Sure, you've heard it all before--if you've been laid off, or just finished your degree and can't find a job, now could be a great time to start a business. But is this just fashionable talk of the times, or is it really possible in today's ravaged economy?
I'd say there really is strength to the theory that now could be a great time to go solo. But first, let's get the bad news on the table: About 95% of small business start-ups fail within the first 10 years.
Second, we're obviously in a long, slow-moving, low-to-no-growth recession--which would make you think that start-ups' failure rate would be even higher, right?
Not so fast. In past decades a high percentage of entrepreneurs went solo because they weren't happy or fulfilled working for big companies, or someone else's smaller company. They usually had steady paychecks, savings, the option of a second mortgage to help fund a start-up, and could afford decent-looking rented office space, business telephones, you name it. Presto! They were entrepreneurs. At least, for a few painful months or years until the bills mounted up and the reality of too little cash flow set in.
Then most of them folded, probably not having realized how many dumb mistakes smart people can make when wading in the treacherous waters of trying to birth a business. In the end, nearly all of them fulfilled the prophecy of the 95% failure rate.
To this historically predictable wave of failures, established old-timer entrepreneurs might say: Of course they went bust--they were overconfident! They didn't study or respect the battlefield they were entering, how long it would take to win their start-up war, and what it would cost before their business was self-sustaining. What didja' expect? Those turkeys went belly up like most of them deserved from day one.
Fair enough. Now let's apply the psychological template of our current era: The global financial system has been on one precipice or another for about four years; just about everyone is scared, financially injured, humbled beyond words, career-wise, and a lot less cocky. Not many can afford to lose any more, and nearly everyone is in a mindset of extreme caution--and plenty ready to listen to good advice.
Has the light bulb gone on yet in your entrepreneur-in-the-making mind? What we have today is the opposite of the cocky mindset that doomed a high percentage of entrepreneurs in more robust times. Today's on-the-threshold-of-going-solo entrepreneurs are in a much more respectful and cautious frame of mind than their counterparts even half a decade ago.
And this, I would wager, will make them more likely to succeed. They realize that a business start-up is a game of inches, like an NFL football game on any given Sunday. All the details have to be perfectly managed, mistakes minimized, the foibles and bad luck overcome.
How do I know this? Because I left a good job and went out on my own in the fall of 1979, bristling with overconfidence and just plain naiveté. Sure, at first I worked out of my home to keep costs down, but it wasn't until I made a basketful of mistakes over two and a half years that I began to truly learn the game of building an enduring business. Fortunately, I made my mistakes on a very small scale and was able to survive those early gaffes and go on to build an enduring, very profitable business that made the INC. 500 three years in a row.
In my book, Chicken Lips, Wheeler-Dealer, and the Beady-Eyed M.B.A.: An Entrepreneur's Wild Adventures of the New Silk Road, I recount my start-up journey from bonehead mistakes to efficient, machine-like efficiency and a highly profitable company that was successfully sold in year 11. Starting as an evening and weekend moonlighter in my attic was tough, but it laid the mental template of success for me, as well as the other entrepreneurs who ended up in the 5% winners circle.
The funny thing is, if I was starting in the current miserable economy and lending climate, I think my company could have taken flight even sooner than it did. Today's stark economy negates the working-for-yourself honeymoon and forces rookie entrepreneurs to pay absolute attention from day one.
That's why today's entrepreneurs may have a leg up on us old-timers. They're starting with a survivalist mindset--which is just what an entrepreneur needs to run the long and narrow gauntlet to success.