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Why do many female entrepreneurs fail? Would confronting reality help more succeed?

publication date: Mar 1, 2011
Many female entrepreneurs do a poor job of “living in the real world" as evidenced by everyday examples of businesses that went bankrupt because they failed to respond to changing market conditions. This happens in good economic times as well as bad.

Given the fact that females entrepreneurs probably have very bright people in leadership, why does this still happen?

Female Entrepreneurs!

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Because they are not dealing with reality; instead they follow the reality they hope is true. Because of this female entrepreneurs fail to anticipate and plan for changes that can destroy or severely impact their business model. Sometimes they’re completely blindsided while other times they see the problem but fail to act in time.

Problems can arise when female entrepreneurs fail to recognize three things:

  1. Structural changes in the marketplace in which they operate. Is the how of making money under siege? Are competitors gaining in strength? What has the potential for changing the rules of the game?
  2. The financial target that they shoot for are often unrealistic and unachievable. Female entrepreneurs may have their businesses based upon a model that is changing. So will they have financial strength to survive any unanticipated change?
  3. Their internal management capabilities and leadership capacity to meet their objectives are insufficient. Will the skills, abilities and experience of your current workforce help you achieve your current goals? As well as future goals that may be impacted by changing condition?

Despite the time and resources spent on strategic plans, female entrepreneurs are less than successful because they fail to analyze the impact of the business marketplace, financial  targets and internal capabilities on their ability to achieve goals. They fail to insure that the functions responsible for these targets work together. They may set unrealistic targets that are above industry norms which make the likelihood of achieving them very low.

It’s absolutely crucial for female entrepreneurs to find out the answers to these questions sooner than later especially if your way of doing business is under attack.  Ask any person in the print news or magazine business about the impact of the Internet on their business and career. They can help you see the consequences of failing to anticipate the impact of massive industry changes.

Many organizations also tend to focus on just one of the targets, usually finance, because the others maybe too difficult to manage and are often very hard to see. A sole focus on one blinds the organization to other dangers which may have a bigger impact.

The automobile industry was selling a record number of new vehicles just a few short years ago. They were meeting their financial targets. But they failed to understand the upward impact on gas prices dues to increased demand for gasoline from places such as China. Higher gas prices are not good for sales of Hummers, SUVs or other gas guzzling vehicles. It was there to be seen but was missed by most of them who continued to pump out thousand of SUVs that people eventually did not buy.

So the question for female entrepreneurs is whether or not they are competing in a dying industry. Structural changes are significant and increasing in speed so you must decide if you want to stay in a losing battle or try something else. The consequences for failing to realistically assess the potential impact of changes in these three areas will be severe. Only those organizations and female entrepreneurs who are willing to honestly and objectively confront the true reality will survive and prosper in the future.

So the question remains for female entrepreneurs – are you willing to confront reality or live in your own limited view of what it should be and suffer the potential consequences?

Source: "Confronting Reality" - Ram Charan
Published by Crown Business
October 2004

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