In many areas, fast food restaurants, bars, entertainment facilities, and any other type of business are being forced to downsize or close, whether possible or not. Even foot traffic is dwindling everywhere. Small, local, independent, and small-business enterprises are posting promotional social networking bids to encourage individuals to continue supporting them. But why? Why have so many entrepreneurs turned away from the business and put their futures on the line by opting out of the economic downturn?
One reason for this is perhaps the easiest to identify-lack of basic knowledge. Many well-educated entrepreneurs have never been exposed to economics or business development. Often, they do not even know how to write a business plan nor understand the basics of finance and business accounting. Most do not even know how to manage an Internet website.
Lack of training and knowledge limits the potential of entrepreneurial ideas. Not knowing the fundamentals leads to bad decisions-mistakes that can spell disaster for fledgling businesses and cause real-world problems for future owners. The result? Many new entrepreneurs-and business owners-may lack the skills and knowledge necessary to successfully navigate through the financial hurdles that businesses may experience. Lack of training also makes them less likely to seek help from seasoned entrepreneurs and venture capitalists when needed.
Another reason for turning away from business is a general lack of a diverse skill set. Many aspiring entrepreneurs lack basic computer skills; therefore, they will rely on technology professionals for business advice. Technology gurus are rarely an option because most will be priced out of the market. For lack of access to a technology professional, aspiring entrepreneurs will often resort to “hobbyist” computer experts, such as friends and relatives. When faced with a business-decision dilemma, the hapless aspiring entrepreneur will usually opt to cut corners and take the easy route, choosing the least expensive option.
Entrepreneurship requires building trust. It takes time for these new businesses to build this kind of relationship with clients, suppliers, and customers. Trust comes with exposure to clients’ products and experiences, which will take time for new businesses to build. This means that they should not rush into business without taking the time to build a strong client base and developing a solid reputation.
As stated before, many new businesses fail within the first year. Reasons for this vary greatly. Entrepreneurs may lack business strategies, they may lack a strong business idea, or they may simply lack the motivation and desire to succeed. However, there are some common reasons why a business may fail during its first year.
Many entrepreneurs turn to social networking sites, such as Twitter and Facebook, as their way of promoting their new business. Unfortunately, these sites are not effective ways of gaining exposure for new businesses. Because these entrepreneurs do not understand the value of social networking sites, they end up bombarded by “tweets” and “friends,” who take the businessman’s side and post negative feedback. As a result, the businessman begins to feel burned when this happens.
Finally, entrepreneurs need to invest time and money into their entrepreneurial endeavors. Entrepreneurial ventures do not come along every day. While many businesses fail in the first two years, many more succeed for the first two years. As such, business owners should learn to invest in their ventures and be willing to wait a while before jumping into the entrepreneurial pool.
One of the biggest problems that many new home-based businesses have is that they lack direction. Entrepreneurs must have a clear idea of what they want to achieve in order to promote their new businesses. This may require the entrepreneur to spend time doing research. The result of the research can be disappointing. In order to make matters worse, home-based businesses often fail because they do not address a critical problem, which is why they were started in the first place. Home-based businesses should take a step back and look at what they want to become instead of blindly pursuing an idea without enough knowledge.
Another reason why some home-based business fails is that they don’t take on enough risk. A major problem with home-based businesses is that the first few months can be incredibly stressful because businesses tend to try to solve very complex problems that can be very hard to solve. Additionally, many entrepreneurs start out with too high expectations, which can cause them to give up on their business before it has truly reached its full potential. For example, when it comes to starting a home business on an as-needed basis, “start-up costs” are often included, which can cause the business to run into financial trouble within the first six months.
In addition to these common problems, there are some specific reasons why some new businesses fail. The internet and global communication technology have caused many new businesses to fail. These include businesses related to health care, financial services, consumer goods, alternative energy, telecommunications, and transportation. However, if you are determined to build a business, the internet can provide you with many small businesses opportunities that can help you reach your goals. If you take the time to learn about each business opportunity thoroughly before deciding which is right for you, it is possible to build a successful business on the Internet.