What I Learned From My First 6 Business Failures
Before starting SBA, I failed at literally 6 different businesses that I started up.
Each one cost me an enormous amount of time, money and energy.
As disappointing as each of those failures was, I learnt a lot along the way.
Most importantly, I learnt how little I knew about starting and operating a business at the outset. (What’s that saying about “not knowing what we don’ t know”?)
Its reported that within the first 2 years, 80% of start ups will fail.
So, if you line up 10 people reading this post, only 2 will still be going into the medium term.
The question that every start up needs to ask is:
“How can I swing the odds massively in my favour so that I’m one of the 2, not one of the 8”.
In my experience, the answer lies in ‘good foundations’.
Getting the foundations right will almost certainly mean success.
Here’s what I call the 7 Foundational Questions. (Incidentally, these same questions apply equally to an ongoing business.)
- Enough Cash – Do you have twice the amount of cash that you predict you will need to get to the point of profit (including your own salary)? We estimate that 95%+ of start ups underestimate the amount of cash they will need to get to profit point.
- Will You Sleep? If the business does not succeed in the way you envisage, will you still be able to sleep at night? No business is guaranteed to succeed or continue. And nothing is worth anxiety and sleepless nights worried about finances or failure. Every business involves a risk. So, put the needed capital into the business bank account – whether that’s $1,000 or $1Million – and chose for the business to succeed. But be willing to kiss the money goodbye and then sleep like an angel.
- Have Fun – Will you be happy and have fun starting and operating your business? Of course, in one sense starting and operating a business is a serious thing. But our experience is that your business will be more successful if you love what you’re doing.
- A Bigger Mission. Does your business have a bigger mission than just generating a bottom line? Money is great and important but is just a means to an end. Having a bigger mission will give you the passion to keep going when things get tough. And it will engage any Team members that you have or bring on board. Your mission should scare you a little and excite you a lot.
- Be the Leader. Can you be the leader in your niche market? A niche market is something that the public sees as being separate or different. For example, ‘energy drinks’ is a niche market; ‘yellow cars’ is a not a niche market. Don’t confuse size with being a leader. Without exception, all start ups can be the leader from inception; its just a matter of creating a new niche market by narrowing your focus.
- A Growth Niche. Is that niche market growing (or will that niche market grow) at the rate of at least 10% per annum? A niche market that is growing is simply more profitable and compounds over time.
- Hope Marketing – Are you relying on ‘hope marketing’? Being good at what you do is not the same as being good at marketing what you do. The term ‘hope marketing’ refers to living in the hope that your marketing will just happen and that somehow you will magically drive new customers to your business.
The mistake that I made the first 6 times was that I couldn’t answer ‘yes’ to one or more of these questions. In other words, the foundations weren’t solid enough – and eventually the house came crashing down.
If you can’t answer a resounding ‘yes’ to every one of these, then I strongly recommend you go back to the drawing board and rethink what you are doing, irrespective of whether you have been in business for 10 days or 10 years.
The best to your learning (and success).