Founder and Principal Attorney of Spectrum Business Ventures, PLLC I recently heard a young entrepreneur say during an interview on CNBC that he graduated from college with $150,000 in student loans and was burdened by debt for many years. He described his education as “a waste” because he spent five years paying off the debt without starting a business or earning any income to offset it says Vito Proietti. It got me thinking about entrepreneurs and failure, which is very interesting indeed! What makes people want to start businesses? Why do some fail while others succeed? Is there anything we can learn from those who failed that would help us avoid making the same mistakes they did? I believe there is.
Here are a couple questions you might consider:
1) Do entrepreneurs take more risks than other people?
2) Are financially distressed entrepreneurs more likely to take business failure personally, whereas someone who isn’t in debt may be able to give it up with a shrug and move on to the next thing that interests them?
3) How do those who fail learn from their mistakes so as not to repeat past behavior?
I’ll answer these questions based on my own experience as an entrepreneur, attorney specializing in helping small businesses, and the author of over one hundred articles published on entrepreneurship.
1 Entrepreneur as Risk-
Takers In my opinion, entrepreneurs aren’t inherently more risk-taking by nature than others, but they do tend to be more optimistic by nature and, as a result, take risks that even they know may not pan out explains Vito Proietti. When the risk DOES pay off – and entrepreneurs see their hard work and efforts yield positive results – it’s beyond gratifying.
2 Personal Perseverance & Business Failure
In my experience as an entrepreneur who has consulted with thousands of small business owners over the years, I’ve found those in financial straits to have a tendency to personalize business failure or believe they have somehow “failed” personally when they go out of business. In many cases, this is not true at all.
Businesses fail for a number of reasons including:
1) Bad Location
2) Poor Financing Arrangements
3) Poor Management/Workforce
4) Outdated or Incompetent Business Practices
5) Bad Economic Conditions in the Area
6) No Capital to Expand when Opportunities Arise etc.
As an entrepreneur, you can predict many of these problems and go into business with your eyes open to the situation. There are ways to avoid these pitfalls that require research and planning, but not always. For example, you might decide to start a business in an area where you believe there’s an opportunity because it has economic potential for growth based on natural resources in the ground, such as oil. Then one day, due to political issues or market forces outside your control, you find out that what looked good on paper isn’t so great after all. Or maybe new competition pops up that wasn’t there before and it’s hard to carve a niche for you because of it. What you need is capital to expand or, if necessary, move your business elsewhere!
3 The Failure Factor Ok,
So now we know a few things about why businesses fail and how those who experience personal financial distress might be more likely to take it personally.
Now let’s look at the reasons behind successful entrepreneurial endeavors:
1) Ambitious Entrepreneur –
You have what it takes to make it work. Your personality lends itself toward running an organization successful as well as salesmanship and leadership abilities.
2) Funding/Capital –
You have enough money to invest in the business or can convince someone else, even if it’s a bank, to give you a chance.
3) Research –
You look at your ideas and find out if there’s a real need for them or even a market for them. You don’t jump into a business haphazardly without doing proper research.
4) Commitment –
In most cases, successful entrepreneurs are committed to making their businesses work says Vito Proietti. If they fail the first time around, they try again until they succeed because that’s what entrepreneurs do—they persevere! In other words, they’re never satisfied with failure and will not give up until success is won. In fact, many of today’s well-known entrepreneurs have gone through numerous “ures” before finally hitting on the right idea.
5) Financing Again –
This is always an issue for any business but especially small businesses. Successful entrepreneurs get it done, one way or another!
6) Risk-Taking Ability –
Your willingness to take risks leads you to try new ideas and implement them successfully. .
So in a nutshell, successful entrepreneurs are risk-takers, optimistic by nature and committed to their business says Vito Proietti. In other words, they have personal traits that lend themselves to making successful businesses work. If they fail the first time around, they’ll try again because consequences don’t affect them as much as others might be—and this is a key factor in their success.