Why business fails? my lessons from start-ups and small businesses

Before we start talking about failure, I am pro-failure – it is not taboo in this space because failure means the entire process of study, plan, attempt, execution, presence, interaction, and action. We only need to do is assessment, and evaluation, reflect on the failure and give it another shot through different angle and resources. There are always things that don’t go smoothly or don’t work out at all in our life. Acceptance and acknowledgment are key in this cycle of failure and success.

There must be various reasons that businesses fail and different definitions and types of failure. I want to highlight a few checklists of dos and don’ts and examples from the previous Startup I worked on. Also these are some of the factors I decided to stop the operation of Mind Ground in South Korea earlier this year.

1. Reduce risks on prototype development.

Start-ups are meant to be struggling because of limited time and resources. Leaders must allocate their time and resources wisely and efficiently. How they manage these two can determine the level of pressure and stress, also how much further businesses (or leaders themselves) could go on. It is impossible to make the best product at once, however, it should not take up all time and money you have. Go minimum yet presentable and sellable, quick execution is more significant than a nice design or perfect package for your product. Focus on how this is going to work, the feasibility.

2. Be extra careful when outsourcing, especially for product development

Outsourcing is usually the cheapest and easiest way for small businesses to make things happen since they cannot afford everything they need in-house. From printing to design, and from recruitment to manufacturing or technology solutions and software developments. Start-ups are going to need and find outsourcing partners. You may think that they are costly but still worth trying because they will save you a tremendous of time and energy so you can focus on other priorities, however, wrong partners can cost you the entire business. You may be referred to a friend of a friend, or introduced to a good neighbor, but no matter how you are connected to those potential outsourcing partners, do not rely on friendship and relationships. You still need to do due diligence – find multiple options, analyze, compare them in detail, and make sure you know enough about what you are dealing with. Always, always, keep in mind you have capacity for plan b, c, d, e ...

3. Team vibe checking!

The ‘Good vibes only’ rule is not a joke, especially in small businesses. Each and every team member plays a significant role and they affect not only businesses but also brand reputations and internal culture. Yes, talents, passion, interests, and skillsets are important; team up with people only your brand and the rest of the team can genuinely relate to and mingle well. Find the right people for your team, and always keep your eyes open for good talents. Personality, work ethics and values, and skillsets are all equally important, especially for small businesses and startups. Personally, the best practice was having a reliable HR professional for a period time with specific objectives and I wouldn't recommend working with global head hunters or large HR agencies for small businesses - it is not a cost & time effective choice in a long term perspective.

4. Build leadership

Leadership is not inherently developed, it can also be trained. No one is born to be a leader nor is one type of leadership determined for business world. We need a different style of leadership depending on the generation, industry, business identity, the stage of the business cycle, and its scale/size. There needs to be decent leadership even if there are only two of you in the business – being responsible, professional, keen, compassionate, and absolutely being you. Continue honing your knowledge also communication skills to motivate, inform, persuade, negotiate, advise, critique, apologize, and celebrate. I believe this is the life-time task as we got to work with people in a transforming environment.

5. BM; is a ‘platform’ or B2C ‘e-commerce’ actually for your startup???

How you generate revenue by creating value for your consumers and communities takes time to be found. It may be still up in the air till you meet the first hundreds of customers and listen to them and observe their experiences. To identify any red flags or green light in your BM or product lines, it needs a good amount of time for MVP tests for sure. One thing I also learned was building a platform is not for every business. It may sound easy and trendy because we are using platforms on a daily basis for different purposes and tasks from habit-building to socialization, and from education to sales, etc. Scaling up in platform businesses takes enormous time, money, resources, and effort, so don’t settle about BM in the early stage (or even in the mature stages), be flexible and open to find market fit, especially with external environmental fluctuation and turbulences.