We little guys know this, and we're pretty good at it, given the challenges. Yet 96% of us fail in the first decade. I have been battling with this number since 1992 - trying to find out exactly why. (Read Michael Gerber's The E-Myth Revisited for an explanation of the numbers.)
I have also lost count of the number of aspirant Richard Branson wannabees who have assured me that their faith can move mountains, and how dare I try and confuse them with the facts, because they are destined for greatness. Most of them are now gainfully employed by others, or still struggling as the equivalent of entrepreneurial hunter-gatherers. (Richard Branson - using this same analogy - is like a feudal lord of the manor!)
What are we doing wrong?
I am glad you asked, because there is a frightfully simple answer. Jim Collins, in his excellent book Good to Great, talks about The Stockdale Paradox - the balancing act a business must work with if it is ever to achieve greatness. (By his reckoning and deep research of the US market over the past 30 years, only 11 listed firms make the grade - and they are not the firms you might first think of.)
Yet each of these firms was a boringly good firm until, one day, for whatever reason, they embarked on a series of exercises (no fanfare, no press, just a gentle series of changes in the way they did things). These changes, over the next 15 years, made these 11 firms dramatically outperform all the firms in their sectors
They simply did the following:
- retained faith that they would prevail in the end, regardless of the difficulties,
- AND at the same time,
- they confronted the most brutal facts of their current reality, whatever those facts might be.
We little guys are great with the optimism and retaining faith thing, but we tend to be the world's biggest laggards when it comes time to confronting our reality.
Our world is changing. Macro-economically the various entities of government are taking steps that are not good for the future of most small business owners. The security issue is affecting our incomes and lifestyles.
Yet, I still have people asking if they should venture forth into this commercial wilderness and open a store in a village with population 47 during the year (92 over holidays), without even considering the long term lease (and guarantees), the cost of setting up (and guarantees when the funds are borrowed), the security and insurance costs, the costs of stock, ...
If Richard Branson ran his airline business like this all his planes would have made unexpected terminal landings miles away from airports!
The thing I battle to understand, to be honest, is why anyone would want to invest £50,000 in setting up a physical store (with all the above-mentioned challenges) when it costs about one hundredth of that to set up an Internet store with a market a million times bigger?
It can't be that they know nothing about the Internet, because they also know nothing about business at this point. (They're in startup mode.)
If you don't take time out to confront the facts, no matter how brutal, you're not going to be around for long.
Winston Churchill once said "Facts are better than dreams." I'd hate to ignore advice from him!
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