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Why most start-ups fail

Sep 28 2014 12:09
* Edward West
Durban - Ian Fuhr, serial entrepreneur and founder and CEO of the Sorbet Group, lists five common reasons why first-time small business owners fail.

1. Sameness is a disease – don’t copy

He said too many first-time business owners copy existing business models.

“Even if you are in an industry that has many similar businesses, you should do whatever you can to set yourself apart from the crowd.”

2. Cash is king — budget properly

Fuhr said most new businesses fail because they were under-capitalised.

Owners invariably underestimate the funds required to see them through the first year or two.

“It takes time to establish a business model and to build a brand.”

3. Don’t milk the business – give it a real chance over the long term

Fuhr said he had seen several entrepreneurs drawing big salaries and buying smart cars long before their businesses could afford such luxuries.

“The only thing that happens quickly in these cases is failure. Starting and building a business is a long-term proposition,” he said.

4. Don’t focus only on making money – build a culture of people and service

New business owners often tend to believe their employees were merely tools to help them make money and so they treated them without respect.

“You will never make money if you don’t build a culture in your business that is centred around people and service.”

5. Don’t take short cuts – always show integrity in your leadership

“Dishonesty is a killer in business.

Your reputation and credibility as a business owner depends largely on the manner in which you conduct yourself,” said Fuhr.

* Edward West is the business editor at The Witness.

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