Statistics: The only science that enables different experts using the same figures to draw different conclusions. Evan Esar.
The often quoted statistic of 90 to 95 % of new businesses failing within the first 5 years of operation, has one of two effects on people. One type of person will be overcome with fear of failure and not even attempt to start a new business, while another person will simply consider the stats as not applicable to them and blindly ignore the warning implicit in the figures.
I was one of the latter assuming that the concept of the franchise that I had bought into, as well as our marketing plans and pure enthusiasm would be enough to pull off a business miracle. However two years after we opened our doors, we said goodbye to our last customer, closed those doors and declared bankruptcy.
It was while I wrote the blog called 50 Lessons Learned on the way to Business Failure and subsequently turned it into the book “I’m not afraid of the ‘F’ Word”, that I really took the time to consider that prediction of failure.
There are many articles and discussions about why small businesses fail so often, and I do think that we need to pay attention to that, but more specifically, I want to address the fact of the prediction itself.
Just like any self fulfilling prophecy, it is possible to either sabotage ourselves or to begin to fatalistically give up when faced with problems rather than attempt to overcome them. I don’t think that the 5 to 10% of businesses that survive and thrive have a magic formula or silver bullet that those of us who have failed at business don’t know about. I believe that they practice good, solid business fundamentals, have a strong mental and emotional constitution and don’t give up when things get difficult. Real business is a lot less romantic than we like imagine; just like making a real marriage work is a lot less romantic than Hollywood would have us believe.
The stats need not apply to you, if you are willing to overcome the challenges that they highlight. The stats do not make businesses go under, they simply reflect the number of times people have got it wrong. You can make a better plan and anticipate what can go wrong by observing what has happened in other businesses and learning from them. So if you are going to go into business, then make sure your plan is solid and sufficient to avoid becoming a statistic.
