It’s the American dream for many people – being your own boss, making an unlimited amount of money, and working when you want to. In other words, being an entrepreneur. While many people have taken advantage of the lack of traditional jobs in the marketplace to strike out on your own, most haven’t researched or reflected on the risk and reality of doing so.
Many of my clients come to me without doing the leg work first – and that’s ok. But here’s what I tell them from day one if they haven’t already done the work.
According to a Statistic Brain study, the failure rate of businesses in the Services industry, which include coaching and consulting, is 45% within the first four years. Not quite as awful as the Information industry at 65% or retail at 53%, but that’s almost half. Within four years of starting your own adventure, almost half of you will have to close it down.
That’s a huge wall to climb – knowing that it is likely you are going to fail. How do you ever get started?
When I stumbled across this study about a year or so after I started my own business full-time, I almost wanted to cry. The first year was tough, full of a lot of ups and downs and all arounds, and I wasn’t sure what was next. I could have easily used this research as a sign that it was time to consider other opportunities. But instead, I wanted to learn more about why these businesses fail.
The why they failed was interesting – incompetence. Incompetence around planning, financial considerations, pricing, and record keeping. Ahem, do any of those sound familiar?
Which of course then sent me into a blind panic because those are most of the things that I had worried about or still needed to tackle. I am not an awesome planner for my business, which blows my mind because I do like a good plan. I didn’t have any real financial systems set-up, in fact, I didn’t even have my own business checking account. Pricing is a topic that will forever be difficult for me – how do you put a number on what you are worth? And official record keeping is something I didn’t think I had the extra money to spare.
See – I was falling right into the failing trap. And that’s the reality of being an entrepreneur – you are almost set-up from the beginning to fail, especially if you are doing it alone.
Since finding that research, I have kept these four failure reasons in front of me on a daily basis. Sometimes the sticky note drives me nuts, but more times than not it spurs me into action.
I have attempt to plan better – but I’m still not doing a great job at it. This year I’m using a quadrant white board with sticky notes posted in each quarter for activities I want to start, stop and continue along with actionable goals. It doesn’t feel as “planned” as I had hoped, but I am still getting stuff done. I absolutely will continue to focus on creating The Business Plan for ongoing success.
I opened a business banking account and formed an official LLC – yes, I was late to that party. I’ve started being more conscious about my pricing and income-generating model (hey, it’s still a work in progress). And I have enhanced my spreadsheet that I use to keep all of my records straight.
It’s not even close to perfect, but it’s better than where it was. Which is the reality – you don’t need it to be perfect, but you need to have some parameters in place to help keep you away from the failure trap that is waiting for you.
And these are just the things the research picked up on. I could like a zillion things that are “risks” and “reality” for me on a daily basis like scheduling, competing priorities, fitting in a life…
No career path is perfect or fail proof – just know what you are getting into before jumping blindly.