{"id":2997,"date":"2023-02-19T16:11:16","date_gmt":"2023-02-19T16:11:16","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/why-some-ventures-fail\/"},"modified":"2025-05-22T15:01:51","modified_gmt":"2025-05-22T15:01:51","slug":"why-some-ventures-fail","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/why-some-ventures-fail\/","title":{"raw":"Learn It 8.3.2: Should You Start a Business?","rendered":"Learn It 8.3.2: Should You Start a Business?"},"content":{"raw":"<h2>The Importance of Planning<\/h2>\r\n\r\n[caption id=\"attachment_8636\" align=\"alignright\" width=\"259\"]<img class=\"wp-image-8636\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/11\/17171734\/5727294500_f96bf2b016_b.jpg\" alt=\"an illustration of a fish with a vendor stall selling scuba gear underwater\" width=\"259\" height=\"222\" \/> Figure 1. Good planning is key to a business' success.[\/caption]\r\n\r\n<p><span style=\"font-size: 1rem; text-align: initial;\">Planning is cited in virtually every list of causes of failure. Why is this so critical? Failure to do the research, analysis, and financial projections that business planning entails makes a small business more vulnerable to the following common causes of failure:<\/span><\/p>\r\n<ul>\r\n\t<li style=\"font-weight: 400;\">Inability to execute on the business concept<\/li>\r\n\t<li style=\"font-weight: 400;\">Lack of or insufficient market demand<\/li>\r\n\t<li style=\"font-weight: 400;\">Lack of product or service (competitive) differentiation &amp; other marketing issues (the four Ps of marketing)<\/li>\r\n\t<li style=\"font-weight: 400;\">Lack of awareness of and\/or ability to respond to emerging trends, relevant developments (technology, regulatory, geo-political, environmental), and competitive actions<\/li>\r\n\t<li style=\"font-weight: 400;\">Overdependence on a single customer<\/li>\r\n\t<li style=\"font-weight: 400;\">Inability to manage growth<\/li>\r\n\t<li style=\"font-weight: 400;\">Inadequate cash reserves or failure to effectively manage cash flows. Related point: inadequate cash controls or personal\/business separation, including using business revenue as a personal slush fund<\/li>\r\n\t<li style=\"font-weight: 400;\">Insufficient management experience or product\/services expertise<\/li>\r\n\t<li style=\"font-weight: 400;\">Lack of self-awareness and related personal\/professional development<\/li>\r\n\t<li style=\"font-weight: 400;\">An inability to acknowledge weakness and\/or compensate for skill and expertise gaps<\/li>\r\n<\/ul>\r\n<p>One of the most critical risk factors is the founder\u2019s attitude and self-awareness, including the ability to objectively assess his or her management skills (or accept external feedback on this point), recruit to address skill and expertise gaps, and effectively delegate responsibilities.<\/p>\r\n<p>Statistics aside, it\u2019s important to understand that failure isn\u2019t final. The benefit of failure is experience, a factor that contributes to success. As Mike Maddock, serial entrepreneur and business consultant, notes, \"the most inventive people are usually the best at failing forward, i.e., learning from what went wrong.\u201d<\/p>\r\n<section class=\"textbox tryIt\">[ohm2_question height=\"350\"]4473[\/ohm2_question]<\/section>","rendered":"<h2>The Importance of Planning<\/h2>\n<figure id=\"attachment_8636\" aria-describedby=\"caption-attachment-8636\" style=\"width: 259px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-8636\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/11\/17171734\/5727294500_f96bf2b016_b.jpg\" alt=\"an illustration of a fish with a vendor stall selling scuba gear underwater\" width=\"259\" height=\"222\" \/><figcaption id=\"caption-attachment-8636\" class=\"wp-caption-text\">Figure 1. Good planning is key to a business&#8217; success.<\/figcaption><\/figure>\n<p><span style=\"font-size: 1rem; text-align: initial;\">Planning is cited in virtually every list of causes of failure. Why is this so critical? Failure to do the research, analysis, and financial projections that business planning entails makes a small business more vulnerable to the following common causes of failure:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\">Inability to execute on the business concept<\/li>\n<li style=\"font-weight: 400;\">Lack of or insufficient market demand<\/li>\n<li style=\"font-weight: 400;\">Lack of product or service (competitive) differentiation &amp; other marketing issues (the four Ps of marketing)<\/li>\n<li style=\"font-weight: 400;\">Lack of awareness of and\/or ability to respond to emerging trends, relevant developments (technology, regulatory, geo-political, environmental), and competitive actions<\/li>\n<li style=\"font-weight: 400;\">Overdependence on a single customer<\/li>\n<li style=\"font-weight: 400;\">Inability to manage growth<\/li>\n<li style=\"font-weight: 400;\">Inadequate cash reserves or failure to effectively manage cash flows. Related point: inadequate cash controls or personal\/business separation, including using business revenue as a personal slush fund<\/li>\n<li style=\"font-weight: 400;\">Insufficient management experience or product\/services expertise<\/li>\n<li style=\"font-weight: 400;\">Lack of self-awareness and related personal\/professional development<\/li>\n<li style=\"font-weight: 400;\">An inability to acknowledge weakness and\/or compensate for skill and expertise gaps<\/li>\n<\/ul>\n<p>One of the most critical risk factors is the founder\u2019s attitude and self-awareness, including the ability to objectively assess his or her management skills (or accept external feedback on this point), recruit to address skill and expertise gaps, and effectively delegate responsibilities.<\/p>\n<p>Statistics aside, it\u2019s important to understand that failure isn\u2019t final. The benefit of failure is experience, a factor that contributes to success. As Mike Maddock, serial entrepreneur and business consultant, notes, &#8220;the most inventive people are usually the best at failing forward, i.e., learning from what went wrong.\u201d<\/p>\n<section class=\"textbox tryIt\"><iframe loading=\"lazy\" id=\"ohm4473\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=4473&theme=lumen&iframe_resize_id=ohm4473&source=tnh&show_question_numbers\" width=\"100%\" height=\"350\"><\/iframe><\/section>\n","protected":false},"author":21,"menu_order":15,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Why Some Ventures Fail\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Scuba-shop illustration\",\"author\":\"Frits Ahlefeldt FA-L.com\",\"organization\":\"\",\"url\":\"https:\/\/www.flickr.com\/photos\/hikingartist\/5727294500\/\",\"project\":\"\",\"license\":\"cc-by-nc-nd\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":2981,"module-header":"learn_it","content_attributions":[{"type":"original","description":"Why Some Ventures Fail","author":"Nina Burokas","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""},{"type":"cc","description":"Scuba-shop illustration","author":"Frits Ahlefeldt FA-L.com","organization":"","url":"https:\/\/www.flickr.com\/photos\/hikingartist\/5727294500\/","project":"","license":"cc-by-nc-nd","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/2997"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/wp\/v2\/users\/21"}],"version-history":[{"count":10,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/2997\/revisions"}],"predecessor-version":[{"id":9502,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/2997\/revisions\/9502"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/parts\/2981"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapters\/2997\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/wp\/v2\/media?parent=2997"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=2997"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/wp\/v2\/contributor?post=2997"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/wp-json\/wp\/v2\/license?post=2997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}