AI-generated summary
Entrepreneurship is a unique and challenging adventure that lacks a one-size-fits-all guide, but certain pitfalls can be identified to help aspiring entrepreneurs avoid failure. In his book, “The Black Book of the Entrepreneur,” economist Fernando Trias de Bes outlines fourteen key factors of failure (FCF) that highlight common mistakes when starting a business. These factors range from lacking genuine motivation and entrepreneurial character, to poor partner selection and inadequate communication. Trias de Bes emphasizes the importance of embracing uncertainty, being resilient, and ensuring partners share values, commitment, and clear agreements on contributions and shares.
The book also stresses that success depends less on the initial idea and more on its continuous adaptation to market needs. Entrepreneurs should enter sectors they are passionate about and have knowledge of, while carefully considering market attractiveness and legal frameworks. Additionally, balancing business demands with personal life and family support is crucial, as entrepreneurship often blurs these boundaries. Sustainable, profitable business models that generate quick returns are preferred over long-term speculative plans. Finally, entrepreneurs must recognize when to transition from creators to managers or even step aside for the business’s benefit, underscoring that entrepreneurship is a lifestyle requiring dedication, adaptability, and clear-eyed decision-making.
Discover the 14 Key Factors of Failure; the mistakes that a person can make when starting a business.
To be thinking about entrepreneurship is to start an adventure. A vital adventure that each person lives in a different way and at a certain time. And as an adventure, the process of entrepreneurship does not admit tutorials or guides… But there are some “maps” that can help guide you – or rather to know what you shouldn’t do – such as the one outlined by the economist Fernando Trias de Bes in his book The Black Book of the Entrepreneur (or as the author renames it, The Black Book of the False Entrepreneur).
The book identifies, through fourteen Key Factors of Failure (FCF), the essential mistakes that a person can make when starting a business. Fourteen factors that jump from the partners to the sector, including motivation or entrepreneurial attitude, and which we summarize below:
1: “Entrepreneurship with a motive, but without a motivation”
A layoff, a retirement, the desire to be your own boss, an unmissable opportunity or having a brilliant idea are part of a considerable list of reasons to start a business. But without motivation and enthusiasm, it is more likely that the project will swell the list of companies that close. Without motivation or enthusiasm, the ability to overcome the challenges that will appear along the way is fading.
2. “Not having an entrepreneurial character”
There are three types of entrepreneurs: the “false entrepreneur”, the “happy idea entrepreneur” and the vocation entrepreneur. The former boasts of his legal independence as an entrepreneur and the latter clings to the idea of setting up his own business. The latter understands entrepreneurship as a way of life, that is, it embraces uncertainty and the experience of risk. “Entrepreneurship is that way of life and of facing the world: accepting uncertainty as the main ingredient,” defends the author.
3. “Not being a fighter”
The entrepreneur will have to face a whole series of challenges along the way that, at times, will force him to redefine his career to achieve satisfactory results. In other cases, circumstances will directly affect the final outcome. The attitude adopted in these situations will be fundamental for the success or failure of a project.
4. “Have partners when you can really do without them”
How many people choose to partner with third parties for fear of undertaking alone or because they need economic resources? The partners can act as real burdens for the business and, in addition, it is considerably expensive (it controls shares of the company). Partnering with a bad (non-capitalist) travel companion can do considerable damage to the company.
5. “Choosing partners without defining relevant selection criteria”
Imagine that you are going to spend the next twelve months inside a submarine. Who would you go with? Your partner must have the same qualities as the person with whom he would be willing to spend a year in a cubicle of a few square meters. Therefore, it seeks alignment in values, complementarity in characters, contribution of extra value and the same ambition
6: “Go in equal parts when not everyone contributes the same”
Before conflicts come, agree on how you will separate if necessary. When the day comes, you may not be on good terms and it will not be so easy to reach an amicable solution. Secondly, decide before you start how you are going to distribute the company by the value or assets that each one contributes. Dividing the company equally does not make sense if the contribution and involvement of the partners is different.
7: “Lack of trust and communication with partners”
Entrepreneurship is a continuous chain of decision-making. And the partners are nothing more than people, with their disagreements, concerns, bad moments, doubts and illusions. Agreeing on all the decisions that will have to be made is a titanic task. In this situation, it is inevitable that conflicts arise between one and the other, sogood communication is essential to ensure the health of the relationship.
8: “Thinking that success depends on the idea”
The important thing is not the idea itself; but the form it takes and that can be modified in the following years according to market trends and demands. And, besides, not all ideas are good business. As Trias de Bes points out, “a brilliantly implemented mediocre idea is better than a mediocrely implemented brilliant idea”. The key is not the idea, but the opportunity behind this idea. Change the “what am I going to sell?” to “why are customers going to buy it?”
9: “Entering sectors that are not liked or unknown”
If entrepreneurship is closely linked to motivation, starting a business in a sector that does not appeal to you will hardly be an incentive to wake up every morning, right? On the other hand, what added value could you bring to a sector that you barely know?
10: “Choosing unattractive sectors of activity for entrepreneurship”
How much is the sector you want to enter growing? What degree of competition is there? In which markets is it emerging? Is the country’s economic situation good? What is the legal framework in which it is being developed? The circumstances surrounding the entrepreneur are one of the most important elements in the line that separates the growth or closure of a business project.
11: “Make the business dependent on family needs and material ambitions”
Directing a project towards profitability has to be compatible with living without having to depend on the business. Diversify your income or save enough time so that your company has room to maneuver without your salary being completely dependent on it. In a context like this, the support of the family is essential.
12: “Entrepreneurship without assuming the impact it will have on our life balance”
In the same vein as the previous Key Failure Factor,the dedication required to launch a business project should not be underestimated. If in a “normal” job, the balance between professional and personal life was already complicated, in the case of the entrepreneur it ceases to exist. The professional and personal levels are the same. So, once again, it’s vital that the family is aligned with the project.
13: “Create business models that do not yield profits quickly and in a sustainable way”
The best business model is not the one that includes a business plan that includes profits in three years’ time. The best business model is one that brings profits quickly and is also sustainable in the medium and long term.
14: “Be an entrepreneur and not a businessman, and not retire on time”
An entrepreneur manages and enjoys growing the project; An entrepreneur creates. If you have both qualities, fantastic. If not, assess when is the best time to step aside and let go of the reins for the good of the business.
