What Is So Hard About Starting A Business

What makes launching your own business so challenging is a valid question. The issue is that while starting a business is not difficult, making it successful is really difficult.

We are aware of this because the majority of new businesses will either fail or stutter into the mediocrity of the market. This is potentially the worst effect because it is even more difficult to escape mediocrity.

Of course, some startups do succeed and develop into successful enterprises. But let’s get back to your original query of what is so hard about starting a business.

I will look at the areas in which businesses reportedly fail in this article. In addition, I will dissect these and formulate some ideas that can ease the process of beginning your own company.

What is so Hard About Starting a Business

Starting a business is not so hard but we look at the fears people have before starting a business;

Thinking you need to have a good business idea before you start up
Considering today’s cash flow and future value
Thinking of collaboration as the only option
Time and timing
No strategic and tactical planning

1. Having a good business idea before you start up

Too many people base the foundation of their firm on the skills they acquired while working in a previous line of work. They also think that their skills may be used in the same way under a different business name.

Usually, the belief leads to one of two results.

First, the startup must join with other companies and contend with them for the same clients.

The struggle for customers comes down to price because there aren’t many variations between companies. As a result, the client is the only “winner” (and I use that term loosely).

This is what economists refer to as “perfect competition,” and while it may benefit the consumer, it rarely results in a viable business.

The second result, which is considerably worse but more typical for a start-up, is that the company fails because it cannot compete on pricing.

How does a startup stay away from those pitfalls?

The secret is to develop a business idea that can compete in an area where there is imperfect opposition. A monopoly business.

What is a Monopoly Thinking

Building a dominant business allows you to evade competition, which erodes margins and profits.

Take a look at how a business like Google differs from the US aviation sector. Google kept a 21 percent profit on $50 billion in sales, compared to the U.S. airline industry’s 20 percent profit margin.

A monopoly company frequently adopts a contrarian stance and is motivated by first-principles reasoning.

‘What crucial reality do you share with the majority of people?’ is Peter Thiel’s favourite question at the beginning of his book Zero to One.

When you answer that query from a business standpoint, the query changes to ‘What valuable business is no one building?’

I recognise that these are challenging questions, but that’s what makes starting your own business so challenging.

Furthermore, you must respond to them if you want to avoid becoming trapped in ideal competition.

2. Consider today’s cash flow and future value

It’s a common misconception that you may launch your own company with little to no capital. Additionally, it will start making sales and money right away, realising your entrepreneurial goal. I apologise, but it is simply naive thinking.

Rewind for a moment to monopoly corporations. Businesses like Google, Facebook, Twitter, and Tesla required significant amounts of investment before they began to generate profits. Why did they manage to survive? Investment.

When investors can estimate a company’s value in the future rather than the present, they invest in it.

Example 1

For instance, Facebook didn’t know how to make money when it first launched. Facebook’s introduction of Facebook advertisements took 3 years, during which time the company had no revenue.

Beginning in 2005, investors made investments to keep the company afloat until it could figure out how to monetise its consumers. After twelve years, Facebook is now valued at over $600 billion.

Without investors, you might be able to launch a business and maintain it but think about the contrasts. Every sale becomes more important to keep the business going when you don’t have money from investors.

That is not how a viable business can expand.

If you have the money, invest in it yourself; otherwise, seek outside finance during the startup phase.

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3. Thinking that collaboration is the only option

The number of one-man companies is astounding; it’s one person versus the world. And it is precisely the obstacle that every one-man firm faces, with the most likely result being mediocrity.

However, the issue with one-man operations in companies is that overheads are removed, which makes it worse.

A one-man business rarely pays its owner a regular salary; instead, funds are taken only when there is a surplus. Nobody is aware of the full operational costs due to the overhead that is lost in the “work from home” fog.

Sadly, the bad news doesn’t end there. Almost all one-man businesses limit their capacity to advance and outthink competitors.

You can work together when you start your own firm with a co-founder or, better yet, a team. You invite feedback the moment you share your views and ideas with others. Feedback sparks more conversation and ideas that are impossible to attain in a one-man operation.

Any concepts that are entertained in a one-man operation will be clouded by confirmation bias, which is a surefire road to mediocrity.

4. Time and Timing

In the startup world, time and timing are two concepts that are frequently misconstrued. Contrary to popular belief, they are not the same thing.

The one factor that you cannot control yet that is essential for the success of your business is timing. You need to be ready for the possibility that your innovative thought comes too soon or too late. Because these failures never materialise, we hardly ever hear about them. That makes it very challenging to draw lessons from them.

Reverse engineering a successful start-up company and examining the role timing played could be one method to get around this. How could you take that as a lesson?

On the other hand, time is something that you can exert some degree of influence over. In addition, you can quickly lose control of it.

Naturally, if the preceding points’ concepts are understood correctly, a start-up will have more control over the time available.

Investors and a team effort will provide you time when it comes to beginning your firm if you have a good idea.

However, as I hinted earlier, it will be just as harmful if you don’t have these components on hand. Pressure is produced when you lose control of your time.

Although it frequently relies on what is causing it, working under pressure isn’t always a bad thing. The mechanics of the situation change if time is of the essence and you are dependent on making purchases to keep afloat.

So, by beginning your own business with the appropriate components in place, you may avoid that pressure and purchase time.

5. Strategic and tactical planning

Every business must have a business plan, which charts the course for the enterprise’s future. A business plan is typically necessary for anyone establishing their firm.

It takes a lot of time and effort to set up one. Sadly, once written, most of it gets buried in the bottom drawer where it gathers dust and develops curled corners.

A successful firm relies heavily on planning, and the business plan is the road map that will be followed. You can visualise what is occurring when it should be happening, and how it should happen by using a roadmap.

Every start-up has a certain amount of uncertainty, therefore any business owner who makes overly cautious decisions is likely to wind up on the path to failure or mediocrity. The business plan must allow for experimentation and iteration to overcome this, a means of determining what functions and what does not.

Too many new businesses begin with a predetermined notion that is set in stone. Iteration becomes a means of getting around the obstacle when it doesn’t work, which is typically the case.

This is included in a strong business plan’s strategy, which also includes steps that will help the company grow. It will be a lot simpler to launch your firm if you have a solid business plan that you can refer to.

Conclusion

All the factors that lead startups to failure or mediocrity haven’t been mentioned above. The five discussed are, however, the most frequent ones.

I have made an effort to thoroughly examine each point’s significance and provide an explanation of why it contributes to failure.

The possible cause and effect links have been thought through and described. If you can comprehend these, beginning your own business will be possible without going through the hardships that others go through.

One last thing that should be emphasised is how these five components work in concert with one another. Therefore, don’t assume that just because you get one right, the others will follow or go away. That won’t be the case. Recognize how they all relate to one another and use that information when planning.

Why was it so difficult to launch your own business? You can share with me in the comment section.