The reason why most people fail in business

Meeting needs is the basis of all businesses. You can devise a wonderful new machine, but if it doesn't address some real and important need or desire, people won’t buy it, and your business will fail. Even Thomas Edison recognized this fact when he said, "Anything that won't sell, I don’t want to invent.  Typically, entrepreneurs get their original business inspiration from one of four sources: 1) previous work experience; 2) education or training; 3) hobbies, talents, or other personal interests; or 4) recognition of an unanswered need or market opportunity. Occasionally, the impetus comes from the business experience of a relative or friend.

As you refine your business concept, keep in mind that successful businesses incorporate at least one of these elements:

1. Something New. This could be a new product, service, feature, or technology.
2. Something Better. This could be an improvement on an existing product or service encompassing more features, lower price, greater reliability, faster speed, or increased convenience.
3. An Underserved or New Market. This is a market for which there is greater demand than competitors can currently satisfy, an unserved location, or a small part of an overall market--a niche market- that has not yet been dominated by other competitors. Sometimes, markets become underserved when large companies abandon or neglect smaller portion of their current customer base.
4. New Delivery System or Distribution Channel. New technologies particularly the internet, allow companies to reach customers more efficiently. This has opened a many per opportunities for businesses to provide products or services less expensively, to a wider geographic area, or with far greater choice.
5. Increased Integration. This occurs when a product is both manufactured and sold by the same company, or when a company offers more services or products in one location.

Your business should incorporate at least one of these factors- more than one if possible. Ideally, you can bring a new or better product or service to an identifiable but underserved market, perhaps using a more efficient distribution channel. Evaluate the ways your business concept addresses the elements described above. Your concept should be strong in at least one area. If not, you should ask yourself how your company will be truly competitive.

Understanding the Market

It is not enough to have a great idea or new invention as the basis of your business; you must also have a market that is sufficiently large, accessible, and responsive. If your market isn't large enough, you can't reach it efficiently, or it isn’t ready for you, your business will fail, no matter how good your business concept. This has been endorsed in this video by Mark Cuban who talks about the reason why most people fail in business:

 

 

“What customers are willing to write a cheque or commit to it?” says Cuban in this video and encourages entrepreneurs to find a niche market and meet its needs perfectly.