What is it that makes a successful business start-up? Why has the failure rate for small businesses remained high over the years? I remember looking at statistics ten years ago, five years ago and this year. Even though there are more available programs, resources, and assistance, the outlook is still not great. According to the Bureau of Labor Statistics (BLS) about 20% of U.S. businesses fail within their first year of operation. By five years almost 50% fail and after ten years almost 70% fail.
I have been in business for more than three decades. I beat the odds. Is it skill? Is it luck? Maybe it is a little of each, but I have some advice for those who want to succeed at start-ups. And it is not typical start-up advice. Lots of experts say to do your research, write a business plan, and make sure you have ample funding when starting a business. I don’t disagree with this advice; all those things are important. In fact, there are many checklists to help you cover the essentials, but that is just the baseline of what you need to consider.
Here are three pieces of start-up advice to add to your list. All of them have to do with being realistic about different aspects of the business.
Be realistic about your dream.
My first piece of start-up advice is to be realistic about your dreams. New businesses are springing up every day. After years of negative small business growth, the tide is changing. Not surprisingly, millennials and Gen Zers make up the greatest percentage of those starting businesses followed closely by Gen Xers. Why? They have a dream. They want to be the boss because they think owning a business will be easier than working for someone else. They know the statistics but don’t believe they will become one.
If you are going to start a business you must know your “dream” will be subject to scrutiny, financial pressure, and way more time than you can ever imagine. Are you realistic about what it takes to own a business? Do you realize you will now have many, maybe even hundreds of “bosses” instead of one? You might not have a constant steady paycheck. These are all things you need to be realistic about and be prepared for when starting a business.
Be realistic about your offerings.
When starting a company, it is important to be realistic about your offerings. Most entrepreneurs believe they can do it better, faster, and smarter than someone else. They get so excited about their product or their service they disregard research and market conditions- even when they did the research themselves. They interpret the data, so it supports what they want to do, not what is realistic. When advisors try to help you determine the best and worst-case scenarios, listen. Put aside your passion and love of the product or service. See if it really does solve a problem or meet a need as well as do it better than the competition. Even if you have the “best” product or service it does not guarantee success. Being realistic about your offerings might make you limit your offerings until you get traction. One or two successful products are much better than lots of products that are mediocre sellers.
Be realistic about the timeline for achieving your success goals.
My last piece of start-up advice is to be realistic about the timeline for achieving success. It goes without saying start-ups have more challenges because the operations are not fully formed. You may not have established a good supply chain yet. Workers may not be up to speed. You need to work out the kinks. There are so many things that need attention, and often not many hands to share the work.
You need to be realistic about how much you can do and how quickly you can ramp up. In the rush to open the doors or launch a new offering, start-ups misjudge what it will take to be a successful start-up. Not to mention the work that needs to be done to market and publicize the business in advance. We hear about how businesses become an overnight success and go viral but that is the exception. It is better to take the additional time. Think before you launch rather than disappoint customers. Be realistic about how quickly your business will catch on. It takes time to be an overnight success.
There are many aspects to consider if you want to be successful at starting a business. Some of them are the good basic principles of operation, management, and finance. Others are not so obvious-how you view your “dream” and what it will take to achieve success — your idea of success. One thing is certain when considering a start-up: you should be positive about your endeavor but take a healthy dose of reality to be sure you stay on track, or you might be the next statistic.