Many people thinking about starting a business for the first time ask me “How long will it take to know if I’m on the right track?” Or more to the point, “When should I throw in the towel and get a real job?”
Of course, the accepted traditional answer has always been: You never give up, i.e. persistence will always pay off in the end … but does it really?
Like most of the big questions in life and in business (same thing really) the answer is: it depends.
Realistically, I think there are some guidelines that may help you but there are definitely no certainties in life and business, other than the proverbial death and taxes.
However, I could start by suggesting that if you need a 100% guarantee of success before you even start you might as well give up right now. Certainly the odds are well and truly stacked against you and with that type of mindset you will never survive the continuing uncertainty of conducting business in the 21st century.
Think about it. Even James Packer and Lachlan Murdoch have had some startling set-backs. OneTel springs to mind.
Now here’s two very bright and driven guys, both with fathers who should have been amazing business mentors, with ready access to whatever it takes in terms of capital and resources. I would certainly back them to succeed with virtually any idea they might come up with.
But, as we know, the regular Joe Blow does not share these obvious advantages, so is it possible or even likely that an average person can ever succeed in business?
For argument’s sake, if we are to take millionaire status as the benchmark for business success and, given you’ll find it hard to buy a nice 2-bedroom unit in Sydney for that figure these days, it is probably setting the bar way too low.
Then, based on available statistics (sometimes you have to love Google), 0.78234% of the total population are in fact successful … having risen to 178,000 in 2013. Most of these are self-employed, although there a number of notable exceptions – mainly CEOs of banks and other finance-types.
Which, looking at this another way, means you have to be better than about 99 out of every 100 competitors in your field to succeed, which I admit does sound daunting.
But consider this. Seventy to eighty per cent of all small businesses in this country fail in the first 12-18 months, so that means only 20 per cent of the original number survive – and, if you are one of them, your odds have just improved from 1 to 5 per cent.
Of course simply surviving does not usually mean you will be drawing a great salary; it will probably be just enough to get by. And you can forget all about the expensive overseas holidays for the moment.
So let’s concentrate on surviving the first 18 months
Well, for starters, if you are young enough to live at home with parents this is a big plus. An overwhelming percentage of successful business people originally started off (the first try) in their twenties or even younger.
And anecdotal evidence strongly suggests if you or your parents were born outside of Australia your chances also improve … but that’s another story.
Note all the success stories you read about famous entrepreneurs starting off in their garages are not actually way off the mark. It sure as hell beats paying a landlord rent. And you get Mum’s cooking thrown in.
The facts in this country are disappointingly clear; the number of capable local graduates or experienced managers in their thirties or forties with a young family who actually break the mould and leave a secure salaried position to start their own business is extremely low.
Now if you consider regular trips to Bali, fast cars and buying expensive clothes and gifts is a measure of one’s personal success, and that forgoing these essential pleasures in life is a ‘failure’ in the eyes of you and your mates that you are still willing to endure (for a substantial period) for the long term success of your fledgling business, then you have just achieved Milestone #1 on your journey to ultimate triumph.
Next issue: we will examine life after the crucial first 12-18 months.
CONTRIBUTOR – Drew Martin: Historical construction equipment is the on-going fascination of this Wollongong-based and now retired earthmover. And it was this strange obsession, together with senior links with the industry and the characters within it, that were the catalyst for his professional writing career and the original reason for adopting a pen name. After appearing each month for nearly a decade with his popular and always controversial Ripping Yarns column in the trade magazine The Earthmover & Civil Contractor Drew next tried his hand at children’s books with his REX-3 The Robot Excavator series being published well before Bob the Builder first appeared on bookshelves. In recent years DM has largely turned his attention online and continues to amuse a younger audience with his original way of looking at what most other people consider completely normal life.