Entrepreneurship MGNT 3234
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March 2 2009 WSJ COVER STORYSo You Want to Be an Entrepreneur Thinking about starting a business Make sure you39re cut out for it rst First answer these questions to see if you have what it takes 1 Are you willing and able to bear great nancial risk 2 Are you willing to sacri ce your lifestyle for potentially many years 3 Is your signi cant other on board 4 Do you like all aspects of running a business 5 Are you comfortable making decisions on the y with no playbook 6 What39s your track record of executing your ideas 7 How persuasive and wellspoken are you 8 Do you have a concept you39re passionate about 9 Are you a selfstarter 10 Do you have a business partner First answer these questions to see if you have what it takes Thinking about starting a business Make sure you39re cut out for it first In this bleak economy lots of people are contemplating striking out on their own whether they39re frustrated job seekers or people who are already employed but getting antsy about their company39s prospects For some people entrepreneurship is the best option around a way to build wealth and do something you love without answering to somebody else But it39s also a huge financial gamble and some people unfortunately will discover too late that it39s not the right t for them Building a successful business can take years filled with setbacks long hours and little reward Certain personalities thrive on the challenge and embrace the sacrifices But it can be a hard switch for someone who has spent years sitting in a cubicle with a steady paycheck So how can you gure out whether you39re suited for selfemployment We spoke with entrepreneurship researchers academics and psychologists to come up with a list of questions you should ask yourself before making a big leap Entrepreneurs of course come from all sorts of backgrounds with all sorts of personalities But our experts agreed that certain attributes improve the odds people will be successful and happy about their decision Keep in mind that any selfanalysis is only as useful as the truthfulness ofthe answers and most people aren39t exactly the bestjudges oftheir own character So you might enlist a friend39s help 1 Are you willing and able to bear great nancial risk Roughly half of all startups close within five years so you must be realistic about the financial risks that come with owning a business and realize that you could very well lose a sizable chunk of your net worth Consider how much you39ll have to ante up and how losing it would affect your other nancial goals such as having a sound retirement or paying your kids39 college tuition Weigh the importance of starting a business against the sacri ces you might face Entrepreneurs should be sure that quotif they lose this capital it either won39t destroy their financial situation or they can accept the concept 0f bankruptcyquot says Scott Shane an entrepreneurship professor at CaseWestern ReserveUniversity in Cleveland quotSome people thrive on the nancial risk others are devastated by the thought of losing even 10000quot And don t assume you ll be able to lower your risk substantially by nding investors Less than 10 of startup nancing comes from venture capitalists angel investors and loans from friends and family combined Prof Shane says And that39s true even in good economic times Banks meanwhile often won39t lend to startup founders without a proven track record When they do they generally require the founders to guarantee the loan or credit line with their personal savings or home an incredibly risky proposition To learn how to mitigate risk by keeping your old job while starting a new venture see quotA Toe in the Water 2 Are you willing to sacri ce your lifestyle for potentially many years If you39re used to steady paychecks four weeks39 paid vacation and employersponsored health bene ts you might be in for an unpleasant surprise Creating a successful startup often entails putting in workweeks of 60 hours or more and funneling any revenue you can spare back into the business Entrepreneurs frequently won39t pay themselves a livable salary in the early years and will forgo real vacations until their business is financially sound That can often take eight years or longer says William Bygrave a professor emeritus of entrepreneurship at BabsonCollege in Wellesley Mass Even if you can steal away it39s hard to nd somebody who can fill in for you Many entrepreneurs must tow along their cellphone and laptop so they can be available to answer questions from clients or employees Having no income for two years meant that had to be extremely frugal virtually never ate out or went on vacations or clothesshopping trips Twentynine years old at the time she says quotI got very jealous of my girlfriends who got home at 5 o39clock every night and could go out gallivanting and pretty much do whatever they pleasedquot She39d occasionally meet friends for coffee instead of drinks since coffee was less expensive Now that her business generates about 2 million in annual revenue the tables have turned Ms Walzer says she earns more from the business than she did as a consultant and quotI have friends who are struggling to keep their jobs because they have bossesquot 3 Is your signi cant other on board Don39t ignore the toll running a business will take on your loved ones Failed ventures frequently break up marriages and even successful ones can cause lots of stress because entrepreneurs devote so much time and money to the business quotI m always surprised at the number of husbands Who start a business and don39t tell their WlVCSquot says B0 Fishback vice president of entrepreneurship at the Ewing Marion Kauffman Foundation You can avoid the heartache by talking at length with your spouse and family about how the business will affect home life including the time commitment changes in daily schedules and chores financial risks and sacri ces They must also understand the huge financial gamble they39re making with you 4 Do you like all aspects of running a business You better In the early stages of a business founders are often expected to handle everything from billing customers to hiring employees to writing marketing materials Some new entrepreneurs become annoyed that they39re spending the majority of their time on administration when they39d rather be focused on the part Of the they enjoy says Donna Ettenson vice president of the Association of Small Business Development Centers in Burke Va quotAll of a sudden they have to think about all these things they never had to think aboutbeforequot she says Jeromy Stallings the 33yearold founder of Ninthlink Inc a San Diego interactive marketing rm with 15 employees always felt he had plenty of passion for entrepreneurship and selfmotivation But when starting his agency in 2003 and hiring his first couple of employees he realized he wasn39t prepared for the daytoday challenges of managing other people Mr Stallings had assumed his passion would rub off on employees and they would do their jobs as enthusiastically as he did But some clients started calling him directly complaining that his employees weren39t returning phone calls or that projects were behind schedule quotMy clients were saying 39We love your passion we love your skill we39re just having a really hard time with your management style quot he says So Mr Stallings turned to peers mentors and guidebooks for help He realized he needed to work more closely with employees and create a more structured proj ectmanagement system quotI didn39t really have a plan in place for how they spend their timequot he says 5 Are you comfortable making decisions on the y with no playbook With a new business you39re calling all the shots and there are a lot of decisions to be made without any guidance You might not be used to that if you39ve spent years working in corporate America says Bill Wagner author of quotThe Entrepreneur Next Doorquot a book that lays out the characteristics of successful entrepreneurs quotFor most entrepreneurial ventures there39s no structurequot he says quotYou39re going into a business and nobody has told you how to be successfulquot Mr Wagner has surveyed more than 10000 entrepreneurs to nd out what traits distinguish successful startup founders from lesssuccessful ones Among other things most entrepreneurs he interviewed said they liked making decisions He doesn39t rule out the idea that lessdecisive people could become better at the leadership role It39s just that they will have to work a lot harder at it 6 What39s your track record of executing your ideas One of the biggest differences between successful entrepreneurs and everyone else is their ability to implement their ideas says Prof Bygrave of BabsonCollege You might have a wonderful concept but that doesn39t mean you possess that special mix of drive persuasiveness leadership skills and keen intuition to actually turn the idea into a lucrative business So examine your past objectively to see whether you have assumed leadership roles or initiated solo projects anything that might suggest you39re good at executing ideas quotWere you senior class president Did you play varsity sportsquot Prof Bygrave suggests asking You might even nd clues back in your childhood he adds quotA lot of successful entrepreneurs were starting businesses when they were still kidsquot 7 How persuasive and wellspoken are you Nearly every step of the way entrepreneurship relies on selling You39ll have to sell your idea to lenders or investors You must sell your mission and vision to your employees And you39ll ultimately have to sell your product or service to your customers You39ll need strong communication and interpersonal skills so you can get people to believe in your vision as much as you do If you don39t think you39re very convincing or have difficulty communicating your ideas you might want to reconsider starting your own company or think about getting some help In 2007 Brad Price left a 135000ayearjob as an associate at a Baltimore law rm to purchase a PuroClean Emergency Restoration Services franchise which cleans up property damage such as mold and ooded basements A former Naval officer Mr Price felt he was very selfmotivated and a good leader But he was less comfortable cold calling and striking deals something he39d never had to do in previous jobs quotThere39s a big difference in waiting for the phone to ring and getting an assignment and having to make the phone ringquot says the 33yearold Mr Price Mr Price says he now has his wife handle the marketing and networking quotMy wife is very good at that 39Hey next time a call comes in how about you give it to us quot he says 8 Do you have a concept you39re passionate about Every morning you want to jump out of bed eager to get to work If you39re not that exuberant about how you39ll be spending your time or the business concept itself running a business is going to be a rough ride Ms Ettenson of the Association of Small Business Development Centers has coached many prospective entrepreneurs about their chosen business She always asks Why they39re doing it If they suggest it39s mostly for the prospect of making a lot of money or because they39re tired of working for someone else she steers them toward something more in line with their interests or avoiding selfemployment altogether quotIf you hate doing paperwork the last thing you want to do is become a bookkeeperquot Ms Ettenson says quotIf you39d rather be outside taking people into the wilderness then that39s the type of business you should be inquot But it39s also usually wise to find a business in an industry you are very familiar with it will be much harder to succeed if you know little about the Mr Fishback at Kauffman says he has steered a doctor and other professionals away from starting restaurants because they often don39t grasp how difficult and risky restaurant ownership is And they39d be competing against restaurateurs with years of experience 9 Are you a selfstarter Entrepreneurs face lots of discouragement Potential buyers don39t return calls business sours or you face repeated rejection It takes willpower and an almost unwavering optimism to overcome these constant obstacles John Gartner an assistant clinicalpsychiatry professor at JohnsHopkinsUniversity and author ofthe book quotThe Hypomaniac Edgequot theorizes that many well known entrepreneurs have a temperament called hypomania They39re highly creative energetic impatient and very persistent traits that help them persevere even when others lose faith quotOne of the things about having this kind of confidence is they39re kind of riskblind because they don39t think they could failquot Prof Gartner says And he adds quotif they fail they39re not dOWll for that long and after a while they39re energized by a whole new ideaquot You don39t have to be as driven as say Steve Jobs to succeed But somebody who gets deterred easily or too upset when things go wrong won39t last Feb 15 2011 12 Rules For Game Changing Entrepreneurs This week s column is a little unusual even for me But it will be fun informative and thoughtprovoking My friend Andy Kessler has written another irreverent gonzo book called EatPeople Anal Other Unapologetic Rules for Game Changing Entrepreneurs He has graciously allowed me to copy his introduction as this week s missive Andy gives us 12 Rules and a Bonus Rule that characterize gamechanging companies They are Scale Adaptive Eat Zero Marginal Waste People Markets Cost Horizontal Exceptionalism Virtual Pipe Edge Market Productive Entrepreneur and Highest Return Find a company that embodies these rules early and you get in on the ground oor of the next Apple or Microsoft Andy has done that He turned 100 million into a billion for his investors then got out more or less at the top He is the real deal and Itake every moment I can get with him Now he just looks for the Next Big Thing for himself but in Eat People he shares the rules for nding them or even creating your own next big thing You can get his book at httpwwwamazoncomEatPeopleUnapologeticGame MM quot F dp1591843774 for a cheap 1348 or on your iPad or Kindle You can read it in a few hours Make notes And get some of his other books while you are there Ithink How We Got Here is one of the best most readable books on the history of technology and the markets I have seen His latest fiction work called Grumby takes a lopsided look at the whirl of technology as he shows how a product can go from nothing to millions almost overnight Read the following and think And enjoy it Eat Peopleby Andy Kessler This place is spectacular It was but I wasn t about to let on Amazing I sti ed a yawn And the artwork is something else Nancy my wife continued Now this is the way to live Paris is one of my favorite places in the worldione giant museum The food the wine the artwork even the people are nice some of them anyway After a quick connection with the gargoyles at Notre Dameione of them reminds me of a kid I went to high school withiit was time to find things my wife Nancy and I hadn t seen before No fan of wandering through trendy neighborhoods or doing mindless shopping Ihit on the idea of visiting a bunch of the smaller museums set in once private homes like the FrickMuseum in New York Frick made his money turning coal into coke for making steel later hooking up with Carnegie to form what would become US Steel He deserved a nice house My ploy worked so it was off to Boulevard Haussmann and some wealthy dead French guy s house stuffed with beautiful paintings and sculptures and fumishingsithe JacquemartAndre or the CognacqJay Or the Andre Jay And over here is the living room where formal entertaining for the close associates of Monsieur the guide droned on I could see a plate on a side table inscribed with Libert Egalite Fratemite How very French I was starting to go stir crazy It was time to miX it up Where are the speakers I whispered to Nancy What Some nice BampO speakers and a decent subwoofer would do this room just right Even just a PC running iTunes or geez at least a measly iPod She shushed me Look at that carpet she suggested Hand woven I ll bet This rug s from Persia I said doing my best Eddie Murphy from the movie Trading Places But who cleans that Do you think he had a Dirt Devil Be nice If you ll step this way we enter the family living quarters This drawing room is where the family spent evenings reading by candlelight telling stories You could probably shoehorn a nice fiftytwoinch plasma over that dresser I wonder if they had DirecTV then If not I wouldn t want to be this guy Shhhhh The bureau is a Louis XV and the chairs are quite appropriate for the time period They look really uncomfortable I remarked You think they recline Would you be quiet Nancy said with a laugh I don t know you I finally had her in the right spirit The air conditioning bills must have been killer at least five hundred a month Stop I can t This guy has some nice art on the walls but I wouldn t trade places with him for even a second But he was an elite in Paris during their golden age Nancy cooed He s got nothing I haven t seen one Bluray player let alone a refrigerator toaster oven or espresso machine I was on a roll Why stop there If he had a garage it smelled like horseshit instead of sporting a fourhundredhorsepower sevenpassenger Suburban How could he get to his country home in a couple of hours It must have taken a full day in a carriage And we ew here in nine hours on a 7777it would have taken him nine months to get to California I guarantee he never made it for a visit Yeah but But nothing This guy was poor No computer no Internet no search engine no YouTube videos This guy has never seen Star Wars for god s sake That s living Damn right Should I go on Don t Cell phoneGPSXboxWorld of WarcraftMetro And I paused to catch my breath I can almost guarantee le dude never used Twitter I got the eye roll from Nancy I was pushing this beyond the point of no return Let alone antibiotics stents for heart attacksihe either died young of tuberculosis or worse watched as one of his kids died young This guy was one of the richest in the world but he d be considered living under the poverty line in our day I m going to the next museum by myself The experience got me thinking I ve been around the investment business for way too many years trying to understand business cycles and product cycles assessing management picking stocks that go up avoiding those that go down but it wasn t until I gawked my way through Monsieur Elite s home off Boulevard Haussmann that I put my mind to the creeping change over the last one hundred years You and I are nowhere as rich on a relative basis as this guy was the envy of all but in almost every other way we have and do things every day that all the riches in the world back then couldn t buy Damn Iforgot to mention microwave ovens or Orville Redenbacher or Somewhere along the way you were probably forcefed some economics An economy is about commerce and trade and me buying bread from the baker who buys meat from the butcher who buys candlesticks blah blah blah Econ 101 and all the macro mumbo jumbo of price is where supply meets demand and marginal costs meeting marginal utility doesn t explain why I can find cheap ights on Southwest Airlines to Salt Lake City to go skiing or why I can even afford to go skiing in the first place Something creates all that wealth that the richest in the world never had including Kevlar parabolic skis How about this line Economics is about allocating scarce resources Well I guess that could work but that implies there are only so many resources to go around and that those who pay the most get the scarcest ones But where did the jet come from or the Kevlar or the online travel agent That de nition is unsatisfying There is only one de nition of an economy I ve ever been comfortable with a system that increases the standard of living of its participants Period Everything else from credit to money supply to quarterly earnings releases to minimum wages is just a tool or else a meaningless characteristic of an economy Without that increasing living standards thing you and I would still be living in caves chasing squirrels and shoveling shit and dying young from minor infections Increasing standards of living doesn t happen automatically It s not a gift from heaven Someone has to invent the future But how do vou find the next big thing How do you find things that go up and to the right and keep going up and up and up How do you find companies to work for or to invest in that will let you create some real wealth And how do you do well by the world Thirty years ago as I started my socalled career not a single person told me that computers and technology would get so cheap that they would practically end up being given awav in boxes of Cheerios Or that Wall Street and banking and monev management would be turned inside out uncorking money buried inside the musty trust departments of sclerotic banks Instead of gathering dust this money went eeing to the higher returns from money market and mutual funds thus allowing anyone with an idea to either invest or get access to capital to build a company of their own go public and create enormous wealth Just one little mention at a cocktail party from someone anyone telling me about this would have done me wonders Not a peep On top of that no one told me that tons and tons of jobs would be destroyediand even more created Who knew Yet that s the world I had to navigate Today the economy may have blown up but the underlying principles of wealth creation still exist Maybe even stronger than ever How to tap them is not so obvious But it s never obvious You have to gure out how to create the future yourself The only way to truly succeed over time is to use your head think out long term trends gure out where productivity exists and therefore wealth is being created in the economy and invest your mind or your money alongside it I ve seen it happen so many times Someone comes up with a great idea and changes the world The next big thing Possible Historical Entrepreneur candidates gt1 met Michael Dell by phone in his dorm room where he was selling PCs and then met him in person well before Dell Inc completely changed how personal computers were sold By getting rid of an entire swath of middlemen and lowering prices for all of us he turned himself into a multibillionaire gt1 met Steve Jobs as he was getting thrown out of Apple and once more as he headed back in when he expanded the company s mission from designing computers to MP3 players and then smart phones and tablets that have made it easier for all of us to get information by voice or by Web wherever we might find ourselves He got richiand you and I got richer lives gt1 met Ed Catmull while sitting on the oor at LAX waiting for a delayed ight back to SFO Pixar was working on its rst feature film Toy Story which pioneered a whole new way to tell compelling stories He and Steve Jobs got rich but the rest of us got to see spectacular movies for ten bucks Quite the bargain gt1 met Carl Rosendahl whose Paci c Data Images was doing similar things for Jeffrey Katzenberg and DreamWorks with a project called Shrek gt1 met Lar Ellison as he was selling databases to corporations when it wasn t so obvious that he was going to completely transform their back offices squeezing out costs in their finance and supply chains and making them much more productive Oracle saved businesses a fortune and they passed the savings along to the rest of us in the form of everything from cheap goods at WalMart to cheap trades at Charles Schwab Sure Larry got richiafter all he saved these companies a ton of money But he made the rest of us rich too As costs go down all of us get wealthier gt1 ve met Bill Gates many times first after Microsoft went public Gates was pitching Wall Street about upgrading to Windows from DOS without much luck Eventually Wall Street discovered spreadsheets which lowered their costs and made it vastly easier to do things like take two companies or two financial instruments and merge them into something nanceable gt1 met Gordon Moore and Andv Grove and Bob Novce the founders of Intel just as they almost lost out to cheap Japanese memory makersibefore turning the massive company on a dime to sell processors at high margins to the IBMs and Compaqs and then Dells of the world driving faster and faster computers so better and better graphics could make computers easier to use for business and making all of us more productiveiwell except for those of us who love video games gt1 heard Sergey Brin and Lam Page speak to a small group a few years before Google went public They wanted to know what you were going to search for before you even knew yourself gt1 met Rupert Murdoch in the early nineties when he almost lost News Corporation under a siege of debt and when he began transforming the entire media space from newspapers to TV to film gt1 met Mark Cuban when he and his partner Todd Wagner were peddling AudioNet to anyone in Silicon Valley who would listen before they sold the audio and video streaming company to Yahoo for 57 billion gt1 met Mark Zuckerberg just as Facebook was crossing a few million users he talked about lowering the cost of communications between groups of people Today a good chunk of the planet logs in to the site regularly to keep in touch with friends and family I can go on gtMeg Whitman when she was at eBay Sept 11 named H ewlett Packard CEOamp ran for Gov of Calif gtJeff Bezos at Amazon even a few telecom folks who were billionaires for a moment in time The cool thing about all these folks is that no one did them any favors There was no government contract that guaranteed them success No secret handshakes or sweetheart deals or smoky room concessions For the most part society didn t do them any favors each of them started small but saw something big on the horizon and created a process to constantly improve constantly innovate and constantly sell exactly what was needed and then identify the next big thing on the new horizon Wouldn t you like to have their VisionH0w do you nd the next big thing Yeah sure none of them discovered penicillin or cured polio But these folks increased my standard of living your standard of living half the world s standard of living on par with any scientist or philanthropist They created wealth for themselves yes but also for society as a whole by making all of us more productive I don t care about and certainly don t idolize those billionaires beyond what I ve learned from them about how to nd and create and leverage the next big things So how was I lucky enough to meet all these folks Well it was myjob I worked on Wall Street trying to nd the next big things It really was my job to nd billionaires well before they hit it big so my investors and I could go along for the ride And I made tons of mistakes believe me But eventually I got good at it It was not just nding driven people with the character and focus and guts to succeed It was also about being in the right zip code nding the next big applications and companies and industries well before they took off when you could invest on the cheap and then sell when they were dear Along the way I learned that those things that made me the most money were not so coincidentally the very same things that made society richer and the world a better placeI call them Free Radicals We ve seen them throughout history Possible Historical Entrepreneur candidates Charles Curtis s 1903 steam turbine generator electricity to the masses Using that electricity in 1907 James Spangler a janitor with asthma invented an electric suction sweeper today s vacuum cleaner William David Coolidge s thermionic Xray tube of 1913 changed medicine That same year the Walker brothers in Philadelphia invented the rst electric dishwasher In 1916 Clarence Birdseye perfected the ashfreezing process and Birds Eye potato puffs In 1928 Thomas Midglev Albert Henne and Robert McNary synthesized the rst chloro uorocarbons trademarked as Freon in 1930 ushering in safe refrigerators and air conditioning other coolants eventually replaced Freon Paul M Z011 created the cardiac pacemaker in 1952 And Percy L Spencer in 1945 watched a magnetron melt candy leading to the invention of microwave ovens Lots of housecleaners lost their jobs to vacuum cleaners Lots of servants weren t hired 0r husbands yelled at because of electric dishwashers Freezers and Birds Eye frozen food put a lot of cooks out of work and on and on ENTREPRENEURSHIP CONTEMPORARY DEFINITION amp INTEREST IN Contemporary de nition Entrepreneurship is a human creative act that builds somethin from of value from practically nothing It is the pursuit of oortuni regardless of the resources or lack of resources at hand It requires a m and the assion and commitment to others in the pursuit of that Vision It also requires a willingness to take calculated risks Timmons 1989 p48 Increasing interest Annual business incorporations Growth in venture capital New industry formation Media interest Job creation Wealth creation Technological change Changes in global competition Creative destruction Education and learning An interest in entrepreneurship has grown since around the 1970s as people began to realize the importance of entrepreneurship and small businesses for example Annual business incorporations have grown in the last ten years from 300000 to 600000 showing that entrepreneurial startups is becoming an even more common experience for Americans Growth in venture capital from the 1970s to the present day shows an interest in capital backing ventures like Google Microsoft Intel Facebook and at the present time new forms of energy and environmental technologies There has been a wave of media interest including the Apprentice and now in the US version of Dragon s Den Shark Tank on ABC can you give me some examples Job creation entrepreneurial ventures are responsible for signi cant job creation Businesses classi ed as small using the SBA de nition represent 997 percent of all employers and pay more than 45 ofthe total US payroll Small businesses generate on average 60 to 80 of net new jobs annually in the US The most recent data illustrate that small businesses created 19 million jobs as opposed to the 994000 created by larger enterprises Large businesses have also downsized by about 6 million jobs in the last two decades Wealth creation currently 10 million individuals are self employed in America 1 in 8 adults and small businesses account for 51 ofthe US GDP Technological change entrepreneurship drives and is driven by technological change For example the advent of electricity the PC the Internet has all required the prior technology and has created entrepreneurial opportunity Where would Facebook be without the WorldWideWeb the personal computer and electricity BUT these technological changes would not have happened without entrepreneurial scientists like Gilbert Franklin Faraday and Edison in electricity and BernersLee in the WWW Entrepreneurial effort creates technology and needs existing technology opportunity to grow a paradox Changes in global competition Friedman s book the World is Flat begins to illustrate some of the changes we ve experienced recently with widening competition both demanding a need to be more entrepreneurship and offering entrepreneurial opportunities Low costs of labor more direct competition speed of movement of capital speed of transfer ofinformation ideas and knowledge mobility of labor all these factors required more inventive and innovative response and consequently further drive entrepreneurship Entrepreneurship is a creative force and a destructive force Schumpeter who was one ofthe leading economists in 1930s observed this phenomenon during the Great Depression entrepreneurship moves resources from less ef cient activities and businesses to more ef cient There is always death as well as birth going on in entrepreneurial contexts often called business churn There has also been a considerable shift since the 1970s in education by the 1990s nearly all US Business Schools offered some course in entrepreneurship and the demand for courses has expanded across all disciplines US small business statistics 275 million businesses in the US 6 million firms with employees 215 million without employees 0 Small firms lt500 employees represent 999 of total firms In US Only around 18000 large firms The reality of failure On average only around 56 of business closures are bankruptcies or involuntary liquidations 15 seen as financial failures by owners 35 not closed but change in ownership 15 reopen in different legal form 30 close whilst still successful for other reasons such as retirement another opportunity failed to satisfy objectives 0 70 of employer businesses survive 2 2 years 50 Z 5 years 33 Z 10 years 25 2 15 years QMD 6 r mm mum Causes of failure Poor management and planning Inadequate capital Incompetenceno prior business experience Product rather than market focus Competition Poor customer service Poor record keeping and financial controls Limited product services andor clients Poor quality lack of a standard for quality of products and seNices Cash flow problems High fixed costs Learning from failure or success I don t understand the cultural fascination with failure being the source of great lessons to be learned Whatdid you learn You learned what didn t work Now you won t make the same mistake twice but you re just as likely to make a different mistake next time You might knowwhat won t work but you still don t knowwhat will work That s not much of a lesson Instead put most of your energy into studying your successes What have you done right What worked Why did it work How you can repeat it Instead of making something worse a little better how about making something good a little better Don t spend so much time looking down Look up more very interesting web blog at httpS39isignalsoomlsvnlpostsl555 learnin fromfailureis overrated all 11 in Mum Mm