  a resource  or a format  where it,  as a minimum, holds or increases its value before it leaves your hand to flow to another place. That format is called an ASSET.

pound

Robert Kiyosaki gave the simplest definition of an asset I have ever heard; “ anything that puts money into your pocket is an asset”. A  liability on the other hand is “ anything that takes money out of your pocket”.  So holidays, fast cars and clothes are liabilities.  And we all know that if you have more liabilities than assets it’s just a matter of time you will break financially.

“ anything that puts money into your pocket is an asset”. A  liability on the other hand is “ anything that takes money out of your pocket”

I believe that the purpose of currency (money)  is not for spending on liabilities;  the purpose of money (currency) in my opinion is to purchase  assets which in turn generate the money  to create the standard of life we want.  The fact that I am able to take my kids to Disneyland out of my salary and while I am there maybe I meet Bill Gates who is also there with his kids,  In  theory both myself and Bill Gates can ‘afford’ to take our kids to Disneyland,  but my spend has reduced my salary but Bill Gates will not be paying for that visit from his salary,  he will probably the paying it from a tiny piece of dividend from his many shares (assets) in Microsoft.  I become poorer  from that visit but he is not affected because  he is spending  not his current monthly income  but the  income  from his assets, assets which continue to grow and appreciate in value, while my salary decreases and I await the next top up. That single spend therefore does not affect his current standard of life in real terms.

the purpose of money (currency) in my opinion is to purchase  assets which in turn generate the money  to create the standard of life we want

I like holidays, fast cars and clothes as much as the next guy;  but the day  I can get all these paid for  by the yields from assets,  rather than my immediate income; then,  I would have had my finances in control.  

monopoly

Use the currency in your hand to purchase assets that will yield  the returns you require to live your desired standard of life. Many people struggle to know what things are considered assets, I will therefore list some here for you. Property,  insurances (in case things go wrong and my, do they go wrong?),  pensions,  investment accounts,  bonds,  brands, copyrights,  distribution rights,  distribution networks,  patents, royalties (from books, music or related intellectual property), trademarks, buildings,  equipment, Art work,  jewellery,  businesses,  training materials among others. I hope you note that a savings account is not listed on the asset list, why will you keep currency whose value moves every time and usually in the depreciation direction? I am for short term savings that enable you to acquire assets; long term currency saving is not a financially smart move in my opinion, because your money is usually worth less than its value on the day you put it in, usually in spite of the so-called interest.

Use the currency in your hand to purchase assets that will yield  the returns you require to live your desired standard of life

Now you know what you should be spending your time and currency on.
All the best

Pound Notes Picture- https://www.flickr.com/photos/v1ctor/

Monopoly- https://www.flickr.com/photos/wwarby/


Warren Buffet on “How to Teach your Kids about Money”

Warren Buffett is one of the most famous billionaires in the world. He also loves sharing his advice with kids as part of his Secret Millionaires Club. Here, he answers five questions, including what he thinks the biggest mistake is that parents make when teaching their kids about money and how he learned about money.

Do you think most parents do a good job teaching their kids about money? 

Most parents know how important it is to teach kids about money and managing it properly. There was a study many years ago questioning how to predict business success later in life. The answer to the study was the age you started your first business impacted how successful you were later in life. Teaching kids sound financial habits at an early age gives all kids the opportunity to be successful when they are an adult.

 

What do you think is the biggest mistake parents make when teaching their kids about money?

I think parents need to start teaching kids about the importance of managing money at an early age. Sometimes parents wait until their kids are in their teens before they start talking about managing money when they could be starting when their kids are in preschool.

What made you want to launch the Secret Millionaires Club? What do you hope kids get out of it?

There are a number of educational programs out there, but there are not many programs that teach about Financial Literacy at an early age. Secret Millionaires Club can help kids develop the right habits that will serve them well for the rest of their life. If this program can have some effect on youngsters and help them develop better habits on money, it can have a major impact on their life when they are older.

Where did you learn about money?

My dad was my greatest inspiration. He was my hero when I was 6 and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early. Savings was an important lesson he taught. I had all kinds of small businesses when I was growing up. When I was 6, I started my first business. I bought a six-pack ofCoke for 25 cents and sold the cans for a nickel apiece. I also sold magazines and gum door to door.

What is the best lesson you’ve taught your own kids about money?

I taught all of my kids the lessons taught in Secret Millionaires Club. They are simple lessons that are meant for business and for life.

Culled from CNBC website http://www.cnbc.com/id/101221055