One Reason Businesses Fail–and How We Can Remedy That
By: Karl R. LaPan, President & CEO, Northeast Indiana Innovation Center
Why do businesses fail? While most people naturally leap to under-capitalization as a key failure factor, an often overlooked factor is a lack of a support system—access to networks, trusted advisors and access to ‘know-who’ and ‘know-how’. As part of the NIIC’s 2016 strategic planning efforts, we adopted the four pillars of entrepreneurship (capital, talent, place-making and connectivity), and based on our 16 years of working with innovative people and companies, we know how these pillars affect business owners on a day-to-day level. Access to robust networks and connections can provide the assistance and edge young and emerging companies need to execute faster and smarter in the marketplace.
An entrepreneurial ecosystem has powerful implications for up-and-coming small businesses. First, the mere presence of a successful home-grown enterprise shows the possibilities of entrepreneurship and the potential rewards of leaving a stable job for the excitement and demands of starting your own company. Moreover, in the event that these nascent companies encounter difficulties, this can actually have a positive impact on the entrepreneurial ecosystem. Entrepreneurial churn is one of the healthiest things for a community to experience on its way to diversifying its economy.
Business growth is driven by a process coined “entrepreneurial recycling”. This means entrepreneurs who have built successful companies and go on to sell them leave the company soon after it is sold. But they remain somewhat in the fold, by reinvesting their wealth and experience to further spur entrepreneurial activity. Some will become serial entrepreneurs; others will become angel investors, providing start-up funding for new ventures and contributing through board leadership. Some may even set up capital funding mechanisms to facilitate investments. Others become advisers and mentors, helping to offer practical, real-world advice. Then there are those who serve as advocates for entrepreneurs, by advocating with government and establishing organizations that support and drive more robust entrepreneurial activity and community engagement (commitment, ownership, and buy-in).
So, I’ve sold you on the value of such a network, but what does it mean to you, the small business owner, today? Here are a few takeaways from some of the most successful entrepreneurial ecosystems:
- Nurture your entrepreneurial passion and the passion of other entrepreneurs. Entrepreneurs tend to be natural problem solvers and challenge the status quo to find better ways to do something. That sort of thinking is how we further a culture of innovation and create the next big thing.
- Connect and grow the collective entrepreneurial spirit by engaging and “paying it forward” with like-minded innovators and aspiring entrepreneurs. No entrepreneur is an island. Your peer may have the solution to your most urgent problem. Networking, story telling, and a little vulnerability go a long way to advancing a more innovative and entrepreneurial culture.
- Build an entrepreneurial community with the entrepreneur at the center of it. Similarly, don’t be afraid to share your struggles and pain points. We’re all in this together and the more we share, the more we can help each other, and the more we’ll collectively learn to make it easier the next time starts a business.