Business is a trap word. When it comes to businesses, there are two main goals: happiness and success.
Success factors in business are: focus on accumulating assets over time; no need of constant investments or hard work; no single point of failure; no long-term dependancies on a co-founder, equipment or resource.
A key reason why business ideas fail is the existence of the wrong kind of dependencies. Short-term dependencies are perfectly fine. You must in fact learn to lean onto employees, trust them, and delegate. Long-term dependencies are tricky and usually involve a business co-founder.
Most people are aware of the risk of a long-term dependency, yet they still often choose one, because they: came up with the idea together; want someone to share the responsibility or the joy and enthusiasm with; need someone to discuss their ideas with; need financial support. The first three are all about the Game of Self factors, rooted in obsessive morality, lack of self-love and resulting insecurities. Money is a Game of Life factor.
If you feel you are the senior partner (more experienced, more resources), always consider whether you couldn’t simply hire the junior one. If you feel you are the junior partner (less experienced, fewer resources), ask yourself whether you would have any control over the whole project. Don’t expect from a senior partner to contribute time and know-how. They might rather contribute resources, and have an investor-like role.
Businesses fail if you try to make people happy too much while neglecting the money earning part. The most important predictor for your business idea’s success is your industry.
The number two reason why business ideas fail is the desire to create something that doesn’t exist. The mathematical nature of the free market doesn’t account for these emotional human desires. If creating cool stuff is not financially sustainable, you should call it a hobby.
The number three reason why businesses fail is that you create more liabilities than assets. Best case are asssets that create money over time with no extra cost (passive income). Start with almost-zero-but-passive income. Then scale. Worst case are liabilities that drain money over time with no extra benefit. Time is actually the most valuable asset. Typical drains of time are annoying customers. Being able to choose your customers is a huge advantage in business.
Finally, reason number four for the failure of a business is having no idea, yet desperately wanting to have one. It often leads to a franchise – a hybrid of having a day job and having a business, taking only the very worst from both – lack of freedom, lack of diversity and high liabilities (slave labor).
Remember, according to supply and demand rules, the best business ideas are not the mainstream ones. Life is unfair to many businesses but actually it is to your advantage. Enter industries where success exists. But don’t forget to share back.
