Your Business May Have No Future, Here’s How You Know
Wouldn’t it be nice if you could sniff out how a long-term commitment would end before actually spending years pursuing the desired outcome?
If you knew that the guy you dated for a year would end up being a terrible partner, wouldn’t it have been nice to avoid the relationship? If you knew that going to graduate school would be useless because you’d switch careers after graduating, wouldn’t you have wanted to avoid the student debt? If you knew that you’d blow $20,000 building a new business, only to lose it all, wouldn’t you have liked a heads up?
Yes to all of the above, right?
For the trained eye, especially when it comes to business, there are clear signs that indicate that a startup is going nowhere no matter how much is injected into it.
I’ve seen business owners put away life savings into their business idea only to lose it all. I’ve seen business owners lose even more than that because no one had the guts to tell them that they needed a new vision.
To save you some grief, give you inspiration to readjust, or to just point you in the right direction, here are the telltale red flags seen in startups without a desirable destination.
There Are No Competitors
Most founders see this as an opportunity, but I see this as a potential red flag. Do you know how many people there are on this planet who are constantly researching new startup ideas to make money off of? Likely millions.
Do you know how likely it is that with that many brains working together, that someone hasn’t thought of your idea yet and tried to pursue it? Insanely low.
There’s a delicate balance between opportunity and red herring when it comes to the “there are no competitors” discovery. You may have struck a unique opportunity if your idea is exactly that — an opportunity that is niched down to a very specific offering to a very specific audience. Like it has to be so specific that it’s a little weird.
If your idea isn’t incredibly specialized with a unique offerings and audience mix, it’s likely that your idea has no competitors because there’s a high barrier to entry (more on that in the next section).
When I don’t see competitors in your industry, it tells me a couple of things:
- You may not have a large viable market. It’s likely that your industry is wiped of competitors because they all tried, and couldn’t find a large enough of a viable market to make a reliable business model off of. If you don’t have enough customers, you won’t have a business.
- There is a high barrier to entry to function and become profitable in the space. More on that in the next section.
There are no bigger killers than not enough customers and too expensive to function — these are kisses of death for new businesses.
The Industry Has A High Barrier To Entry
There are a lot of antiquated industries that have high barriers to entry because:
- The minimum purchasing costs for inventory are extremely high, preventing new players from easily entering the market.
- There’s a lot of regulatory, legal, industry-related red tape that makes it difficult and expensive to get the business going.
- The profitability of the business is razor-thin because the costs of running the business are too high.
Unfortunately, this is the one scenario where pushing and hustling won’t do you much good. The only solution that can remedy this problem is a lot of money and patience. This is why “disrupted” industries are usually done so by well-funded startups — the money makes all the barriers created by red tape “disappear”.
You Want To Hire Everything Out
I’ve met a lot of business owners with a good amount of personal capital who hire out all the major responsibilities of starting up a business from the very beginning.
Blame it on 4 Hour Work Week culture, but if you’re not a drop-ship business, you are putting yourself in the danger zone of startup death if you don’t personally get your hands dirty during the awkward teenage years of a business.
This awkward growth period is when you figure out who you are, what you stand for, and who your customers are. Without personal knowledge and observation of these critical pillars of identity, you remove your ability to steward the vision and growth of the business.
It’s kind of like growing up in a home where you’re a stranger to your own kid because you decided to do other things rather than spend time with them. As the years go by, you fall further and further behind from truly knowing them and are unable to recover the evergrowing loss.
If you don’t have a personal fire to run your own business in the beginning, it’s a sign that you’re mentally not ready to take on the responsibilities of being a business owner. Truly becoming a business owner who wants to know and grow with its business requires sticking around for the messy parts too.
If You Didn’t Fall Into Any Of These Categories…
Congratulations! If none of these above categories applied to you, this means that the only thing stopping your business from a bright future is you and your mindset.
Isn’t that interesting to think about? There are probably only a handful of businesses that are truly bogged down by the above issues raised, so that means the mass majority of businesses that fail are a result of personal mindset.
If this just became an ‘aha’ moment for you and you want to ensure that mindset doesn’t become a personal gatekeeper to your success, here are some resources that I recommend that you leverage to keep you mindset hygiene in place:
Introduction to mindset support:
- Books — some good ones that come to mind: “Big Magic” by Elizabeth Gilbert, “The Dip” by Seth Godin, “Dare To Lead” by Brene Brown, “The Big Leap” by Gay Hendricks, “Atomic Habits” by James Clear.
Mid-level mindset support:
- Retreats, conferences, short events
- Monthly masterminds
Drastic, full mindset support:
(Best for those wanting to accomplish big goals and/or need to fix current mindset blocks.)
- Multi-month coaching and/or events
Want to turn your startup chase into a victory lap? My Friday morning emails will help you get over your Crux.