Right now there are two million entrepreneurs in the UK actively engaged in starting a new business.
Many of their ventures will never get off the ground. Of those that do, the majority will fail. There are more than 15 million entrepreneurs in the US doing the same thing. Most of their ventures will fail too. Less than one per cent of those who submit business plans to business angels, venture capitalists or similar sources of funding will be successful in raising the money they seek.
This picture of entrepreneurship is not a pretty one. The odds are daunting, the road long and difficult. Why, then, are a stunning one of every 19 adults in the UK – and one in 10 in the US – actively pursuing entrepreneurial dreams? In a word: opportunity! Opportunity to develop an idea that seems, at least to its originator, a sure- fire success. Opportunity to be one’s own master – no more office politics, no more downsizing, no more working for others. Opportunity for change. Opportunity to experience the thrill, excitement, challenge and just plain fun inherent in the pursuit of entrepreneurial adventures. As a former entrepreneur, I know, because I’ve been there too.
But there’s a problem. Most opportunities are not what they appear to be, as the business failure statistics demonstrate. Most of them have at least one fatal flaw that renders them vulnerable to all sorts of difficulties that can send a precarious, cash-starved new venture to the scrap heap in a heartbeat.
An abundance of research makes it clear that the vast majority of new ventures fail for opportunity- related reasons:
- Market reasons: perhaps the target market is too small or simply won’t buy
- Industry reasons: it’s too easy for competition to steal your emerging market
- Entrepreneurial team reasons: the team may lack what it takes to cope with the wide array of forces that conspire to bring fledgling entrepreneurial ventures to their knees.
As long-time venture capitalist William Egan notes: “You may have capital and a talented management team, but if you are fundamentally in a lousy business, you won’t get the kind of results you would in a good business. All businesses aren’t created equal”.
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