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90 Percent of All Business Fail in the First Two Years

 
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Jul 06, 2008 6:06 PM ET    Quote  Report Abuse
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Craig,

 

You really do have a great talent of articulating idea. Do you think that the American Society we leave in really supports Entrepreneurship “I mean people mentality and not government regulations”?  To me it seem like most peoples drive in life is a 9-5 with a Large Company and eventually working their way up the corporate ladder. 

 

How many people automatically get every bad statistic the moment they even mention starting a business to their family, friend, or co workers.  “Well 9 out of 10 businesses fail in the first year blah blah blah”

 

With all the anti Entrepreneur Facts, stats, and myths "which are totally wrong", why aren’t Job/Career stats stated all over the place. 

9 out of 10 Employee never make 1 a million dollars in Revenue

9 out of 10 Employees never make it up the corporate ladder

9 out of those 10 failed businesses also have to fire their employees LOL.

You get the idea.

 

 

We are also constantly bombarded by negative Articles also. Example: "Why 9 out of 10 businesses fail doing a Recession", 5 Thing Small business owner need to do to not go out of business ETC"

How many of these Small business Articles are actually being written by small business owner/operators.

 
 
CraigL

posts: 9051

Jul 08, 2008 1:03 AM ET    Quote  Report Abuse
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The problem isn`t that our society doesn`t support entrepreneurship---it absolutely does! (At least for a while longer, depending on Congress.)

No, it`s that we`re not expecting much from our children. Interestingly enough, based on this book I`ve just read (The Fourth Turning), this support or lack of support for ideals and independence is cyclical. It happens on a generational basis.

We`ve just come through what the authors call an "unraveling" cycle, each of these lasting about 20 years. Following the unraveling comes a crisis, also lasting about 20 years. The last one was the WWII crisis, and these types of events change the world.

During the crisis they`ve been dealing with war and shortages (crisis), then busy rebuilding everything (post-crisis). That creates an economic boom---a "high." It`s in the next cycle that things become interesting, as with the Boomer generation.

After a crisis, the society just wants peace, family, and enjoyment of life. They rebuild institutions and infrastructure, usually creating an economic boom. The children born as this cycle moves along, create an "Awakening." They`re raised in a boom, with abundance and no worries. They`re encouraged to reach beyond the mundane, explore ideals and spirituality, and they develop a strong sense of entrepreneurial spirit.

As young adults, they revolt against the staid older "hero" generation, tearing down the institutions and seeing a focus on the mundane. They push their ideals forward, then grow older. Taking power, they realize there isn`t anything left, since they tore it all down. At that point, they start businesses, and begin to see that gradual ending of the great economic boom times.

The generation following the Boomers is a "nomad" generation. Raised under egocentric parents, they`ve been left to grow up on their own---the latchkey kids and survivors of abortion and divorce. This "Gen-X" or more properly, "13th" generation has no particular loyalty, sees the economy as passing them by, and looks toward themselves and small groups to accomplish survival.

Right now, entering the Crisis (2005-2025), the oldest "hero" generation is mostly dead. The "silent" generation (50s) is in power but leaving. The boomers are just now taking control of the future (middle age, managing gov`t.), and the 13ers are coming of age. The youngest children being born in the 90s and now are the next "hero" generation, who will fight the wars of the crisis.

Everyone is exhausted. We`ve just had the unraveling, and old people just want to retire and enjoy the money they gained during the economic high. Middle age boomers are tired of idealistic arguments and lost kids, and want to refocus education on bringing society back to values.

The 13ers are old enough to understand that they`re tired of doing whatever they please, and want a basic, simple family life with enough money to live comfortably. So ALL five generations are in alignment---they just want some peace and quiet, but see that the institutions and government have failed.

The result is a society-wide re-focus on family groups and neighborhoods, coming together in an adversarial position against an increasingly intrusive government (still run to a large extent by "silent" generation people). They no longer believe they`ll be wealthier than their parents, and often are being given money from those older parents who feel guilty.

There`s a general negativity in the air, as people become more pessimistic and see no solutions to overwhelmingly complex social problems. Like the autumn of the seasons, the fruits of 60 years have been harvested, and now things begin to brown and die out. It prepares the ground for the cold of the winter and the next crisis.

That clears everything out, brings many new solutions, and pulls all of society together again. There`s a new community, a "we can do this" atmosphere, and a solid focus on winning. All the entrepreneurial effort taking place prior to the crisis, then comes into focus and the society moves forward into the next economic "high" period.

It`s a fascinating book, although the first half is pretty dry. I only wish they`d used types of music to better highlight which generation they were talking about at any given moment. :-) To the best of my understanding it works out to:
  • Eldest prophets - WWII "hero" generation -- 40s big band music, and swing.
  • Old artists - Silent "artist" generation, too young for the war, too old to be kids -- 50s rock, folk music -- the "civil rights" generation, now at the highest levels of power. This generation is the guilt-ridden beneficiaries of the post-war boom, and believes in transfer of wealth.
  • Middle-age prophets -- Baby Boomers -- 60s hard rock, college riots, talk about ideals a lot but don`t usually do much about them. Self-centered, inward directed, seeking a spiritual awakening.
  • Young adult nomads -- 13ers (Gen-X), 70-80s grunge and techno rock -- lost and raised on their own, pragmatic and working enough to solve a problem, the moving on.
  • Children - Millenials, the new "hero" generation who will form a great team, come together and fight a win-or-lose war, without any question about the outcome.
CraigL2008-7-8 1:11:26
SmartSammy

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Jul 08, 2008 12:22 PM ET    Quote  Report Abuse
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Sometimes reality is just not fun.  And these numbers do speak the truth.  Why?  Many businesses are dreams, and few are solid business ideas.  Should you not dream?  No, but one must also be aware of the downfalls.  And statistics tell all.
 
I have been building a wonderful resource for entrepreneurs and small business owners to teach them the basics of finance...and providing top quality tools.  Problem:  the numbers tell all many times.  No matter how hard you sweat and hours you work--your dream might just not be a good business idea.  And what I have found out, is most entrepreneurs shy away from the truth in numbers.
 
If you think you have an idea-run it by a banker, a SCORE representative or someone with business experience.  They will tell you if the numbers might make sense one day.
 
And you won`t lose your house, your spouse, or even your health and your dream will become a nightmare.
 
So, study the business side of business.  That is how you will not fail. 
 
Jul 08, 2008 1:09 PM ET    Quote  Report Abuse
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Sometimes reality is just not fun.  And these numbers do speak the truth.  Why?  Many businesses are dreams, and few are solid business ideas.  Should you not dream?  No, but one must also be aware of the downfalls.  And statistics tell all.
 
I have been building a wonderful resource for entrepreneurs and small business owners to teach them the basics of finance...and providing top quality tools.  Problem:  the numbers tell all many times.  No matter how hard you sweat and hours you work--your dream might just not be a good business idea.  And what I have found out, is most entrepreneurs shy away from the truth in numbers.
 
If you think you have an idea-run it by a banker, a SCORE representative or someone with business experience.  They will tell you if the numbers might make sense one day.
 
And you won`t lose your house, your spouse, or even your health and your dream will become a nightmare.
 
So, study the business side of business.  That is how you will not fail. 
 

The Horse less Carriage was once a dream, Transmitting Voice through the ether was once a dream, computers were once a dream, and everything was once a Dream. And nobody believed in them at the time. A lot of times the old Guard "Score, banker, and Old business folks" won`t recognize your dream, some time you have to put in the faith.  But if you give up on you dream, then of course you will fail.  How many times have we heard story of people being told no 1000 times, then they finally finding their break.  Did you know that The Kernel was turned down by literally a few hundred banks before he got approve for a loan to Start Kentucky Fried Chicken, and he did all this in his 60’s.  He didn’t give up.

 

These numbers are not correct because of the fact, there is no way to generalize "SMALL Business" into a category and calculate the success rate.  This number could have been figured out during the Dot Com Bust where 9 out of 10 Dot Com businesses failed. But I doubt 9 or of 10 personal services businesses failed.  Matter a fact a personal service can hardly fail, it might go into part time, or be placed on a hold "vacation", but the business is still able to survive if the owner wants to.

 

These numbers are thrown around by pessimists none Entrepreneurs, and employed government researcher who have no real clue about business.  A lot of the time when the Government and IRS thinks a business is failing "because of Tax losses” the business is actually doing real good and saving the owner $1000`s is taxes LOL.

 

Hey a lot of people lose there house, spouse and heath, and never even thought about a starting a business “Housing bubble”.  I rather dry trying then to live in regret.  I rather become poor trying to get rich, then to settle with poverty LOL.  Entrepreneurship is about risk. Because I can almost guarantee I will eventually become rich “maybe even from writing a book “My failures, and How not to make them LOL”

 

SmartSammy where can I find your resources??

 

lori7779

posts: 2

Jul 08, 2008 1:19 PM ET    Quote  Report Abuse
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Interesting stuff, is what you are saying sort of like listening to the news. We are supposed to believe what they tell us, what they want us to beleive...if common sense pervails we too are being fed and manipulated to some extent.   I recently attended a government business seminar for guidence on the steps to opening a store and taking my home based business to the next level. They threw out the stats on failure and stress the importance of structure etc. I`m passinate about my ideas and products although I have to admit the roller coaster of emotions and the fear involved. Keep talking and I will keep reading..thanks.
lori77797/8/2008 1:41 PM
CraigL

posts: 9051

Jul 08, 2008 1:49 PM ET    Quote  Report Abuse
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Y`know, we could look at some of these other statistics we`re hearing on the radion commercials. One that comes to mind is for an autism test, where they toss out statistics of how many chances in a million does your child have to become a professional basketball star.

Clarence, I think if we start from a position that statistics are a replacement for reality, then everything you`re saying is correct. The logical analysis and the comparisons do show that statistics can be a pessimistic, preventative obstacle to starting a business.

But we also know that statistics are an important and very useful field of analysis. If we look at it as a cautionary analytic tool, then it may still be pessimistic, but not an obstacle.

The more I think about it, the more I`m seeing that this discussion isn`t so much about statistics as it is about the overall concept of analysis. Our feelings usually tell us to run forward as fast as we can, immediately jumping into a new set of actions.

Our analytic mind more often tells us to slow down, think it through, and examine both the pros and cons. We don`t ordinarily examine ONLY the downside of a new proposition, but neither do we only look at the positive side. Groundless optimism or pessimism is a psychological pathology---a problem, not a solution.

The problem is where people untrained in analytic thinking allow their feelings to continually affect their thinking process. They see a number of obstacles and "feel" that because there`s even 1 obstacle, therefore the entire idea is an immediate failure. Or they go the other way, feel the idea is brilliant, see ONLY the positive side, and end up bankrupt.

Another problem is a failure to understand relative weights to pros and cons. For instance, we might look at the benefits of having a car and say that the up side is freedom to travel wherever, but the downside is that "I was in an accident once, and broke my arm." If we then say that no way should we ever buy a car because it`s too risky, we`ve wrongly valued the accident.

We can`t change reality, but we can change our perspective on things. If we say that statistics are simply facts, then the way we allow those facts to affect our feeling (i.e., optimism or pessimism) is our own option. If we choose to focus on the pessimism, then statistics become a threat of doom. Choosing to focus on the optimism, they become a cautionary analytic value.
Jul 08, 2008 1:51 PM ET    Quote  Report Abuse
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Interesting stuff, is what you are saying sort of like listening to the news. We are supposed to believe what they tell us, what they want us to beleive...if common sense pervails we too are being fed and manipulated to some extent.   I recently attended a government business seminar for guidence on the steps to opening a store and taking my home based business to the next level. They threw out the stats on failure and stress the importance of structure etc. I`m passinate about my ideas and products although I have to admit the roller coaster of emotions and the fear involved. Keep talking and I will keep reading..thanks.
 

I was in the military and leaving, and they made us attend a mandatory Transition Class for a couple of Days.  Now this is a class given by the military, who want people to stay in the military giving you tips and advice on how to make the transition from military life.  Let me just say they gave tons of Static about how most people can`t find job, the unemployment rate, how rare full  health insurance is, the cost of housing, the college success rate and every negative statistic about how civilian life.  Then I had to use my common sense and say "Hey 98 percent of working people are civilians LOL".  I heard the military has a 30 percent retention rate by using this class.  I know quite of few people who where on there way out the military and decided to stay after attending this class.  And when I asked one of my friends who changed their mind to stay, guess what they said?   The same statistics from the Class:  Unemployment is high since 9/11, heath insurance is hard to find, and the cost of living is increasing LOL.  I left the military, finished college, got a job before I finish my last semester and made literally 3 times as much as a made in the military, with full health insurance.

 

These statistics are being used to stop Entrepreneurship, and Entrepreneur minds.  Every time I hear one this statistic I say to myself "everything I am able to purchase and enjoy was because of someone having an idea, taking the risk of it not working but still starting their business", and I rush online and read a success story.

 

Don’t let anyone tell you that you can do something. If people can’t do something themselves, they wanna tell you that you can’t do it.  If you want something, just go get it. – Chris Gardner “Purist of Happiness”

There is no security on this earth; there is only opportunity – Phineas T. Barnum

 
Jul 08, 2008 1:59 PM ET    Quote  Report Abuse
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Y`know, we could look at some of these other statistics we`re hearing on the radion commercials. One that comes to mind is for an autism test, where they toss out statistics of how many chances in a million does your child have to become a professional basketball star.

Clarence, I think if we start from a position that statistics are a replacement for reality, then everything you`re saying is correct. The logical analysis and the comparisons do show that statistics can be a pessimistic, preventative obstacle to starting a business.

But we also know that statistics are an important and very useful field of analysis. If we look at it as a cautionary analytic tool, then it may still be pessimistic, but not an obstacle.

The more I think about it, the more I`m seeing that this discussion isn`t so much about statistics as it is about the overall concept of analysis. Our feelings usually tell us to run forward as fast as we can, immediately jumping into a new set of actions.

Our analytic mind more often tells us to slow down, think it through, and examine both the pros and cons. We don`t ordinarily examine ONLY the downside of a new proposition, but neither do we only look at the positive side. Groundless optimism or pessimism is a psychological pathology---a problem, not a solution.

The problem is where people untrained in analytic thinking allow their feelings to continually affect their thinking process. They see a number of obstacles and "feel" that because there`s even 1 obstacle, therefore the entire idea is an immediate failure. Or they go the other way, feel the idea is brilliant, see ONLY the positive side, and end up bankrupt.

Another problem is a failure to understand relative weights to pros and cons. For instance, we might look at the benefits of having a car and say that the up side is freedom to travel wherever, but the downside is that "I was in an accident once, and broke my arm." If we then say that no way should we ever buy a car because it`s too risky, we`ve wrongly valued the accident.

We can`t change reality, but we can change our perspective on things. If we say that statistics are simply facts, then the way we allow those facts to affect our feeling (i.e., optimism or pessimism) is our own option. If we choose to focus on the pessimism, then statistics become a threat of doom. Choosing to focus on the optimism, they become a cautionary analytic value.

 
CraigL,
This dis
 
You right, this is turning more into a discussion on wieghing more on the side of overall concept of analysis.  I kind of wanted to just debunk the myth, and let people know that that "and some over" stats maybe not be accurate, and can in no way predict the future.
 
Thanks,
CraigL

posts: 9051

Jul 08, 2008 2:12 PM ET    Quote  Report Abuse
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Ah....now there`s the crux of the matter: "......that statistics may not be accurate..."

ALL statistics are accurate, just as the left or right side of all equations are accurate. It`s ONLY when we put the "=" sign (a.k.a. "the same as") into the equation that we can make a judgement of accurate or not.

For example. 2+3 or 8-12 is totally accurate. You can read it, the symbols are correct, and the numbers are numbers. Additionally, 5 and 4 are accurate for the same reasons. But 2+3=5 is accurate, whereas 8-12=4 is not accurate; it`s not "true."

We wouldn`t usually ask if statistics are accurate; we`d ask what`s their basis---what are the underlying assumptions. And THAT`s the problem in modern education and society. People don`t question assumptions anymore.
lori7779

posts: 2

Jul 08, 2008 2:16 PM ET    Quote  Report Abuse
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Fasinating Clarence, manipulation and control at its finest.. I wish you could stand up in one of those classes and tell the real story.....if you can`t trust your own military/country who can you trust..Ha!

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