Via Slashdot I have come to a very interesting article entitled Why I stopped being self-employed? In which an entrepreneur explains his reasons for business failure. Some of the reasons seem quite related to business in particular but I think you can generalize without much problem to any business. Let’s review what that person says and try to get general lessons applied to any business project.
Little capital: It is very typical that businesses fail because they have little startup capital. Believe it or not the money fly. You have to have a cushion in case things run abundant slow. It’s always better to have a good proportion of debt versus equity.
Overspending: It has something to do with the money coming back. It’s best to keep a low profile until you get income. Controlling spending is the most important in the beginning.
Little and slow cash flow: Finding customers fast that pay is a priority. Money in and out, to establish a routine. Live long without customers is complicated. It is sometimes necessary but then it takes a lot more startup capital.
Unrealistic expectations: The author of the input drop it a little obliquely but had other expectations. I thought getting customers with a product to fund the development of another but the first product ate all resources. We must focus on something, do it right and be realistic.
I hope that the author will have better luck next time. Everyone knows that the errors are drawn good lessons, harsh in this case but ultimately lessons.