Why Most Businesses Fail

Oh, hey! MarkTaw.com updated! Why Most Businesses Fail (A Theoretical Model) was an interesting article analyzing the reasons for the high failure rate of new businesses.

Business owners can find that income fails to cover expenses. New owners might not realize that profits come many years down the road, and I believe most of them are in the high percentage of first-year failures. For those owners that do appreciate how difficult it can be to meet expenses and start saving, it is possible that the expenses accumulate much too quickly compared to revenues. Mark suggests that there are only three options: reduce expenses, increase income, or quit your business. Reducing expenses might results in less debt, but it is still debt. Increasing your income is obviously important, but it can be frustrating when your margins are terrible. Quitting the business adds another notch to the statistics about failed businesses. What he says about each is insightful about the thought processes new business owners need.

He ends the article with 12 tips for people who still want to go through the trials of starting and running their own businesses. #8 and #9 go well together. #8 says to try multiple things. Get multiple streams of income. Don’t depend on one product or service. You need a backup in case one aspect of your business fails.

#9, however, says that you need to start somewhere. You can’t always jump into multiple endeavors. Start somewhere, take action, and get something out there. You need to make one product before you make your second. If I had stuck with my deadlines for game development, Oracle’s Eye development would have slowed down incredibly, and if you have been reading for the past month, you know I can’t afford to lose the few hours I do get to work on it. According to my old deadlines list, I am supposed to have a prototype for IGF 2007 by the end of March. I am also thinking about topics for a book or newspaper article series. I haven’t finished my first game yet, and there is a temptation to work on a different project to give myself a break. I need to ignore everything else and focus on my game project. I need to take as much action as I can to finish it.

Otherwise, I’m just another wannabe game developer who couldn’t finish what he started. So long as I am making progress, no one can say that I didn’t finish. I just haven’t crossed the finish line yet. I’ve been floundering because there were a handful of finish lines, which caused me to lose my focus. Once I made the conscious choice to concentrate on one goal and ignore the rest, it was easier to breathe. Taking action was a choice between doing something productive or not doing something productive, which is a lot easier than trying to decide which of a handful of productive actions to take.

2 comments to Why Most Businesses Fail

  • Amen… that last paragraph really struck me as familiar. I’ve just recently figured out that I really only have about 40 hours left of work to do on Blobyrinth… just gotta do one task at a time until they’re all done.

  • Congratulations on knowing how far you are from the finish line! I am still having trouble projecting the time needed to complete a task. Good luck!

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