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Listen… With All Due Respect, If You Fail, It’s Probably Because You’re Totally Incompetent.

Businesses fail for a variety of reasons. This is part one of a two part blog series that dives deeper to explore the reasons for business failure. In this blog post we’ll examine failure from a leadership standpoint, and in our next post we’ll look at failure from a business positioning standpoint. So let’s jump in.

A study done by ISBDC provides a good place to start when examining business failures. The report concludes that the three biggest causes of failure are; founder incompetence, lack of managerial experience, and lack of general experience.

  • Incompetence 46% 46%
  • Lack of Managerial Experience 30% 30%
  • Lack of Experience 11% 11%
  • Other 18% 18%

Lack of Focus

This study concludes, that the most common reason for business failure is due to the fact that the entrepreneurs who founded them were incompetent (46%). The word “incompetent” is a fairly broad word meaning “inability to do something successfully”. If we zoom in closer to analyze the root cause of incompetence we’ll often uncover the underlying deep-seated behavioral problems of the entrepreneur at the helm of the company.

One of the biggest behavioral problems is entrepreneurial lack of focus. The sad truth is that many entrepreneurs don’t work that well without a boss. First time entrepreneurs often abuse the freedom they are granted by working on their own ideas. They focus on the tasks that “feel good” (like researching, meetings, brainstorming, conferences etc). Many entrepreneurs have difficulties working in the trenches on the issues that would help their company grow because these tasks often can’t be completed without feeling at least a bit of pain.

Failed entrepreneurs often have a research bias. They like learning and thinking about their idea, but when it comes time to actually focus on doing the hard work, they have a difficult time bringing themselves to do it.

Many entrepreneurs also often fail to prioritize and organize their days. Entrepreneurs who find themselves on the losing side of a battle often have a hard time separating signal from noise. They find themselves increasingly busy and stressed, but in reality, their businesses are not any further ahead.

The ability to focus (even in the absence of a traditional boss) is critical if you want your idea to succeed.

Lack of Commitment

When you are your own boss you have an obligation to fully dedicate yourself to your business idea. This dedication will help you stay committed to both your short term and long term goals. Many entrepreneurs fail because, although they like dreaming about achieving their long term goals, they lack the daily commitment necessary to get them there. The fact is, that many people who call themselves entrepreneurs, are simply not. They might be ideas people, inventors, innovators or creative minds. But they are not entrepreneurs.

Entrepreneurs are individuals who can stay committed to a long term vision and are willing to grind away every day (even through pain) until they get there. Entrepreneurs are thinkers, but more importantly, they are doers. If you have a tendency to lack commitment, or if you have a difficult time getting into “grind mode”, you don’t need to run back to a job. Instead, if you feel you’re lacking in your ability to commit you can use mentors, masterminds or local startup groups to help you stay accountable to your goals. Sometimes the act of making your commitments public (even just on a forum or blog) can help make it more likely that you’ll do the things you’ve committed to do.

Lack of Motivation & Passion

Incompetence can also be caused due to lack of passion. Many soon-to-be entrepreneurs become interested in entrepreneurship because it seems to provide the framework necessary for financial freedom. The fatal mistake these people often make, is that they begin conceptualizing ideas by thinking about how they can make money.

What these people don’t realize, is that working on a project, even if it’s your own, gets boring quickly if it’s not something that makes your heart beat. Being an entrepreneur means you’re signing up for a marathon. If you’re not excited about what you’re doing, not only will your lack of passion show up in your work, but you’ll likely not have the stamina to complete the journey. For all entrepreneurs the journey is hard, but it’s a passion for the underlying business idea that makes the journey possible.

Inability to Listen

Incompetence can also result when entrepreneurs are unwilling to listen. As the saying goes; “it’s hard to teach and old dog new tricks”. Many entrepreneurs have too much pride to listen to outside opinion. Their ships sink because they are unwilling to let go of their assumptions about how things ought to be done.

On the other side of the spectrum, entrepreneurs can also fail by being too open and listening to bad advice. Not knowing how to filter ideas can be fatal to any entrepreneurs business.

Incompetence can also find its roots due to lack of proper mentorship. If you’re not getting the results you want, you’d be wise to study other entrepreneurs who have come before you. Having an open forum to bounce ideas around, and having the opportunity to listen to expert opinion, is often regarded by entrepreneurs as their most valuable business weapon. Information is power.

Lack of Experience

That said, it’s not just incompetence that leads to business failure. Lack of managerial experience accounts for roughly 30% of leadership failures. Managerial failure results from entrepreneurs not being able to deal with the many moving parts within their business.

Entrepreneurs are required to have proficiency with sales, time management, employee management, accounting, business planning and customer support, to name only a handful of areas where skills are required. To put it lightly, it’s no small task to juggle the needs of so many different departments at once. No entrepreneur I know finds that process easy. However, the inability to strategically manage the many managerial needs of a company can lead to total failure.

Similarly, lack of general experience leads to around 11% of business failures. For example, an entrepreneur with great managerial experience in one niche might want to try their hand in another niche. However, their lack of experience dealing with the unique set of problems and dynamics within the new niche can also lead to business failure.

The other 8% of failures are due to things like fraud, natural disasters and neglect.

Think of Failing as an Option

I advise you to stop yourself from failing before you give yourself the chance to do so. By studying why other people fail you can better defend yourself from failing. Be honest with yourself. Study yourself. It’s not always pleasant what you find, but be sure to take a close look.

If you find yourself prone to lacking focus or discipline, my advice to you would be to sit down with yourself and have an open conversation out loud about yourself to yourself. Admit, were you see weakness and vulnerability. Identify any of your own personality traits that we just linked to business failure. Are you unfocused? Do you lack discipline? Do you not enjoy doing work that doesn’t feel good? Are you a know-it-all?

The goal is to learn to control or repair those personality traits so they can’t lead you down the path towards total business destruction.

You can also reach out to me. My name is Sterling, and I’m the founder of, an octopus-like boutique venture studio with a growing portfolio of creative technological projects.

I run a mentorship program which I’ve designed to be the digital equivalent of sitting down with me once / week so I can help guide and influence your company’s growth. You can get this for less than the price of buying me a cup of coffee for each mentoring session. I’ve been a successful entrepreneur for almost 20 years. I’ve created some of the biggest websites online that have brought in millions of dollars in revenue. The last project I incubated and then launched, went from $0 to $16,000 per month in less than 6 months without anyone else helping me work on the project. In my mentoring program not only will you get access to my mentoring sessions, you’ll also focus on lifestyle design, systems building, project management and case study analysis. You’ll also become part of a growing community of ambitious start-up entrepreneurs. Sometimes it’s just nice to be able to plug into like-minded people to help you expedite company growth. I’m an approachable person. If you have any questions about the program feel free to reach out to me.

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