, 13 tweets, 4 min read Read on Twitter
There is nothing automatic about #profit. In fact, 9 of 10 startups fail. Which means they go under and the investor often loses money, time, and effort put into creating and running the business. But it still creates jobs for those employed, even though fortune.com/2014/09/25/why…
those jobs of course only last for as long as the business. There is much confusion about *why* businesses fail, however. Which means there is bad advice for how to avoid failure. As noted in the linked @FortuneMagazine article, the "self-evident" reason startups fail is that
there is no market for what they produce. This is indeed an obvious point, but it is one that is almost entirely avoidable. I would even go as far as saying that most businesses fail for silly reasons, which explains why experienced entrepreneurs often do better: they don't make
the same silly mistakes. The silliest of them all is to start a business that does not satisfy an actual consumer want. While this is easier said than done, it is also overlooked by all too many entrepreneurs. I've discussed this in numerous articles: to be a successful
#entrepreneur, it is necessary to place the consumer first in one's thinking. For a business to break even or make a profit, it has to create value for consumers--and do it better than other businesses. Consumer value should be the alpha and omega in entrepreneur.com/article/331848
*every* business, because it is its raison d'etre--the reason for existing. Entrepreneurs should take this to heart: the business is not for you, but for consumers. Production of goods and services is a *waste* if it is not undertaken to make consumers better off. Running a firm
with any other goal is not to run a business, but to have a hobby. It is costly for the economy overall, and is most likely costly also for you. To put it in economists' jargon, your business is not doing production, it's doing consumption. And you don't make money off of
consuming. Placing yourself before the consumer is such a silly, yet so common mistake that I've argued that most entrepreneurs are simply bad entrepreneurs. It's not an accusation or intended to belittle entrepreneurs, who do really hard work. It is mises.org/wire/most-entr…
descriptive: most entrepreneurs unfortunately place consumers second or even further down the list. Or they discover their importance way too late. This makes you, from the perspective of the economic system, a bad entrepreneur. Because you are not creating the value that you,
considering your abilities and effort, could create. If your business creates real value for consumers (in their eyes!), selling to them is rather easy--and capturing part of that value is far from impossible. That's how you *should* think about your entrepreneur.com/article/329794
business, but most entrepreneurs start businesses primarily for themselves--which means they start ut not being aligned with creating value for consumers. So no wonder they fail because there was no "need" for their product. That's not bad luck, but by design. The #1 advice for
entrepreneurs, which would help many avoid failure, is what's the core message of the Economics for Entrepreneurs podcast: place the consumer, and especially consumer wants, *first*. Doing so helps your business thrive, and provides you with income. mises.org/library/econom…
In that fundamental sense, being an entrepreneur is "easy." Which makes it astonishing that so many fail because they, after the fact, find out that there was a "lack of market need." That shouldn't be figured out after you start/run the business--it should *direct* your efforts.
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