Being a business owner is one of the best ways to earn money while you sleep. It is how you can be your own boss, do something different, and really start to transform the future into something a little bit better. Starting a business is, unfortunately, very easy. It is so easy that many fail to conduct the proper preparation or consideration and end up failing. They fail because they don't have a strong enough business plan or any clear idea of what they are doing, what they need, or even who their customers are.
These businesses fail fast, so fast that there is hardly any record of them at all.
51% of small businesses are less than 10 years old. 32% are less than five years old. In total, the average lifespan for a small business is just 8.5 years. Living longer will naturally increase the chances of building that small business and growing into a medium and then enterprise-sized company.
Overall, business lifespans have shrunk drastically. In the 1960s, for example, the average lifespan for a company was 32 years. In 2020 that same average is now 21.
There are many reasons for this. The first is that trends and needs change so drastically that businesses can quickly fail to keep up. Businesses are also more often bought out once they reach a certain level of success, ending them that way though not in failure. Some companies merge, others revamp.
Even startups that enjoy a lot of investor startup funding experienced a lot of failures. Only about half of startups make a profit in their first year, and most don't survive for more than 3 to 5 years.
There is hope in that statistic, however, in that it includes both companies that go under and also ones that are bought out – and often for a very good price.
Regardless of what kind of business you want to operate and whether you want to stay local or go big, planning and preparation is key. It is how you can avoid falling in that key first year or two and how you can build a strong foundation that can weather storms and support your every business venture.
Start with Your Strengths
Regardless of what kind of business you are looking to start, always begin with your strengths. In some cases, this will be obvious. If you are an engineer, then using that experience is a must, regardless of what type of business model you are going for.
At the end of the day, your skills, your knowledge, and your strengths are how you stand out. If you worked as an engineer, then using that experience to either prop up your business or to center your business around, is a great way to get started.
When you think about starting a business, you want business administration and operations to be the unknown factors, not what your business will be centered around. Alternatively, you could be a business or operations expert and want to find a product or service to focus on. Regardless, you only want one area to be unknown and then will need to work to fill those knowledge gaps.
Not only will centering your business around your specialization help you stand out and appeal more to customers or other businesses, but it is also a great way to take advantage of your existing network.
Networking in a new industry is hard; leveraging your network to help get your new business off the ground is how you succeed. Not only can you hire great people off the bat because you know who you want, but you can also market and even get preorders or pre-hires before you launch.