Every new entrepreneur has likely heard the warning, "Four out of every five new businesses fail." There's just one problem -- it's not true. Here are few simple steps you can take to make sure your business avoids a premature death.
FYI: From the editor
Start-ups are risky business. We all know that. Even as you read this, someone somewhere is giving a speech on entrepreneurship and warning that "four out of every five new businesses fail." It's a statistic that everyone has heard, and most people believe it, especially those who are taking the first steps toward building a company of their own.
There's just one problem: it's not true. Four out of five new businesses do not fail. While nobody knows the true mortality rate for start-ups, we do know that most survive for at least five years. There are, moreover, a few simple steps you can take to make sure your business avoids a premature death.
First, find someone willing to pay for your product or service.
Second, hoard your cash. In the words of one successful entrepreneur, "Throw nickels around like they're manhole covers."
Third, find a mentor -- someone who's been through the start-up process, preferably more than once.
That's it. If you follow those rules, I can almost guarantee that you won't become part of the failure statistics.
Start-up success, on the other hand, is another matter. The goal, after all, is not just to create a business but to create one that's going to let you lead a happy life. Such an enterprise is the product of decisions people make early in the company-building process.
To illustrate that point, we've put together a package of eight profiles this month under the heading " Your Way." Each showcases one particular pathway to entrepreneurial success. There is, for example, the former business-school professor who started a restaurant because he wanted to test his ideas about managing people and creating effective organizations. And the nurse who created a medical consulting business because she wanted a more flexible schedule that would let her spend more time with her children.
The profiles are a vivid reminder that there are an infinite variety of approaches to company building. Most of them work, but the pathways lead to very different types of businesses. As I read the pieces I couldn't help reflecting on how much better off most entrepreneurs would be if -- instead of obsessing about the chance of failure -- they spent a little more time thinking about what kind of business they would like to have if they succeeded.
Stuff happens In every start-up, however small, entrepreneurial vision clashes with conventional wisdom, creating the kind of drama that we shamelessly exploit in our Anatomy of a Start-Up series. The anatomies play the promise seen by founders off against the skepticism of the experts. Readers can then decide who they think is right.
This month we have a chance to find out who was actually right. In " Big Plans" we present updates on eight companies that were Anatomy subjects from 1996 through 1998, including Oregon Chai, CDnow, and Excelsior-Henderson. To get the most out of their stories, I'd urge you to go back and read the original articles. You can find them all here online at inc.com.