Image credit: Flamingo Images/ShutterstockEvery entrepreneur encounters plenty of setbacks along the way to success. When things inevitably take a turn for the worse, it's important to have a support system in place to help you overcome obstacles.
Roadblocks play a role in every entrepreneurial journey. There's a reason only one-third of businesses make it to the 10-year mark. Unless you anticipate and plan for them, you'll find yourself running in circles rather than moving forward.
Common entrepreneurial setbacks
Each entrepreneur faces their own unique challenges, but there are some that threaten us all when we first begin the journey. First, you might focus on the wrong data. Entrepreneurs rarely have the benefit of a team of experts making sense of their KPIs. When I first started out, I spent about 90 percent of my time on core operations; any time I had left went to the highest-priority items to bring in revenue.
That's a normal course of action for any founder. But if you can find the time for it, you will almost always benefit from identifying the growth levers that are unique to your business. Spend some time thinking about which metrics you're tracking, whether there are others you should be measuring, and which numbers matter most in the short and long term – with the latter taking priority.
The second trap you could fall into is acting on institutional imperative. This is what Warren Buffett defines as "the tendency of executives to mindlessly imitate the behavior of their peers." Anyone who has started a business can relate to this one, as the pressure to follow trends and compete with others can cause even experienced entrepreneurs to miss out on opportunities for true growth.
Finally, countless entrepreneurs get themselves into trouble by operating on shaky accounting and legal foundations. Even if you're an experienced operator, you might not have a great deal of legal or accounting knowledge to draw on when you're making important decisions.
Unfortunately, the lack of a solid accounting or legal foundation can cause serious problems when issues inevitably come up. The data backs this up: 29 percent of new businesses fail because they run out of money, which means you're at a huge disadvantage if you're not prepared for legal and accounting obstacles that could arise.
These setbacks can feel like a punch to the gut, but most entrepreneurs learn to handle them calmly and iterate until they get it right. Except in the most extreme startup scenarios, business is a long-term endeavor that rewards slow and steady progress – so small mistakes won't kill you.
Tips to turn setbacks into success
A fear of roadblocks shouldn't stop you from forging out into unknown territory. In reality, those setbacks are key chapters of any success story.
It sounds cliche, but anything that can go wrong will go wrong. In the world of entrepreneurship, change is inevitable. You might need to tweak your pricing. Your partner might run out on you for no good reason. You might face production or manufacturing issues that drain your bank account.
When it comes to growing your business – despite the inevitable roadblocks and wrong turns that come with the territory – there are some practices that will keep you on the right side of the statistics:
1. Start with a solid support network.
You can't grow your business until you have a buffer of support to celebrate with you in the good times and help you out when the going gets tough. In my case, this is my wife and son. But you'll need to find your people – be it family, friends, mentors, other entrepreneurs or all of the above – and start involving them in your trials and triumphs.
2. Grade your decisions, not your results.
History tells us that the best managers tend toward extreme rationality in their decision-making. This can feel almost impossible in a small business environment because things come at you a mile a minute. Practice focusing on the process of making decisions instead of worrying about the infinite outcomes beyond your control. This frees up time and energy for creativity, deep thinking, and collaboration (which will help you get the results you dream about).
3. Know your business better than anybody else.
Unless you're operating a larger company, nobody will understand your core business as well as you do. It's a lot of pressure to handle so many moving parts at once, but there is also a lot of opportunity. If you can identify the KPIs I mentioned earlier, you'll be in a better position to make meaningful decisions that affect your business's future.
4. Follow industry developments selectively.
Keeping up with competitors can bring valuable insights that help you run your business better. Just be careful not to overlook your own unique value propositions. Your job is to create an unfair advantage for your business, and you can only do that by understanding your customers' needs and how you might differentiate yourself in the marketplace.
5. Perform a legal and accounting pre-mortem.
Pre-mortems can be useful thought exercises that you can use internally to reverse-engineer your response to issues. Imagine that your business is wrapped up in a court case or being audited by the IRS. What went wrong in this hypothetical situation? What blind spots did you miss? Once you've identified potential problem areas, you can discuss these matters with your team or a trustworthy professional and then shore up your internal processes to reduce any risk.
As an entrepreneur, you should learn to expect setbacks. As long as you focus on the things you can control and make good choices early on, you'll be on solid ground – and hopefully a few steps ahead of the competition.
