[leggomygreggo]

I would have to agree that one of the main reasons people fail when starting a business is because of a lack of planning. A lot of people just jump into starting a business without planning or even seeing if the business is something that can be profitable.

I think that another reason that alot of businesses fail is because of a lack of dedication to the startup. If a startup is not given enough attention it is destined to fail

[WLMP]

I ran High-End Plumbing Fixture retail store for 5 years. My business model was to sell only top quality merchandise where manufacturers have a strong presence and good service. The last 2 years I was constantly under pressure from other retail stores concentraiting on chinese imports. Eventually I could not meet ends needs and quit. Very tragic story. Still paying off debts.

[janet554]

I have not reached my business goal 12 times so far... i'm 27. However the good thing is that everytime I "fail" i learn something new, and my next venture is more succsessful than the last.

In the beginning (back in high school) I had no idea how to get business cards made... or how to get a business certificate... or how to setup a website... or what is a 'server'... how to make a business more interesting... now I can do all these things very easily.

[EasyAutoSales]

I've done a few things that I didn't feel succeeded. Luckily, every lil incident and failure taught me something useful for my next attempt. Right now, we're keeping a blog of everything we're doing to document our next success (or failure).

[SerialEntrepreneurs.]

I have fortunately launched approx. 4 - 6 successful businesses...the one business that didn't do so well is when I was in the energy drink business for a year....The setup of Long Island, NY was not friendly to salespeople who needed to travel inand out of their car to offer the products....as opposed to a metro area where you can walk and hit many, many delis (and the like) in a short walking distance....

When I did decided to bite the bullet and throw in the towel on the business, I donated the remaining two pallets of energy drink to the Red Cross for Katrina victims....

[Aletheides]

I don't even think I could count how many failed businesses or concepts I've had on two hands.

The trick to success is to fail yourself to succeed.

[toritaiyo]

Wow, haven't been on YE in a while. Glad I stumbled back today. I think this is a really good thread.
Here are some failures: some mine, some entrepreneurs' whom I worked with (sorry for the length, getting my YE fix all in one shot ) :

#1 (failed due to poor planning)

When I was in high school I had a "business" (sole proprietorship with a DBA registered with the state). --Side note: Sole proprietorships are NOT recommended by most business counsellors. I was still a minor at the time and not making much money so it probably was good enough in my case, maybe, but not recommended.-- I was offering design and printing services to local businesses along with a local community newspaper that I edited and delivered (sometimes with help from friends).

It was a good combination because the newsletter let me show off my business's design work and at the same time it attracted attention from local businesses that wanted to advertise in it. I did menus for restaurants, business cards/flyers/etc., custom t-shirts for a local school. It was going really well (I was even invited to talk at a youth business symposium - oh, the heights from which I have fallen ). The problem was I was getting SWAMPED with work. There were likely many more problems than that (managing the finances for example) but being overworked was the straw that broke my back. I gave it up to focus more on school. Looking back now I realise that I never really planned what I would do once the business was successful (the #1 business killer in my opinion), i.e. how to get all of the work I like doing done while doing 5 million other necessary parts of the business I don't like doing. I never planned when I would need extra help or how to use the extra help if I could secure it.



Failure-witnessing #1 (cash management problem)

I ended up spending most of my years in college in Japan (that is another story entirely, but this won't make sense without it). While in school, a friend introduced me to an American who had opened a music store in Japan (and was struggling). I introduced myself to him and told him that I would work for him for free if he would teach me how he started his business. Prior to the music store he had a medical equipment business servicing the US army bases in Japan. He used some of the profits from that to open his store (at this point he was still doing both businesses). Things were going great at first, really great. And then it happened. He had a substantial amount of money that he was due for the sale of some medical equipment but it ended up being held (in escrow I think, I don't know the exact details). This happened RIGHT before the grand opening of the store and prevented him from purchasing sufficient inventory. Long story short, the business (undercapitalised) went into a cycle of demise. I met the owner around the middle of that cycle. It was sad and at the same time inspiring because although the business was failing, and eventually had to be put down, he never let that break his spirit. I 'd like to think that my being there to help him at that time helped keep his spirits up a bit too. I learnt A LOT from him. It was a better education than four years of business school provided. I learnt from him, because even though he was failing he was very knowledgeable (so failure doesn't make you a failure!), and I learnt from his failure (I learnt what to avoid). A WARNING: learn cash management, bookkeeping is #1. If you are not careful an unexpected expense or other snag can kill your business. I've been reading a great book lately "The Small Business Survival Guide: How to Manage Your Cash, Profits, & Taxes" (You can probably find it or something similar at the library), I HIGHLY recommend it.

Failure-witnessing #2 (cause: legalities)

This one is a bit unique to starting a company as a foreigner in country. A friend of a friend started a financial services company in Tokyo (actually it was a branch of a company headquartered in Singapore that he convinced them to let him start in Tokyo). Anyway, he hired me and grabbed a few people from a competitor and things started rolling. It was great at first and we were profitable above what he had projected to the bosses in Singapore. Then came the legal problems. We are all foreigners which meant some visas had to be renewed and on top of that were problems with the legal formation of a branch office in Japan. Long story short things did not get done in time, my visa was set to expire and chances of the company sponsoring a renewal looked slim, I had to leave Japan. The branch failed but I learnt a lot from the experience (both what to and what not to do). Like the cliche says, "Know before you go." Learn what legal hoops you need to jump through before you set out and before you start making promises it turns out you cannot keep, like sponsoring visas (for your employees' sakes). Even in Japan there is an organisation where you can get this information for free in English, so in an English speaking country like the US, UK, Australia one has no excuse for not knowing. In the US you have the SBA and S.C.O.R.E. and in the UK, Small Business Service (now "Enterprise Directorate").

[toritaiyo]

#2 (My 2nd and current Business. Cause: lack of capital, lack of support)
Somewhere in between witnessing failure number 1 and being hired by failure number 2 I began laying the groundwork from my own business. This time I was determined to do it right. I found a mentor by running an ad in expat magazine. I think I wrote something like "young aspiring entrepreneur looking for experienced entrepreneur as a mentor." I received over a dozen replies (so it works) and one in particular was very helpful. Mentors are really good.

Anyway, with his advice (at the beginning) and new determination I began putting together a business while still in college and still in Japan and only 22 years old. I not saying this to brag but to show that it can be done much more easily than in the past. For example, I incorporated a Florida LLC online through the state business website ( sunbiz.org) while half a world away from Florida. I also applied for my Federal employer id and state sales tax id while in Tokyo. During one school break I returned to Florida and setup my business bank account (I don't think that could have been done any other way than face to face) and some other formalities.
I had a business idea for student services catering to students at colleges in Japan (including a social networking site for them). I went with a friend to meet a JETRO advisor (a Japanese business counsellor) about starting a branch of my LLC in Tokyo. He basically treated me like a two-year old. Oh well, people will always look down on you for one reason or another. I pressed on and continued with promotions at my school and others. The plan bombed (lack of interest) and I went back to the drawing board. This failure was a great opportunity because it forced me to think bigger and that is what I ended up doing with the project. I still find myself lacking capital from time to time but I am slowly but surely putting this business together (part-time) with little overhead so somehow I manage.

My current job:
I am currently work for a small interior decoration company. The owner is an acquaintance of mine. His business has been a testing ground for me to put a lot of what I have learnt in past to work. I am trying to make his business a success but there are more problems than I even want to think about. The main problems (that cause all the other problems) are LACK OF PLANNING and LACK OF COMMUNICATION. Lack of written planning turns a business into a nightmare. And lack of communication is worse. Imagine you're riding a flaming motorbike down the street at top speed while trying to fix the engine and put out the fire. If you can imagine that then you can imagine this business. The fact that the owner has managed to stay in business this long is a testament to the quality of his technical work. When I arrived the service was poor (late for appointments) and the filing and accounting was in a total mess. Just like the flaming bike the only thing keeping this business together is sheer momentum (the owner hustles) and it is scary to think how much longer that can last.
BE CAREFUL: This business is profitable, this business is expanding, this business looks in many ways like a success but it is flirting with disaster. You're business may be just like it and you may not even know that you are in trouble. I don't think my boss knows (I think he ignores), despite my efforts wake him.
E-myth Revisited by Michael Gerber describes this situation perfectly. It was like looking in a mirror when I read it. To summarise, technicians (people who can do the technical work of a business) wake up one day and decide that they don't want to work for XYZ, Inc., instead they will start their own business. THE PROBLEM: they can do the tech work but they cannot do the tech work AND the 5 other jobs they don't know how to do (accounting/record-keeping, effective marketing, managing, building a business system instead of just working a job). I think you can avoid the problems this company is having by planning, communicating effectively with employees, learning a bit about how to run a business before-hand, and finding/using a business counsellor or mentor.

Despite the problems, I have learnt the most from this business experience. I had to teach myself how to use Quickbooks for internal business accounting. I created an office manual from scratch so that if he hires someone to handle the office in the future they know what to do. I also created a marketing kit for the company and conducted marketing campaigns. It has been a great (albeit stressful) learning experience.

I mention all of these experiences not as warnings against starting a business but as reasons to learn as much as you can before you jump. Also I hope these show how working for small business owners (whether failing or succeeding) can give you a lot of great experience. And most importantly I hope that these make it clear that failure is not a bad thing necessarily. All of these business people had started businesses prior to the ones I worked in: some had succeeded and some had failed (some miserably). But all three of them carried on starting new business after the failures. And I likewise intend to do the same.

I hope that this post is at least a little helpful. it is definitely long...

Let me know. Also let us know why you ask (thinking of starting one?)

[Crucialp]

Originally Posted by aleish

I think first timers do fail in their business and the major reason is lack in planning.

Agreed.

Also, a lot of people fail in business due to starting one on the simple basis to make money! We all have the aim to make money but money is always a bi product of a successful business

[HiTechGadgets]

“Failure is a phase through which nearly all people must pass on the way to success. The ability to take a punch and then get up off the canvas to win the fight is one the defining characteristics of entrepreneurs”