Common thinking is that as many as 8 of 10 new businesses fail within their first two years. Government data tells a different story:
"About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm's age. Survival rates have changed little over time."
- Source: U.S. Bureau of Labor Statistics, BED
So, while the data is certainly more encouraging than common thinking, each individual new business writes its own story.
An entrepreneur colleague recently decided to abandon his business venture. He had invested over 1 1/2 years and a considerable amount of cash, but unfortunately his value proposition wasn't being embraced quickly enough by the market to encourage him to continue.
Should he have quit? One could easily say that he shouldn't have. He should have figured out a way to persevere in the face of adversity, right? After all, isn't that what true entrepreneurs do? They don't abandon their ventures ...rather, they show dedication, resilience and fortitude despite hard knocks. Well, it is easy to judge and a lot harder to actually live the life of an entrepreneur, especially when the latter has a spouse and children who have their own real financial needs. I am certain his decision was painful for him to make.
Entrepreneurs need to be prepared (and sufficiently well financed) to weather a challenging start up period before they decide if their business is viable. 1 1/2 years may be a bit early to throw in the white towel. For instance, one of my entrepreneur colleagues is a millionaire and has the financial support of an even wealthier partner/investor for his venture. He is confident that despite a relatively slow business build, the market will adopt his product solution over a 5-6 year horizon. And so, he continues to drive forward.
Entrepreneurs may also need to pivot if their initial efforts are not sufficiently productive or successful. It is not necessary to stubbornly stay the course if doing so will lead to certain failure. I pivoted my consultancy's approach after my first year's business results proved disappointing. Since shifting my business to represent CPGs in creative tech scouting, new product commercialization and new business opportunity development, my consultancy has thrived.
So, what is a reasonable and realistic time period for an entrepreneur to assess his venture's viability? It took my consulting business about 2 1/2 years to earn a sufficiently strong corporate client base before I knew that I was going to make it. But that's my case and I certainly can't speak for others. Each entrepreneur's situation and economic circumstances is uniquely his own.
What is your perspective?
"Connecting You With The Right Solutions" BFS Innovations, Inc.