New entrepreneurs start businesses every day with great ideas and visions for success. However, many of these ideas never materialize and up to 20% fail within the first year.
This is especially true of one-person businesses, which make up a considerable portion of new companies. These “solopreneurs” may have the best intentions starting out, but many end up running out of funding or aren’t able to reach their target market.
Below, eight members of Young Entrepreneur Council laid out the main reasons why many one-person businesses fail and what solopreneurs can do to prevent this.
1. Aiming For Perfection Instead Of Just Starting
Focus on just getting your business idea into the market, however minimally viable. Lean on your network for early adopters or get some free marketing from your friends and family. This turns into a virtuous cycle where you’ll start getting more business and can keep perfecting your product. Don’t focus on becoming Apple or Google before you have even made one sale or had one person use your service or product. – Anthony Saladino, Kitchen Cabinet Kings
2. Lack Of Pre-Launch Planning
I think many one-person businesses fail because there’s a lack of planning before launching. You’re not going to know every single thing that will happen with your business, but too many startups fail to have a solid business plan they can follow through the first year. For any business to have even a slim chance of survival, it requires a business plan. This will take your company from step A to step B and ensure that it stays on track. – Stephanie Wells, Formidable Forms
3. Trying To Do Everything On Their Own
Being a solopreneur doesn’t mean having to do everything on your own. If you try, you’ll probably eventually fail. Know your shortcomings and hire freelance experts when necessary. Make sure you have an accountant or tax professional and lawyer that you can rely on. These professionals can make or break your business. Trying to do all your legal work through LegalZoom and preparing your own business and personal taxes as your company grows are both highly likely to come back and bite you (hard). If you find yourself spending all your time on mundane, repeatable tasks instead of scaling your business, bring on a freelance virtual assistant to take that busy work off your plate. Technology has made being a solopreneur more achievable than ever, but most successful solopreneurs don’t truly go at it alone. – Mark Stallings, Casely, Inc
4. Getting In Their Own Way
You are your own roadblock. Because you are the only one involved in your business, you have to handle all of the work. If you get sick or need to take a day off, then the work may not get done. Yes, there is automation, but it’s still nice to have someone to lean on if anything fails, for both practical and motivational reasons. To avoid becoming your own roadblock, make sure you create a network of friends and like-minded entrepreneurs in your field. This will allow you to ask for help when you need it, and it also provides a cheering section for when you’re feeling down on those inevitable rainy days. – Shu Saito, All Filters
5. Not Delegating Enough
The biggest reason why many one-person businesses fail is the lack of delegation and opportunity for growth. While keeping overhead low is ideal, it’s important to note that it’s also not optimal. One person cannot do it all. While it may seem like an expense that you can’t afford upfront, it’s critical to actually allow you to make a real business. Instead of thinking of it as an expense, think of it as an investment. This will help you also think about how to get the most out of your investment. That will in itself drive you to improve and scale your business. – Maria Thimothy, OneIMS
6. Not Understanding All The Numbers
There are many possible reasons, but one that I’ve frequently seen is new entrepreneurs not understanding all the numbers. Specifically, they don’t take the time to thoroughly research costs and expenses. This is especially common in e-commerce, where profit margins can be very thin. For any type of business, you have to factor in every expense, including renting space, buying materials, investing in tools and equipment, paying utilities, etc. You also have to estimate that business tends to have peaks and valleys. This brings up a related issue, which is that many new businesses don’t have sufficient capital to survive the time it takes to build up a customer base. – Kalin Kassabov, ProTexting
7. Failing To Hire Strategically
You can’t spend all of your time working in your business and doing everything yourself and expect to have time to work on growing the business. As a one-person business, you wear all of the hats, and that’s not sustainable. That doesn’t mean you need to hire a full-time staff immediately, however. Start with freelancers and build up to adding part-time employees to your team. Of course, you also need to invest in hiring people with the right skills and experience or you’ll waste your money. It’s tempting to hire a cheap marketing consultant or agency, but don’t give in to the temptation. Invest wisely now and you’ll get better results in the long term. – Jonathan Prichard, MattressInsider.com
8. Not Considering Outside Perspectives
When you have a small business, managing marketing, product development and other activities is possible. However, at some point, you start missing out on fresh ideas on how to improve processes and grow your business. It’s useful to start looking for mentors who can guide you and give you some much-needed perspective. This will help prevent you from stagnating and will help you focus on the right steps to improve your products and find new customers. – Syed Balkhi, WPBeginner