Is starting a small business for you?
This is the red pill post. If you’ve already made up your mind to start your own business, you can skip this page. But if you’re still on the fence or just want a reminder of what you’re up against…
Many Businesses Fail
“According to the U.S. Bureau of Labor Statistics, about 50% of all new businesses survive 5 years or more, and about one-third survive 10-years or more.” ~ SuccessHarbor
So the first five years is a coin toss. Look at the person next to you. One of you won’t make it. At the ten year mark, one of your Three Amigos business buddies will be still standing. You can improve your odds, of course, by learning why small businesses fail.
You Have a Choice
Zappos offers new-hires $2000 to walk away and not take the job they have just interviewed for. They know that not everyone is going to like the company and fit into their customer-service zealot culture. They are doing both Zappos and the would-be employee a huge service by letting them walk away early instead of making both sides suffer through a bad fit.
I’m offering you a similar but much bigger deal. Behind door number one is a steady paycheck, promotions, paid vacation, health benefits and the opportunity to dodge the scar tissue and angina that goes with running your own business. Behind door number two? It’s all you, baby.
Should you make the leap or keep the paycheck? It’s not an easy question, but I’ll give you my 57 cents on the subject ($0.02 adjusted for inflation). All those magazine covers touting the brave new world of being self-employed? There’s a good chance they’re not talking about you or me. The press loves to glorify the outliers — the few who make it big. Take a thorough inventory of who you are and what you are up against before making the leap.
Take inventory of who you are and what you are up against before making the leap. Click To Tweet
Look over the following lists and see how many of the items you can relate to…
|Keep the Paycheck if you:
||Start a Small Business if you:
Can a list of bullets really predict your future success as a small business owner? Of course not. Every person who starts a business is a different and some ideas are riskier than others.
When I started my software business in 1997, I did so with the understanding that my friend had “a few months” of contracting work that he thought I could help with. I was sick of working for someone else and knew I could do it better myself. I was the classic E-Myth case study, having an entrepreneurial fit. I told my wife that I was going to quit my steady job working for a local consulting company and she said, “That’s nice, dear. By the way, I’m pregnant with our third child.” I asked her to wait a couple of weeks and see. Maybe she she was wrong. Good timing on my part, right?
That first contract lasted 18 months and the business ran for 15 years. According to the stats, I beat the odds. But… it was possibly the worst financial decision I ever made. Those fifteen years were filled with all kinds of ups and downs:
- The joy of landing a new client
- The depression of losing a client when the NPO changed directors
- The client who stiffed me for $56K
- The heartache of my first (and hopefully last) lawsuit
- Very Lean years and almost lush years
Notice I didn’t say it was the worst decision. Just the worst financial decision. I could have made (and saved) more money by staying employed as a software pro, provided that I didn’t go insane. There are other reasons than money to make the leap, as hinted at by the bullets above. It could be that you’re not good employee material. Perhaps you value your independence above all else. Maybe it’s an undeniable sense of mission. Just don’t ignore the very real risks.
Before you leap into the void, do some reading on Starting a Business to gain confidence that you’re leaping for the right reasons. And good luck!