May 6, 2018
3 min read
Opinions expressed by Entrepreneur contributors are their own.
You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
Entrepreneurship is soaring in the Middle East. According to research by MAGNiTT, the annual investment in startups across MENA is closely US$1 billion. Between February and December of 2016, two major success stories from the region dominated headlines worldwide: Souq, a Dubai-based ecommerce marketplace, and Careem, a transportation network company.
Generally, the growth rate has been nothing short of intriguing. However, the fact that eight out of 10 businesses fail every year, is a strong warning about starting a new business, which every entrepreneurial mind must pay attention to.
In 2017 alone, 10 of the most funded American startups -with combined $1.695 billion venture capital funding- shut their doors. Apart from this, the story of Damien Patton, the Banjo founder “who raised $4 million, built a great app, and realized everything was wrong” is another startling reference that a business idea may initially sound great but end up a big flop.
Before you get stuck midway, below are vital indicators the business you’re considering might not be right.
1. You’re not passionate about it
If serial entrepreneurs have only one secret of success, it’s passion. Explaining “how to know you’re building the wrong company,” Damien Patton emphasizes one thing: the absence of passion.
Patton is not alone. Jeff Bezos gives a directive advice while reviewing the secret behind Amazon’s astonishing rise: “Never chase the hot thing, you need to position yourself and wait for the wave. And the way you do that is you pick something you’re passionate about.” Obviously, running a business without passion makes it impossible to confront the inevitable challenges hence failure.
However, it’s not absurd to look outside the passion corridor. But must you weave the business into your ardour? Absolutely. Virgin CEO Richard Branson did exactly that when he launched Virgin Money in 1995.
2. The business is not problem-solving
Coming up with the right business idea is one thing. Validating it is another. This means your idea, passion aside, must match consumer needs. So, be sure to ask yourself: What existing problem does it solve? What vacuum does it fill? If you have a clear, concise and compelling response, then it’s great. If not, it’s not.
Innovation isn’t for all, but a business must offer a distinctive value, at least by solving a problem quite effectively. Uber, for instance, solves an existing problem by transforming taxi service with a location-based app. Today, the company thrives as it meets the needs of two groups simultaneously: riders and drivers.
“If you show people the problems and you show people the solutions, they will be moved to act,” says Bill Gates. If not, your business is waiting to crumble.
3. Your business idea wows no one
Finally, and in what may probably give a clearer assurance, pitch your idea to other people and accept the feedbacks in good faith. Either you trust your guts or not, this is essential. A great idea will puzzle no one.
Take this from me: if all the feedbacks are thumbs-down, it’s the wrong business. Those you shared your ideas with are potential customers. As such, their judgement goes a long way in determining the market need for your product and, ultimately, your success.
Related: Five Hacks For A Fail-Proof Business