I wish that launching a startup or creating a business was like a dinner recipe, with step-by-step instructions of exactly what to do. Unfortunately, this isn’t the case. I certainly won’t be the first to tell you that there isn’t a perfect roadmap or handbook to follow that will tell you precisely how to start and run a business successfully. It’s quite challenging and there is a great deal of real-time learning. That said, I am here to encourage and certainly not discourage you from starting the process.
The good news is within minutes I can create a business for you. We can come up with a name, file an LLC, and, boom, just like that, you have a limited liability company. But of course, that’s not what you want. You want to create a business that will grow, thrive, and stay true to its mission through and through. Fortunately with properly aligned research, a strong business plan, and an understanding of necessary capital, that dream can become a reality.
Information is literally at your fingertips. No longer do you have to go to a library, find the right books, and research all day. With a bit of human power and a cool little tool called Google, you can have all of the information you need in a matter of seconds. To top it all off, most of the credible research and work is already done for you. There is extensive readily-available data you can analyze and learn from to best position a startup.
Recognize that timing is everything
That said, timing is imperative and sometimes you just have to execute when you see an opportunity. For example, I launched Restart strictly because of a poll I did on Instagram. When the pandemic first hit, the markets went crashing down. Every headline referenced the Dow Jones industrial average or the Standard & Poor 500 index. So, I asked my audience the following question: Be honest with me in three or less sentences. Could you summarize what the DOW is? Over 250,000 people answered the poll. What do you think the results were?
91% of the people said they could NOT summarize what the Dow was. It’s critical that everyone understand what major indexes like the Dow represent. The Dow is short for the Dow Jones Industrial Average. To further explain it, let’s first understand what a stock is. A stock represents a company. And if you’re looking at a stock’s performance and price, it’ll give you an explanation of everything that’s happening within that company. Imagine that you want an idea and a better understanding of what a lot of companies were doing. You don’t have the time to go through every single stock to understand how those companies are doing. But you want to quickly get a barometer for how the whole market’s doing. That’s what the Dow Jones index does.
The Dow Jones is made up of 30 individual companies. So think about 30 stocks in a big basket. You throw 30 of them in there—all in the United States stock exchange. How do we explain this? The performance of those stock prices and the sum of them is the index. Let’s just say the value that the Dow represents is the sum of the performance divided by a factor. This number gives us an idea of how all 30 companies and their stocks traded in the United States are performing as a whole.
It’s similar to when we look at our bodies and we get a temperature or we get a blood pressure or heart rate reading. We might not know exactly what’s happening, but based on the temperature, if we have a fever, we probably know there’s something wrong. And if there isn’t a fever, it gives us the barometer of how our whole body is functioning. This is similar to the Dow Jones when compared to the whole market.
When my audience didn’t fully understand the Dow, I recognized that this was a critical time to implement a business to bridge this gap. Life as we knew it was changing—unemployment hit record highs and personal finance had to be addressed. Had I spent months on analysis and planning, I wouldn’t have been able to grow the company at the rate I have in just nine months.
In less than a year, this poll has turned into a business with over 100,000 followers in the community. In addition to creating the community, I launched a YouTube Channel, signed a two-book series deal with HarperCollins Leadership group, and a podcast deal. I have launched merch as well as a networking membership. I’ve had the opportunity to speak at organizations like the New York Yankees’ front office and universities as large as the University of Kansas. I have interviewed public figures like Daymond John, Dana White, the Bella Twins, Barbara Corcoran, The Fat Jewish’s Joel Ostrovsky, Shawn Johnson, and Erica Nardini. The moral of my successful business story is, there is no substitute for timely execution.
Your ability to recognize a felt need and meet it quickly can be the first step to launching your own successful new business.
Get honest with yourself about the stats
One of the most important attributes of a successful entrepreneur is your sense of reality and honesty. Of course, you want to be optimistic, but there is a fine line between optimism and naivety. The latter will result in unrealistic valuations, failed expectations, and a whole lot of money and time down the drain. As an entrepreneur, it will serve you well to understand important entrepreneurship statistics so that you can be on the right side of them. If your plan and business successfully overcome the filter of the “why, what, how, and when” challenges, you’ll be better positioned for long-term success.
Fledgling business statistics can be daunting. While I certainly can’t guarantee your startup’s success, I can help you get honest about what you will face in the days ahead. And I can guarantee a higher probability of success by providing you with the expert advice you can utilize to put the odds in your favor. As you launch your new business, get honest with yourself about these important startup stats:
20% of businesses don’t make it through the first year.
How to beat the odds:
Make sure your business plan is bulletproof before launching your startup. A fifth of all startups don’t make it through the first 12 months. We live in a digital world where e-commerce is a critical part of a startup’s success. It’s imperative that you nail online operations. Before you can launch a website, you must register a domain name. It’s not hard to do, but it will likely cost you a one-time purchase fee, as well as an annual renewal fee.
The next step is to build a webpage that is consistent with your branding. Some platforms whose cost structures you can compare are Wix, Squarespace, BigCommerce, and Shopify. Once you decide which website building best suits your needs, you can design a payment system that can be seamlessly incorporated into your website. This step is crucial for converting consumers who come across your website into customers. Before publishing your website, make sure you test it on all devices and across browsers. You want to make sure that all of the links and buttons work, and that everything is consistent.
All of these considerations must be included as costs in the financial statements in your business plan. Once your plan is created, pitch it to all walks of life—people with different backgrounds, ages, experiences, and professions. If someone asks you a question that you have not fully thought through, do not pass go. Stop, think it through, and create a plan of action. Analysis paralysis is certainly a real thing, but lack of preparation is more common and detrimental. Your careful planning is your first step to growth and success.
50% of startups don’t make it through the 5th year.
How to beat the odds:
Think about that for a minute. Every other business doesn’t make it through the 5th year. Wild! What can you do?Develop a flexible five-year plan that will act as your guiding light through an unpredictable journey. Necessary components of this business plan include:
- an executive summary and mission statement
- a company description as well as product or service description
- a marketing and sales plan along with competitor analysis
- SWOT (strengths, weaknesses, opportunities, and threats) analysis
- organization and management structure
- financial projections and a timeline
This seems practical and something that most business owners do, doesn’t it? Here’s what they don’t do—consistently and persistently update their projections and plan. The more information you have, the more accurate your projections and outlook will be. You must aggressively work to use the information at your disposal to accurately update your outlook and strategy. You must not get lazy with this practice!
There are and always will be inevitable factors you can’t control. These will play into your long term success, but you must actively manage all items that you can control. Never lose sight of the two most important factors in your business: client acquisition and client retention. Other competencies will come and go and can be adjusted. When you own a business, you may not technically have a “boss” anymore—or do you? Yes, you do. While you may not report directly to anyone, your clients are your new boss.
Your clients have a direct impact on your gross revenue number. If you are not retaining your clients and growing your client base, it shows. It’s equivalent to being late to work, missing a meeting, or indirectly putting yourself in a position to get fired. A small business owner losing client revenue is the same thing as an employee being fired. Manage your top line the same way you’d manage meeting expectations with a boss. Having a flexible 5-year-plan and concentrating on your client base will streamline your focus as you move ahead with your business. Having a flexible 5-year-plan and concentrating on your client base will streamline your focus as you move ahead with your business.
24% of funded startups fail due to lack of funding.
How to beat the odds:
While bootstrapping can provide enough support for some startups, not all can survive without outside investments. Nearly a quarter of funded startups fail. This is not to say you should sacrifice a chunk of your company if you feel you can’t afford to fund your startup alone. There are different ways to finance your company with debt and equity funding. It’s critical that you know which source of funding is the better choice for you. Slow down. Don’t overestimate the value of your product or service.
Do the necessary research before launching with strategic financial planning. If you aren’t willing to invest in your company, how will you manage to sell others on investing in it? Build a plan that’s attractive for investors. With a solid financial plan in place, you have a solid base to grow and expand your business.
Startups with two founders are 19% less likely to scale prematurely than startups with a single founder.
How to beat the odds:
This statistic truly speaks for itself. Entrepreneurs are known for their strong opinions, which can make it difficult when it’s time to ask for a second opinion. If you’ve considered taking on a business partner but decided against it, have an honest conversation with yourself. Ask yourself about whether or not an additional person could add value to your company. Having a partner could increase your ability to scale your business at just the right time. For any stage startup, having diverse opinions on important decisions regarding the direction of the company can have an enormous impact on your startup’s outcome.
I started the company as a 100% owner. I knew I’d wanted to bootstrap the business and self-fund. But I didn’t want to overextend myself given the current state of our business climate and economy. Thus, I created what I call my “dream” team. Each member of the team received a portion of equity aligned with their value-add and commitment to the company. When building the team, I knew it was imperative that none of the teammates had overlapping skill sets. Each of them believed in the mission. Moreover, I brought in a top-tier business development and operations executive, a Big Four Accountant with his CPA, and a corporate attorney. With our skills sets, we covered each area necessary to start this company well-positioned while staying lean.
How to beat the odds:
As we previously mentioned, fostering a collaborative space and partnering with people to bounce ideas off of can be extremely valuable. That being said, it’s critical that you choose the right people. The wrong can mean the difference between success and failure. When building a team, focus on a diverse set of people who have different perspectives, operate differently, and have expertise in varying areas.
My business school experience was textbook, but one of the most important practice theories instilled in me was centered around building an effective team. One of the key components of doing that is avoiding homogeneity. The more diversification in your teams’ skills and backgrounds, the more success you will likely find. Be smart. Be strategic. And make sure every single member of your team is willing to put in the work that it takes to succeed.
Back to my original point regarding revenue. Businesses live and die by their top line. So the first person I brought on board was a business development machine. I aligned my success with his. Our partnership became stronger every day. When he wins I win, and when I win he wins. Our successes are aligned and we are both motivated to win and move the chains forward every day. I am one that tends to overthink. He’s one that tends to execute. Thus, when we put those two competencies together it leads to well-thought-out strategies that weren’t over-analyzed and were effectively executed. Once our combined efforts drove material top-line growth, we both then knew we had to add members to the team. Without the growth in our top-line, we couldn’t justify the additional support.
A diverse and solid team will give you the strength that you need to move forward towards success.
42% of startups fail because there’s no market.
How to beat the odds:
This statistic is critical to know as an entrepreneur. The product, idea, or solution may make sense in your brain, but public perception is what truly matters. Before you devise a business plan, raise capital, or invest your own savings, make sure there’s market demand for your product or service. Five friends who are willing to vouch for you and support your business are not enough to beat the odds stacked against you. Send out surveys. Conduct focus groups. Interview people. Do your research on similar companies. Who is your exact demographic? Why will they purchase? You may find yourself in this 42% if you can’t instantly answer these critical questions. My Instagram question about the Dow revealed a market that launched my newest venture. That research was critical to my startup’s success. Finding and catering to your market is key in keeping your business growing and grounded.
In your journey towards launching a successful business, lock in on the key secrets and advice I’ve shared with you. Use timing to your advantage. When you recognize a new market, don’t hesitate to meet that need. Get honest with yourself about the reality of growing a new business. Utilize a flexible business plan and analysis to sustain your growth. Your hard work and passion will help your startup survive and thrive in the coming new year.
This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.
We provide third-party links as a convenience and for informational purposes only. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Intuit accepts no responsibility for the accuracy, legality, or content on these sites.