Why most start-ups fail

(shutterstock)
(shutterstock)
Durban - Ian Fuhr, serial entrepreneur and founder and CEO of the Sorbet Group, lists five common reasons why first-time small business owners fail.

1. Sameness is a disease – don’t copy

He said too many first-time business owners copy existing business models.

“Even if you are in an industry that has many similar businesses, you should do whatever you can to set yourself apart from the crowd.”

2. Cash is king — budget properly

Fuhr said most new businesses fail because they were under-capitalised.

Owners invariably underestimate the funds required to see them through the first year or two.

“It takes time to establish a business model and to build a brand.”

3. Don’t milk the business – give it a real chance over the long term

Fuhr said he had seen several entrepreneurs drawing big salaries and buying smart cars long before their businesses could afford such luxuries.

“The only thing that happens quickly in these cases is failure. Starting and building a business is a long-term proposition,” he said.

4. Don’t focus only on making money – build a culture of people and service

New business owners often tend to believe their employees were merely tools to help them make money and so they treated them without respect.

“You will never make money if you don’t build a culture in your business that is centred around people and service.”

5. Don’t take short cuts – always show integrity in your leadership

“Dishonesty is a killer in business.

Your reputation and credibility as a business owner depends largely on the manner in which you conduct yourself,” said Fuhr.

* Edward West is the business editor at The Witness.

Consider yourself an entrepreneurial hero? Or just have something on your mind? Add your voice to our Small Business Centre:

* Write a guest post
* Share a personal story

ZAR/USD
17.70
(-0.23)
ZAR/GBP
23.16
(-0.45)
ZAR/EUR
20.81
(+0.02)
ZAR/AUD
12.67
(-0.21)
ZAR/JPY
0.17
(-0.23)
Gold
2033.00
(+0.33)
Silver
28.82
(+2.47)
Platinum
1001.00
(+3.93)
Brent Crude
44.57
(0.00)
Palladium
2292.00
(+5.25)
All Share
56757.73
(-1.56)
Top 40
52435.65
(-1.72)
Financial 15
9897.96
(+0.10)
Industrial 25
74671.49
(-1.98)
Resource 10
58948.78
(-1.89)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 941 votes
It depends on how the funds are used.
74% - 6282 votes
No. We should have gotten the loan elsewhere.
15% - 1293 votes
Vote