Running a business is hard. If anyone tells you otherwise, you should seriously question what that person is trying to sell you. The statistics on the failure rate of businesses have remained consistent.
Failure rates by years in business:
- Year 1 – 20%
- Year 5 – 50%
- Year 10 – 70%
While the breakdown of these statistics will vary by industry, the numbers are not promising.
I attempted to start a business venture in my mid-20s. My vision was to use a for-profit business in a social-good model, hoping to provide a new business structure for businesses to model after. I wanted to change the way business was done. I still want to see a world where money and profit are not the sole bottom line. I want to see money and profit as a means to benefit others.
In attempting to get my venture off the ground, I persevered through long hours, the uncertainty of the business working out, disagreements with various people, and ultimately came out of the process with some new insights.
1. Choose your business partners wisely
I was raised in a family with a history of owning and operating businesses. One of my early lessons was not to do business with family or friends. There is some truth to this sentiment. I later learned that it is not business itself that tears family and friends apart. It is what doing business together reveals about one another that can damage the relationship.
My first business venture taught me that it is crucial to choose your business partners wisely. It is not enough to be like-minded or kind. It is not enough to be good friends or close family members. Going into business with people you should trust may seem easier, but it might not lead to a successful business.
Business partners who share core beliefs, have similar work ethics, and have compatible attitudes will be more fruitful. It may be challenging to find people who fit this bill, but worth pursuing. Working with friends and family may be possible, but it could be a bumpy ride.
2. Establish your vision
My parents were first-generation immigrants. Their vision for the businesses was to make a living that enabled them to provide for the family. It is the same reality for many business owners and is a vision worth achieving. I am grateful that my parents worked hard to give me stable shoulders to stand on allowing me to dream bigger dreams. Being able to have big dreams is a privilege. If you have that privilege, it is imperative to establish a clear vision of that dream.
The primary reason my business venture failed to take off was due to a lack of agreement among the multiple parties involved. The business never really got started. There were many other reasons for its impending failure—the partnership dynamic, lack of experience, and lack of capital. More importantly, it wasn’t a good test of the social-good business model since we were looking to purchase a franchise.
Looking back on this failed venture, I am grateful it didn’t take off. The one aspect that I believe is still worth exploring is my vision of doing social good. Regardless of the vision for your business, ensuring that all stakeholders understand and share that vision is essential to the business’s success.
3. Persevere even when it hurts
The process of starting a business is arduous. The most apparent difficulty is having enough capital to buy or start the business and continue operating for at least two years. An enormous amount of time goes into planning, training, and meeting with lawyers and bankers. Having the autonomy of being your own boss is appealing when starting a business, but autonomy is a two-edged sword. The other edge is the responsibilities and the need to maintain one’s own motivation. The lack of structure and consistent schedule requires self-discipline.
After establishing enough capital, dealing with people provides the next challenge. As mentioned, working closely with partners will inevitably lead to tension. However, the people closest to you can be the most hurtful and discouraging, albeit having the best intentions in mind. When you pursue something out of the norm or deemed risky, remember there will always be those that question your vision. Identify the people and the issues that will set you back and persevere even when it hurts.
I learned and experienced a lot despite the failure of my first business venture. These insights have equipped me to be a better person and entrepreneur. Business is hard, but there are numerous treasures to discover. Despite the statistics, it may be worth pursuing your own business. Remember, choose your partners wisely, establish a strong vision, and persevere even when it hurts.