Failure of your venture is difficult to envisage as the idea behind it seems so powerful. This is especially the case at start-up before you and your venture have been tested by trying to sell your service or product.
However, data proves that a the failure rate of ventures is high. Entrepreneurship is tough. Research published on Statistic Brain provides a summary of failures by industry as well as their primary causes. This is useful intelligence.
There are valuable lessons to be learned by considering case studies of social venture failures. Search these stories out; you will learn more from these entrepreneurs than from the myriad of heroic tales of success. Failed entrepreneurs (some go onto success later with a different venture) wish that they had had learned these hard lessons earlier. It’s not as if the lessons are new; they’re not. It is often the case that an inexperienced entrepreneur is blinded by the mission or the sheer power of their idea.
To this end, read an article in the Standford Social Innovation Review in its spring 2015 issue.
It is a case study of a social enterprise in Washington, D.C. that failed after a year. The article includes a comparison of another, very similar venture in Washington that continues to flourish. The comparison of the two ventures is invaluable.
There are six lessons enumerated in the article:
1/ Begin with a sound financial plan;
2/ Integrate your mission into your operations;
3/ Know your business;
4/ Create a cohesive identity;
5/ Clarify your target marekt;
6/ Know that your mission is not sufficient to succeed.
The last point can be very difficult for social entrepreneurs to believe. At ventureLAB where I work as a mentor to entrepreneurs, I always work on building a viable business model before the social impact model. After all, you’ve chosen a business approach to tackling a social or environmental problem. If you’re not successful with your business, you’ll not acheive your mission.