It goes without saying that starting your own business takes a lot of work. Roughly 50 percent of new U.S. businesses fail in the first five years. It can be very intimidating and scary to start a business, knowing there’s no guarantee it’ll work out.
Over the years, I’ve had the privilege of working with entrepreneurs and startups at various stages of growth. Some of these businesses have gone on to great successes, while others, unfortunately, not so much.
But there are lessons to be learned from success stories and failed attempts alike. If half of businesses fail in the first five years, what are the other half doing right and what can entrepreneurs learn from them? Below are tips, tricks and words of wisdom to consider when kicking off a new venture.
1. Bend before you break.
As a business owner, and especially as an entrepreneur, you must be adaptable. When leading a business during the early stages of the unknown, you’ve got to master the craft of working well during times of constant change. If something can go wrong, it likely will, but if you’re able to be fluid, you and your company will avoid wasting time backpedaling and scrambling.
Robert Kiyosaki, author of Rich Dad Poor Dad, simply explains this notion: “When times are bad is when the real entrepreneurs emerge.”
2. Deny instant gratification and think about the long term.
Avoid making decisions that provide short-term or ad hoc solutions -- you need to think about your business’s success three or five years down the road. Build what customers are looking for, not what will be a quick win.
In the words of author Seth Godin, “The media wants overnight successes (so they have someone to tear down). Ignore them. Listen instead to your real customers, to your vision and make something for the long haul. Because that's how long it's going to take.”
For example, don’t hastily create a poorly designed website because you need one in a week. Customers who visit your site and have a negative experience will be turned off by the lack of usability or intuitiveness and your brand’s reputation, potential sales and customer loyalty will suffer. It takes a lot of work to turn around this type of damage.
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3. Cater to your customer.
Don’t build a business model where the target customer is anyone in the world. Your customers will be the fuel for your business, but you need to first identify who they are then invest in them heavily. Get to know your customers -- speak to them frequently, ask questions, earn their trust and learn their pain points and what they’re looking for.
Customer satisfaction and loyalty can be the most valuable tool to a brand’s longevity. Always keep in mind that it takes 12 positive experiences to make up for one unresolved negative experience.
4. Embrace technology as a helpful tool, not a complicated burden.
Identifying and deploying the best IT early out the gate can potentially help your company be leaps and bounds ahead of competitors who don’t. Before you deploy an IT strategy, pay attention to tech trends and think through your business, particularly how it affects customers. Envision where you want to be in three, five and 15 years and then determine what technology tools will allow your business to reach your customers so you are able to scale and grow.
Don’t implement technology for technology’s sake, do so because it’s what’s best for your business.
5. Grit and determination in the face of failure will lead you to success.
As an entrepreneur and leader, you need to become one with perseverance and determination.
Consider the perspective of Max Levchin, who co-founded PayPal: “The very first company I started failed with a great bang. The second one failed a little less, but still failed. The third one, you know, proper failed, but it was kind of OK. I recovered quickly. Number four didn’t fail. It still didn’t really feel great, but it did OK. Number five was PayPal.”
Some of these points may seem like common sense, but when you’re in the trenches making crucial decisions, it’s tough to slow down and step back to think about long-term impact. Having these simple guidelines and insight gives you a place to start when the going gets tough. If you keep these five pieces of advice in mind, you’ll be on the right track to join the successful 50 percent.