Pretty presumptuous right? Everyone knows that entrepreneurs have a high failure rate and are expected to fail because that’s what makes a small group of entrepreneurs successful – learning from failure and continuing down the path of creating profit by providing solutions to problems that exist in the market. But what if entrepreneurs didn’t have to fail? Or what if a fewer amount failed? Crazy idea? It may not be as crazy as you think. Failure is based on not having the right answers to the right questions. Finding the right questions to ask is harder than finding the right answers. So what if entrepreneurs knew what questions to ask that would guarantee their success?
I have a theory that entrepreneurs fail not because of their idea, their grit or mistakes but because they don’t know what they don’t know. Entrepreneurs start businesses to solve problems. The problems can be personal like wanting to increase their wealth or can be professional like wanting to build a company that they can lead and drive change through. Ego, pride and freedom are some of the reasons people take a risk and start a business. Ignorance, lack of understanding and limited access to experienced people that can help are all catalysts for failure. I believe that if entrepreneurs were given simple and concise information about their business, they would know what questions to ask to get the knowledge they need to avoid the mistakes that may lead to their business shutting down.
I believe that the most important question an entrepreneur can ask is: “Am I creating value?”. Value is incredibly subjective but does have many objective characteristics. Take your business. Are your assets and equity greater than the liabilities your business has? Said another way, does your business owe more than it owns? If so, you are not creating value through the activities your business undertakes every day. Asking yourself this question should lead you to ask others questions that only you should be finding the answers to. How do you increase your assets? How do you lower your liabilities? How do you increase your equity? These seem like simple questions but try to come up with three answers for each of them. Chances are you probably can’t but now that you know, you have no excuse to try.