Many of us are familiar with the
history of Germany. A once, vibrant, and great economy that became a shadow of itself after the war. Today, many businesses, especially start-ups are like Germany. They have all the looks and appearances of a business that would survive in the marketplace while enjoying artificial prosperity in their survival years. However, they are heading towards doom.
How can a business enter the marketplace, engage in its competitive wars, and still stay alive and strong? Let’s learn from the war…
A Great Nation Vs a Great Business
By all standards, Germany before 1918 was one of the economically vibrant nations in Europe. However, some years down the line, Germany felt cheated by its European brothers after it found that its spot at the colonial marketplace was a sad and small portion compared to its fellow European brothers’ — this is what happens to businesses. Young entrepreneurs budding with ideas, zeal, and passion to develop a new product or offer services worthy of creating a business often find themselves struggling a few years down the line.
The first lesson an entrepreneur should learn here is, it doesn’t matter if you own the idea or the clear picture of the opportunities involved, others would beat you to it if you’re not able to carefully forecast the direction of the market or able to adapt to the ever-changing business environment to stay ahead of your competitors.
Another lesson to learn is, nobody is your friend in the marketplace. Yes, there are allies, but there are no friends in the business world.
Most Start-ups, like Germany, make one fatal mistake when starting a business – they startup with a loan/debt. For no reason should you start up a business with a loan, most importantly if it is a business built on a new product or new form of service. However, stories abound of entrepreneurs and businessmen who build empires by starting their businesses with an obtained loan. Yes, there are stories like that. But those are the exceptions, not the rule. Unfortunately, today, entrepreneurs blindly make the exception the rule, at the detriment of their business.
As an entrepreneur or a business person, using a loan to start a business would keep you under pressure — which is good, if you know how to manage and handle it — but it can force you to make decisions that can be harmful to you and your business.
When under pressure, the ability to reason critically might be hampered, you may see myths and call it an opportunity, you may invest wrongly and drag your business to its knees.
Note: one of your greatest business tools as an entrepreneur, is your mind. It should be sound at all times, loans and debts mess with that. If you must take a loan, only take it to grow your business and preferably not within the early years where the business is still trying to survive.
The following are companies that folded up within the first 5/6years.
Company name: WESABE
Profile: A personal Finance Management system. Raised about 5 million dollars.
Life span: 5 years.
Cause: Bad Management.
Company name: PAY BY TOUCH
Profile: A start-up that offered innovative Retail Payment through fingerprint. Raised about 350 million dollars.
Lifespan: 6 yearsCause: Bad Management.
The common denominator of all these businesses is bad management.
Note: all three companies are located in the United State, because of their level of economic stability, yet they failed.
The Beginning & The End
In 1939 when Germany decided to go to war, it attacked Poland, Denmark, Norway, Belgium, Netherlands, Luxembourg, France, Yugoslavia, and Greece. The victories were swift, the blow on the enemy crushing, the German soldiers were elated. This caused the whole world, particularly Britain, America, and Russia to stand in awe of Germany’s might.
Most businesses take after this same module. They enter the marketplace with so much capital, ideas, and resources to the admiration and fear of existing businesses. They throw money into advertisements, update their social media pages, start campaigns, throw their products/services on people’s faces… the sky always seems to be their starting point.
However, research has shown that this approach has proven to be unsustainable.
Like Germany, they focus on the battles instead of the war! Yes, each battle is important if you’re to achieve victory in the business world, but not all battles should be won. At some point in doing business, you will learn to give your competitors a Trojan Horse, just so you can capture the entire marketplace. Learn more about the Marketplace War by reading my next article on the coming issue of this magazine.