Kona Impact has worked with thousands of entrepreneurs over the years. We often see these entrepreneurs at different stages of their businesses, from day 1 when they get an idea and are ready to run with it, to the waning days of business as they begin the steps to liquidate their assets and close up shop. These, of course, are extremes: most businesses we work with are well-established and doing well.
That said, we get to see many businesses start and close. While they all have a myriad of reasons for failing—often a handful—here are some to the common ones we see:
1. Inability to get beyond a logo or business card. We see this several times a year: a person who obsesses over a logo, or worse yet, a business card, so much so that they lack perspective on what really matters at that point in the business: big picture planning. Yes, branding is very important—it’s what we do at Kona Impact—but those who believe that creating a logo is creating a brand or a business are just not focusing on the right thing.
2. Not doing the math. We see this all the time with emerging businesses. If you want to see widgets, you need to understand your total costs of production, your facilities costs, labor costs, marketing costs, taxes and figure out a reasonable salary for yourself. Whether its t-shirts, cosmetics, coffee or tubas, you need to have a very solid grasp on costs and projected sales levels to figure out if you have a chance of making any money from your business.
3. Believing 100% in social media or 0% in social media to grow your business. You do need a website and online presence that you own and control. Using Facebook, Instagram or other social media platforms are important, but not sufficient for most businesses. Plan on your marketing efforts using what you own—a website—and what you use to reach targeted markets—Facebook, Instagram, Pinterest, etc.
4. Not having sufficient funds for a year. Many recommend six months’ worth of reserves to get a business going: based on the experience of many of Kona Impact’s clients, this is too little, as many businesses take longer to grow than most people realize. The worst thing I see is businesses that have a good idea and a solid chance of prospering running out of funds too early.
5. Not going “all in”. If you are looking for a hobby, go surfing, take up gardening or join a club. If you want to run a business successfully, be prepared to spend every day—including weekends—focusing on developing and running your business. If you don’t, I guarantee you that your competitors will. If you aren’t going to play to win, don’t waste your time. Keep your money and time.
Businesses fail for many reasons. Some are just bad ideas, and others are viable ideas with poor execution. Some just start at the wrong time in the economic cycle and are doomed from the beginning. Others fail because the owner finds a better opportunity and moves on. We often find that it is a combination of factors. As such, a burgeoning entrepreneur needs to focus on what she can control and reduce the risks to success as much as possible.