Preventing Entrepreneurial Failure

Preventing failure is actually very tricky. Successful entrepreneurs for one business don’t always succeed at their next business. There are many reasons for the inability to translate one business success to another.

Let’s explore what needs to be done to be successful at each and every business.

On the page about standardization you learned that a standard is always required. To be successful every time a standard business start-up process must be developed that is proven. Some of the steps for a standard business start-up process are given here.

First and foremost the Entrepreneur must learn all that can be known about the business.  Analysis paralyzes can be a problem at this stage. At some point the Entrepreneur must take action.

To fully understand a business a model must be made of the business. All processes must be defined and standardized.

When all the research into the business is complete the Entrepreneur has a complete understanding of the requirements to be successful.

They know:
1.Who the customer is, what they want as a product, the product specifications written and implied.
2.How to contact the customer and make the sale.
3.All the parameters of the business process from making contact with the customer to the final delivery and acceptance of the product by the customer.
4.How each and every step in the process is related to customer satisfaction.
5.The cost of the entire process and the final acceptable sales price of the product. Ultimately, the profit potential of the product is known.

In terms that is understood by all, the Entrepreneur has developed a business plan showing the profit potential for the new business.

The Savvy Entrepreneur has a business plan. All good businesses start out with a business plan. The difference is the Savvy Entrepreneur has build more than just a business plan. They have built a business. When each process step is modeled and standardized parameters are determined to monitor the process. Of course the ultimate parameter of the business is profit.

The parameters for each and every process in the business tell the Savvy Entrepreneur if the business is on track to make a profit long before the product is sold. If at any point in the process the parameters indicate the customer will not be satisfied with the product action can be taken quickly to account for any problems. There is no need to wait for the final outcome, profit, to start to make changes. The data taken at each process step forewarns the Entrepreneur of impending trouble.

There are other advantages to a standardized approach. If early on the Savvy Entrepreneur notices the sales are not what they should be then they can react by looking at the product being sold to see if it meets the customer requirements. They can look at the sales process itself to see it there is a problem communicating the benifits of the product. If ether are not functioning correctly they can be changed before the business is lost.

For an ongoing business the most important aspect of understanding the customer requirement is the potential for a very early proactive intervention in the product mix of the business. To give a very classic example of a well established business that lost out on a big sales potential was IBM. Yes, they are still around today not because they won the business but because they learned by their mistake. Other business have not been so lucky.

IBM’s story in brief is one typical of large corporations. They believed their product would not go away in the face of overwhelming evidence the market was changing. Big main frame computers with expensive software were being replaced at an alarming rate by smaller more capable computers with cheaper software. The economy of smaller scale was evident at every corner with the new smaller computers. Companies were not willing to invest any longer in large main frame computers with expensive software that was not user friendly when a better option of available.

IBM basically had blinders on. They held fast to the concept of the big computer until they had nearly lost their business altogether. When they did finally make the switch to the PC, IBM has the distinction of making the same mistake again. They had better than 80% of the PC market then lost all but 15%.

The numbers are approximate but you can get the point. IBM is alive and well today because they learned how to make changes pro-actively. As a Savvy Entrepreneur you must do the same. Look into the future for trends to see how they will affect the business then act accordingly.