{"id":938,"date":"2014-06-23T08:00:25","date_gmt":"2014-06-23T08:00:25","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=938"},"modified":"2015-05-18T20:30:45","modified_gmt":"2015-05-18T20:30:45","slug":"your-real-odds-for-business-start-up-success","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/your-real-odds-for-business-start-up-success\/","title":{"rendered":"Your Real Odds for Business Start-up Success"},"content":{"rendered":"
\"Picure<\/a>
Your odds of succeeding in a small business venture are much better than most people think.<\/figcaption><\/figure>\n

A few days ago, I reconnected with an old friend. A serial entrepreneur I’ve worked with on and off over the years.<\/p>\n

We’ve been friends for decades now. And so perhaps not surprisingly, after not seeing each other for a while, we reminisced about the ventures we’ve worked together on\u2014some of which have worked well. And some of which haven’t worked so well.<\/p>\n

As we were talking over all this shared history, it dawned on me that my friend’s experiences neatly illustrate subtle but also actionable, powerful insights concerning small business start-ups.<\/p>\n

Accordingly, with his permission, I share in slightly camouflaged terms his start-up successes and failures\u2014and then some possible insights you may want to consider.<\/p>\n

The Small Business Owner’s Biography<\/h3>\n

Before I get into the insights, though, I need to bring you up to speed on this rather typical small business owner’s history.<\/p>\n

A first thing to know is that this small business owner has over slightly more than three decades operated half a dozen ventures:<\/p>\n

    \n
  • A niche consulting practice,<\/li>\n
  • A business services firm,<\/li>\n
  • A specialty manufacturer,<\/li>\n
  • A consumer products business,<\/li>\n
  • An ecommerce venture, and<\/li>\n
  • A financial services firm<\/li>\n<\/ul>\n

    None of these ventures stood out in any big newsworthy way. And his results were often varied.<\/p>\n

    Though all produced at least a slightly positive return on investment (sometimes just barely), his owner’s draw or salary bounced all over the place.<\/p>\n

    One venture simply paid him a living wage for a time. (Say $15 an hour in current day dollars.) And that’s not exactly what an entrepreneur aspires to given the risks and all.<\/p>\n

    Three of the remaining ventures paid him at least the household median income for at least a few years. (Roughly $50,000 a year in current day dollars.)<\/p>\n

    Two of his ventures paid him more than $150,000 a year (in current day dollars) for at least a decade. (That’s basically a 95th percentile income for a decade.)<\/p>\n

    And then his best venture actually paid him a 99th percentile income (roughly $400,000 a year in current day dollars) for a decade.<\/p>\n

    So one can get lost in the accounting details. But the details lead, I suggest, to a three subtle insights.<\/p>\n

    Insight #1: Your Definition of Success Really Matters Most<\/h3>\n

    A first insight? Your or my definition of success largely determines whether we are successful.<\/p>\n

    For example, if your definition of success is a living wage, each of the six ventures succeeded. That’s a 100% success rate.<\/p>\n

    If you say success means earning more than just a living wage, that success means earning at least the median household income for at least several years five out of six of his ventures worked. That’s an 83.33% success rate.<\/p>\n

    Suppose you ratchet up the success criteria even more and require and want to make at least a 95th percentile or better income and for at least a decade. With these criteria, you can only grade three of six ventures as succeeding. That means a 50% success rate\u2014and a 50% failure rate.<\/p>\n

    Finally, if you define success as a business income that puts the owner into the 99th percentile and for a decade, only one of the ventures counts as a success. (And you’re looking at about a 17% success rate and then roughly an 83% failure rate.)<\/p>\n

    The upshot? Small business entrepreneurs need to be careful about the success definition they use.<\/p>\n

    No, of course, you and I don’t want to be too loose-y goose-y about our definitions of success.<\/p>\n

    But we also don’t want to set the bar too high.<\/p>\n

    If we do set the bar too high, we very possibly miss lots of pretty attractive opportunities.<\/p>\n

    And by the way, remember that regularly, great ventures grow out of so-so small businesses that find themselves positioned exactly perfect to pursue some great new opportunity.<\/p>\n

    Insight #2: A Single Venture’s Outcome May Be Irrelevant<\/h3>\n

    Another truly powerful insight resides in the anecdotal data shared here: Thinking about business success or failure rates and then looking at a single venture lacks relevancy if you’re willing to explore subsequent opportunities.<\/p>\n

    For example, earlier I noted that using the “at least a 95th percentile income for at least a decade” definition meant that my friend’s failure rate was 50%. Wow. That 50% seems pretty ugly right?<\/p>\n

    And that 50% conveniently meshes with the popular conventional wisdom that your odds of success are scary. What kind of fool starts a new business? Yikes.<\/p>\n

    But look again at the entrepreneur’s actual experience: Over a slightly longer than three decade time frame, he built and profited from three pretty profitable businesses. Each lasted at least a decade. Two produced at least 95th percentile income for a decade. One produced a 99th percentile income for a decade.<\/p>\n

    You can’t combine those business’s incomes and returns and come up with a bad outcome for his roughly three decades of small business venturing.<\/p>\n

    And so the takeaway here is that failure in a single venture doesn’t mean failure as an entrepreneur.<\/p>\n

    If someone ends one venture but then moves onto a new, good, fun, high-potential opportunity, everybody (owners, employees, customers and vendors) may win big time in the end.<\/p>\n

    Insight #3: The Landing May Matter More than the Takeoff<\/h3>\n

    And now a final insight related to the actual “ending” of a business venture.<\/p>\n

    Have you ever heard the aviation joke that goes “A good landing is one which you can walk away from?”<\/p>\n

    That perspective, I think, works as a good insight about this business start-up success and failure stuff.<\/p>\n

    No matter how your venture takes off, and basically no matter how smooth or even great the “flight” is for you or me as a business owner, the landing really matters.<\/p>\n

    A safe landing where a venture ends but in a way that nobody involved gets too beat up or too badly injured means that you the business owner can do something else.<\/p>\n

    Maybe that something else is start a new business. Maybe that something else is to take a job working at some other firm. Maybe that something else is retiring.<\/p>\n","protected":false},"excerpt":{"rendered":"

    A few days ago, I reconnected with an old friend. A serial entrepreneur I’ve worked with on and off over the years. We’ve been friends for decades now. And so perhaps not surprisingly, after not seeing each other for a while, we reminisced about the ventures we’ve worked together on\u2014some of which have worked well. […]<\/p>\n","protected":false},"author":1,"featured_media":954,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[12,5,16],"tags":[],"class_list":{"0":"post-938","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-management","8":"category-new-business","9":"category-strategy","10":"entry"},"yoast_head":"\nOdds of Succeeding in Small Business<\/title>\n<meta name=\"description\" content=\"Your odds of succeeding in a small business venture are much better than most people think\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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