For every success story we hear about smart entrepreneurs who have founded a lucrative lifestyle business, there are hundreds of untold stories about those who have failed. So what makes the difference between lifestyle businesses that thrive and those that crash and burn?
I don’t believe that it’s simply a matter of bad luck that many wannabe lifestyle entrepreneurs struggle to launch a successful venture on their first attempt. In fact, many people are making the same mistakes over and over again.
Each person and business is a unique case of course, but there are five common factors in particular that can contribute to the downfall of a small biz start-up.
1. Unrealistic expectations
With a lot of online entrepreneurs promoting lifestyle businesses as a way to ‘have it all’, it’s tempting to look at those who are successful and assume that their path to the top was an easy one, but that’s rarely the case.
The worst thing a fledgling founder can do is to quit their job and expect that reading a few books about the law of attraction will fix all of their problems. Very few people are prepared for the amount of work involved in getting a lifestyle business off the ground, and the need to be flexible and agile when dealing with the inevitable challenges that arise.
Most importantly you need to have a realistic picture of what’s involved. Learn from those who’ve been there, done that. Take online courses. Got to conferences for your chosen industry. Get in touch with people in the industry you want to launch a business in, and see if you can meet them and ask them questions. Make sure you know the full story before you dive in.
2. Lack of knowledge, skill or experience
There is no shame in failing in your attempts to start a business, as long as you learn from the mistakes you make the first time round and take steps to ensure you never make them again.
Experience in business, or at least in a field that’s related to the business venture you are launching is invaluable. Those who lack any kind of business experience are much more likely to fail the first time they attempt to launch.
Likewise, if they just don’t have the knowledge or skills required for the area they wish to make money in, then they will almost certainly fall at the first hurdle.
In a world where we are all connected, you can easily learn about the field you’re interested in through online courses, reading blogs and other websites.
Not only that, but you can find people who do have the skills, knowledge and experience your business idea requires, and partner with them, or at least hire them as a consultant so that you don’t make a crucial mistake in the early stages of your start-up.
3. Bad choice of niche/weak offer
Too many Richard Branson wannabes fail to remember that he did not achieve all he has through charisma alone. His genius was in finding a gap in the market and exploiting it. whether it was in the music, aviation or telecommunications industries, Branson knew that there was room for his unique approach and that people would be willing to pay for it.
Far too many lifestyle businesses are ‘me too’ efforts with nothing to differentiate them from the competition and no proven market demand.
Is your product something people really need, or is it just something that would be ‘nice to have’?
This can be tested by setting up a simple product/email sign-up page and driving traffic to it via a Google Adwords campaign. If you can prove from the beginning that you can attract enough people who are willing to actually hand over cash for your product or service, then there’s a chance you could turn your idea into a business.
Even with the right niche and a hungry market, your offer might be weak. Perhaps you’re pricing is too high, or potential customers just don’t feel they’re getting enough value or choice. Conversely, your prices might be too low, meaning you don’t make enough profit to keep your business afloat.
Sometimes, if you don’t get it right first time, the only thing you can do is experiment with different options – the sooner the better though because the longer you leave it to change something that’s not working, the more likely your business is to fail.
4. Lack of strategic planning
Too many entrepreneurs just sleepwalk their way into troubled waters. You might have quit your job in the hope of doing something more enjoyable, but after a few months you realize you’ve just created another job for yourself that keeps you running round in circles like a hamster on a wheel.
Now you’re not even able to stop and take a look at the big picture because you have to work all hours of the day just to pay the mortgage and bills.
Your strategic planning should have a long-term focus from the beginning, and every entrepreneur needs to schedule frequent check-ins with flexibility built in to your business plan for when things go wrong or circumstances change.
As the founder of your business, even if you don’t have any staff, it’s your responsibility to have a vision and a realistic plan to implement it.
5. Don’t have a strong enough network
Trying to be a lone wolf and make it on your own in business is a guaranteed recipe for disaster. A strong network is absolutely essential if you are to weather the inevitable storms that come with stepping out into the lifestyle business arena. If you’re isolated, it’s a fair bet you won’t have any impact whatsoever.
Enlisting mentors and peers to your cause who will give you support and honest feedback will make all the difference as you forge ahead with your new venture. Mastermind groups that meet either online via Skype or Google Hangouts or in the real world, are a great way to maintain contact with a group of like-minded business-owners and ensure you stay on track.
Ideally anyone launching a lifestyle business will have been building their network well in advance, but even if you’re not in a great position at this stage, you can improve things by simply reaching out to people you respect and asking for their advice.
I’d also recommend finding ways you can help them, without expecting anything in return. When it comes to building a solid network, if you’re only in it for your own gain, anyone with half a brain will see through your strategy straight away and steer clear.
Make sure you’re connecting for the right reasons however, and there’s no reason why you won’t make genuine connections that could end up being mutually beneficial down the road.
Of course there’s no point building a huge network in the world of cloud computing and then launching a lifestyle business that centres around child-rearing – your business should be relevant to your network, and vice versa.
So there we have it – five of the most common reasons why lifestyle businesses frequently fail. One of the above can be a deal-breaker on its own, but combined with any or all of the other issues mentioned and it’s likely that your business will end up as just another flash in the pan.
By avoiding these common mistakes from the very beginning you can dramatically increase your chances of success and really achieve the dream of building the business and life that you really want.