Recently I delivered a keynote to 500 future entrepreneurs at the University of Michigan's Entrepreneurship Leadership Program. After the keynote, I took questions, including this gem: "What can any future entrepreneur do today to improve their probability of startup success?"
That's a really good question, and one I think about a lot. After all, there are lots of different forms of entrepreneur (the serial founder, the mom-trepreneur, the side hustler, etc.) so any skill, activity, or improvement must apply equally to all. I had many ideas, but first I needed a rubric on which to narrow the choices.
This skill, trait, or activity had to be widely applicable, timeless, accessible, and available to all readers. It also needed to be specific to entrepreneurship--making life better overall is not my domain.
My first thought was meditation. After all, everything we experience comes through the lenses of our minds. So an improvement to one's mind improves all of one's life by improving the filter through which we process life.
Research has shown that adopting a practice of meditation three times a week will have several positive impacts, including increased emotional resiliency, reduced stress, greater comfort in uncertainty, a calmer mind, and better overall decision making.
Further, entrepreneurs must be able to process multiple pieces of information simultaneously and do so clearly. Mindfulness meditation has been shown to increase focus and the ability to think with a sense of clarity, both of which lead to improved decision-making.
My next thought was exercise. Just as meditation impacts all aspects of one's life, adopting a regular exercise routine does the same for your body. Entrepreneurs who add a regular weekly dose of exercise succeed more in business.
In fact, exercise programs have consistently been found to lead to a less stressful and more productive life for the entrepreneur.
Next up was sleep. Most of us don't sleep enough. Guidelines suggest that for optimal function, the adult body should get seven to eight hours of sleep. In 2018, Professor Brian Gunia from Johns Hopkins University found that sleep problems undermine entrepreneurs' ability to thrive.
Research consistently shows that sleep is crucial to maintaining a healthy immune system, metabolism, and memory. Sleep is needed to help your brain learn.
But we all know that meditation, exercise, and sleep are important to our well-being. I needed something that was specific and explicit to entrepreneurs, something that every entrepreneur would benefit from, and that is when it hit me: financial literacy.
In a CB Insights survey of the top 20 reasons why startups fail, a staggering 29 percent cited running out of money for their downfall. As a serial entrepreneur over more than two decades and five startups, I've found being financially literate the one thing that has saved me from mistakes that could have cost me my business.
Without financial literacy, it is simply more difficult to budget properly, make intelligent decisions about credit cards and debt, handle emergency expenses, or take proactive steps toward retirement and long-term care needs.
Without financial literacy, no investor will touch you and it is unlikely you will survive long enough to fully explore your opportunity. In 2013, I published a paper entitled "The Impact of Financial Literacy on New Venture Survival" in the International Journal of Business and Management. In that paper, I shared my research confirming the link between financial literacy and startup survival. The research found that entrepreneurs who were financial literate (and acted accordingly) had a much lower probability of closing their venture involuntarily.
There are a few things you can do to become financially literate, and apply that knowledge to your business. You can learn about financial literacy over the internet through online courses and webinars. There are large number of sites (some free), including the U.S. SBA, Intuit, and Alison. On those sites you can find courses that last one hour, three hours, or even 13 weeks.
The more you need to know, the more you can learn. But start small--perhaps by taking one of the many financial literacy tests online. In my experience nine out of 10 entrepreneurs overestimate their financial literacy.
Once you have become self aware, then you can decide if you want to take a 60-minute course or a 60-hour course. After being exposed to any amount of material, it is imperative that you apply it. Financial literacy is a tacit skill, like riding a bike or playing guitar: to really, deeply grok, one needs to apply it. So after every lesson, take some time to apply it to your business.
So yes: get more sleep, hit the gym and learn to meditate. But first, make sure you are financially literate.