I have known a lot of very bright business owners over the years that failed to succeed. People that had a brilliant understanding of computer science and other technical skills ended up in bankruptcy, because they didn’t know how to manage their own company. They would have been much better off if they learned the prerequisites to running a company first.

Most entrepreneurs discover that running a business is a lot more difficult than they initially thought. Around half of all businesses shut down within five years. There are a number of reasons that businesses struggle to be successful, but most of them are due to mistakes on the part of the business owner.

The reality is that there are a lot of competencies that entrepreneurs need to succeed in the world of business. Some of these competencies include:

  • Understanding how to create a balance sheet and form other financial statements
  • Knowing how to conduct market research to formulate better marketing strategies
  • Building strong relationships with employees, customers and other stakeholders
  • Having a strong foundation in the basics of business law to meet compliance requirements and have informed conversations with attorneys as needed
  • Maintaining a strong understanding of the technical skills that serve as the foundation for the business (knowing how to fix cars as an auto body shop owner, make excellent tattoos as a tattoo artist, provide sound medical advice as a doctor etc.)

These skillsets are not formed overnight. Too many entrepreneurs believe that the final competency listed on the bullets above is the only thing that matters. They think that they will succeed in business as long as they excel with the technical requirements. Sadly, nothing could be further from the truth.

Many business owners are highly skilled at providing services. However, they do you not understand the fundamentals of marketing and finance, which puts their entire business model on very shaky ground.

Financial skills in particular are very important. Over four out of five businesses fail due to poor cash flow management. This is a problem that company face even if they are actually bringing in a good amount of business. They often fail to monitor expenses or invest in capital that doesn’t pay for itself over the long-term, which puts them in a situation where they cannot cover future expenses.

Fortunately, any ambitious entrepreneur can develop the skills they need to excel. Here are some options they can consider.

Get a graduate degree in business

An MBA or other business degree does not guarantee success, but it definitely increases the likelihood. There are a number of different business degrees that an entrepreneur can pursue. Some of these programs are more specialized, others provide a diverse, well-rounded overview of the fundamentals of business. Business owners that don’t know much about finance or marketing should consider getting one. They should understand the difference between business administration and business management and decide which one is best.

Get a mentor

A good mentor can make a huge difference to any entrepreneur. Even business geniuses such as Warren Buffett got their start by working with a mentor. The trick is to find a mentor with a good track record and expertise in the specific field that you are trying to break into.

Do an apprenticeship

Apprenticeships can help you develop the technical skills you need to succeed in business. However, they offer other benefits as well. You can also develop a lot of other business skills. You might learn the basics of bookkeeping and marketing.

Read case studies on successful businesses

You can learn a lot about running a business from case studies. Although this should not be the first place to go for information, it is a good idea to look at them after you have a gotten a business education elsewhere. You will learn a lot of extra details that will come in handy later.

New entrepreneurs should not start a business blind

Entrepreneurs need a variety of competencies to succeed. They need to be careful about being too eager and starting a business before they are ready. It is a good idea to develop the necessary competencies first.

By Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.