According to StatisticsBrain.com, at year five, 55% of all new companies will have already failed and that number goes to 70% by year 10.
Here’s the best part. How many of those businesses fail because of plain old incompetence?
Take a guess…. 46% – AMAZING. That number shoots up to 76% if you add a type of incompetence called “Unbalanced Experience or Lack of Managerial Experience.”
Now, allow me to put you in a bit more pain.
With the current job market as weak as it is today, there has been virtually no salary growth in the last 5 years. Actually salaries have slipped by 8%. Things are so bad that the median pay of a fast food employee (who thinks of his job as a career) is $16,168 (yes, that a year not a month) and those who have those jobs are terrified of losing them!
We have strong incentives to make our businesses work. Failing could mean you seek employment locally (hint, hint) and that would…. suck.
So what can you do RIGHT NOW to practically insure you won’t fail? (bet you’re curious, right?)
Rule Number 1: Don’t Fail.
Since we know that incompetence is mostly responsible for failure and that the rewarding world of fast food awaits us if we do fail, then it’s worth the effort to become competent.
Competence starts with who you are, what you are good at and what you need to do to augment your skills. Besides signing up for a bevy of expensive courses in topics you aren’t interest in, I would start with some simple self discovery. One of the most powerful beginnings you can ever have would be to align your reason for being in business (your “why”) with what you are doing.
Recently, my friend Srikumar Rao asked me if I knew what I was going to do next after my 5 years with Chet Holmes and Tony Robbins had come to an end. After an insightful conversation, he directed me to a powerful TED talk by Simon Sinek who explains that your “why” is the reason you do what you do or should do what you do best.
Simply stated as Srikumar explained, if your reason “why” is out of alignment with what you are doing, success will be more difficult and work far less enjoyable. He extended this concept to companies too. Go spend 18 minutes and watch the TED talk, well worth it.
Now that you know your “why” or at least you know that you need to do someself-discoveryy along those lines, I suggest measuring your primary strength.
Your Primary Strength Lets You Build Your Team Around YOU.
Knowing where you fit in the team and knowing the primary strengths and traits of your team members is critical. Check this out, it’s a simple and free tool to discover your own and other’s personal tendencies as part of a functional team. When I took the test, the information was spot on. In fact after a few reads of the 7 major “animals” I was able to see how my past teams had both succeeded and failed.
Finding Your Serengeti is a NYT best selling book by Stefan Swanepoel who created this system to quickly assess your strengths. Using these disarmingly simple tools, teams can be built, leaders can direct and structure new teams and sub groups. I wish I had this tool earlier in my career.
First, you need to know your “why” and then help all your team members find theirs.
Second, you need to take inventory of your personal tendencies, your natural characteristics that DRIVE you to thrive.
Knowing “who” you are, and knowing “why” you do what you do, will show you where you and your team fall short.
Your success rate just increased substantially.
You’re much further along than most everyone else. But competency still requires skill and the first skill you must acquire is how to leverage your time. I wrote a blog post on the Using Leverage to Make It Big! which should help you get more value for the time you spend. The next step is to take what you discovered about who you are and why you do what you do and optimize your activities. By aligning your ideal abilities with your desires will make everything you do more meaningful and more powerful. Now, where do you fit?
The Pieces of Your Puzzle and Where You Fit.
Not always and not everyone will need a partner. But if you are willing to take one on, you might increase the odds of success substantially. In my life I had a business partner who was my perfect compliment. I was the business guy and he was the technical guy. We were 50/50 partners and my odds of success increased 500% by having him as a partner.
Who can you add to your team to substantially increase your odds of success by filling in the gaps you are missing?
The Serengeti test I referenced above will tell you what your strength is so start with that. If you are an Entrepreneur (crocodile) then you might need a Lion (strategist) on your team.
Add Team Members:
Most people start a business in a fit of entrepreneurial fury, many are unprepared not knowing what they just got themselves into. I’ve heard some business owners admit that if they knew in advance what it would have taken to get as far as they already had, they may not have signed up for the task.
Your job is to use every resource available to succeed and attract the right people to you. Here’s a few suggestions on how to bring in a brain trust without giving up 1/2 your company:
- Build a board of advisors, offer them some shares, enough to keep them in the loop.
- Start a relationship with your bank, even if you are funded by investors, meet regularly.
- Start or join a mastermind, attract smart people, give everyone an hour to share and invite everyone else to provide suggestions.
- Find a coach who’s done it before and ask for help. You may have to pay but this improves your odds of success substantially.
- Find a partner if you’ve not already done so. It doesn’t have to be a 50/50 split but someone who will feel as if it’s their company and stay committed.
- Finally read books and listen to audio programs while in the car. For less than $500 you can get quite an education from ultra successful people by listening to their audio programs and working with their techniques. Look on ebay for used CD programs.
I assure you, if you do what I explain in this article it will stack the odds in your favor. If you work 1/2 days on your business, you will most assuredly be successful. Note; 1/2 day = 12 hours. And remember Rule #1.
So what’s left? – Money.
Being under-capitalized is deadly. Maybe this should have come first. Find a way to secure/save enough money to live (living expenses) for 1.5x the amount you think you will need. Raise or save enough to secure basic business services to get going and if you are doing it alone, get some help fast. Running out of money is preventable with some planning but taking your eye off the ball to raise more can sink your ship. Start this right and you’ll never look back.
The desire to start is overwhelming. Taking a deal that’s not good for you or the company because it’s the only deal… is a mistake. Many deals have “haircuts” built in, this means you will suffer a loss of your own equity if you don’t meet milestones or run out of money before you can cash flow positive. I hate to say it but some savvy investors count on the inexperience of new CEO’s to make that mistake and play right into their hands. Don’t make that mistake.
Decide what you are willing to lose, make sure your family members are on board and go for it.
Have the hard conversation with your wife or husband, explain what’s going to happen and make it clear you may run through all your savings and then some. Be fair, build in trap doors which you can drop out of should you need to, this will make spouses and family members feel safe. A trap door says “when our savings gets below $XX,XXX I go get a job and work the business on nights and weekends.”
In the end, you need to survive this so you can do it again if you fail. A very astute investor once told me to plan your failures to be quick, small and measurable. Fail often, fail small and learn from your mistakes. We all make them and that’s what we call “experience.”
Your Chances of Success Just Improved by another 25%
Follow the guidelines (know thyself, know thy team and watch the money) to give your company a fighting chance. Then get a coach, get some training, get a few good advisors and a partner if needed, you will beat the odds. I’d bet on you.
You don’t need to do this alone.