Undercapitalization is NOT the biggest reason startups fail

Starting a small business, but you haven’t got a year or two of working capital saved up?

Join the crowd. Many small businesses don’t have a financial cushion, and we hear repeatedly that not being ready to finance several months of losses (or more) is why they fail. Don’t you believe it!

Truth Hurts:

Just because people are always telling you, “You should do this for a living,” does not mean you should.

Has anyone ever said, “… and I’d like to be your first paying client”? No? Then don’t listen to your friends, coworkers, or your brother. These people are admiring your talents, but not offering to get you off the ground.

I do want to sound harsh here, because you want to know the truth now, before you sink your cash in to float the losses. The biggest reason why startups fail is… Nobody wants what they are selling.


There is a bit more to it than that.

Nobody wants what they are selling…

  • In the current location
  • In the atmosphere created
  • In this style, size, package
  • From the particular salespeople
  • At this time (or with really bad luck, in this era)
  • At this price
  • With their expectations

Any or all of these elements (and many more) can contribute. Bottom line: Right now, nobody wants the widget, nobody wants the service.


If it’s your startup, how can you save the business?

1. Decide what YOU want: until you know your own mind, don’t be surprised if customers won’t come along for the ride

2. Determine what the customer is trying to tell you about what he or she wants (better yet—needs)

3. Look at the list above: which elements can you change to bring your vision together with the customer’s? Can you:

Change locations?

Reconsider your firm’s name?

Update the look of your place? Change the look of your logo, your printed materials or Internet presence?

Vary the offering? Fancier? Simpler? More? Less?

Bring your staff along on this journey? Is it their attire or their attitude that needs changing?

Is your timing off in a simple way, such as needing to serve breakfast and lunch in an urban-office area instead of dinner, or in a big way, like no one seems ready for what you offer? Can customer education bridge the time warp and bring customers forward?

Raise or lower prices?

Bring expectations in line with offerings, by continuing to fine-tune each element?

4. Bring it all together: your Vision, their needs, your execution of each aspect of the business, until the customer wants what you are selling.

So simple? Not quite. This is hard work. An investment of time, money, and oh, yes, really hard work. Get help with this if you can. C’mon, did you think you could save your business in an afternoon?

It’s Never About You. It’s About Them.

Whoever first called quitting your full-time job with a happy, auto-deposited salary to become an entrepreneur “working for yourself” was full of baloney. Yes, folks, baloney.

Are you a small business owner or a wannabe? Let me introduce you to your new boss—the customer.

If you think your old boss was demanding, unpredictable, and never around when you needed her, boy, is owning your own small business gonna open your eyes.

The business of doing business is not as simple as having a talent or a skill that some folks admire. If it were, I’d be a woodworker, a genealogist, a (full-time) writer, a comic, a therapist, a miniaturist, a masseuse, and a restaurateur. I’ve worked in some of those industries, but most have been suggested to me by folks who admire a skill I use in my off-time (I LOVE my hobbies).

You CAN put what you love together into a business that fulfills others’ needs, but the focus really has to be on those “others.” I can’t emphasize that enough!

Love using your talents, in a way that others need and can relate to? Then you won’t be digging nearly so far into your “working capital” to get your business working.

How does a great new business hook you? What do they have to do, to get you to want what they’re selling—when you managed fine without them before?


Grow and be well,

Kelly Erickson

P.S. It’s never about me, it’s about you. If you’ve been around since the beginning of the MCE Blog, I’d just like to tell you that you are reading your 200th post. Congratulations on your tenacity, and thank you for creating an amazing community here. I’m blessed with the most wonderful readers on the web. I’m so glad you want what I’m selling! Do continue to share MCE with others, and together we’ll fuel even more ideas to grow your business in the next 200.