The survival rate for 1 year is 91%. So what happens in the intervening 4 years?
Whilst research shows that the type of business has a definite impact on survivability, (education and health sectors have the strongest survival rate with over 50% surviving longer than year 5), I believe the reason for failure has a more human dynamic.
To gain a better insight, you first need to understand the entrepreneurial mind. The average person has an aversion to change and risk – that’s why their results are average. The entrepreneur however, thrives in an environment of change and excitement. It keeps him awake at night and makes her leap out of bed earlier that your average drone.
When building something from scratch, the early days are the most exciting; you take nothing, and make it something. It’s almost miraculous. Look what I’ve done! The adrenaline kick is tangible.
The results are at their most stark at that embryonic stage. From nothing, comes a premises, equipment, staff, sales and income. And all this in one year.
Then something happens. A system is born that automates the business. That’s what makes great businesses we’re told – systems, not people.
And that’s great, if you like routine. But routine is anathema to the entrepreneur, and they lose all that initial excitement and adrenaline. And with it, they lose enthusiasm for the business. They become bored and their minds wander, looking for the next adrenaline hit.
I know, because I’ve done it. I’ve walked away from successful businesses because I got bored with the routine. And I’ve let businesses fail because of the same boredom.
The remedy, in hindsight, was to have a goal larger than the establishment of the business. If the goal is just to create a business, and you succeed in 6 months, then you’ve achieved your goal, and boredom ensues.
However if the goal was a magnificent, 30 storey, gold plated, ‘take over the world’ one, then the initial birth of the business is merely a stage in its evolution and the boredom avoided.
The goal is then broken down to yearly, monthly and even daily targets, which the missing of any, risks jeopardising the goal. Every day starts from zero. In every day, exists the fear that the dream will not be achieved. How can boredom live in such an environment?
So here’s my plan; to save £300,000 in 10 years. To cover costs and investment goals, I need only generate £120 of new sales per day, for 6 days per week, for 10 years.
I’ve budgeted £80 – 100k to buy a 50′ Beneteau yacht and have it moored in Gibraltar harbour. The remaining £200k, I’ll squander sailing the Med until I’m not fit enough to continue. Boredom avoided.