What is success? It’s abstract, really. For some, it could be money and status. For others, it’s finding happiness. In business, we tend to measure success starting with profit.
In talking to entrepreneurs, I am always fascinated with the different perspectives of success. In general, they believe their ideas are incredible and the obstacles they need to overcome are constraints like finance, resources, marketing, and competition.
I argue that their potential barriers are actually achieving excellence in developing and executing great programs. Why do I think this? Well, 90% of new businesses fail withing five years, and that includes IPOs and venture capital efforts.
Consequently, there are several issues that need to be addressed in order for entrepreneurs to reach their full potential. When an entrepreneur thinks about starting a business, there are two distinct concepts that pop up time and again: Passion and Reality. These are both critical to success.
Passion was best described by Steve Jobs when he said, “Because the people who are crazy enough to think they can change the world are the ones who do.”
Reality is understanding the problems, limitations, and constraints associated with any undertaking. As Thomas Edison said, “A vision without execution is hallucination.” Passion is what gives us the drive to overcome these obstacles. It is the excitement and energy that drive a start-up. It is crucial to balance these two concepts if you want to execute a successful business.
You also need more than a good idea—they’re a dime a dozen. Your best friend might have the next million-dollar App idea. Ideas are great as they are the true engines of innovation. However, an entrepreneur needs to determine whether they can execute the idea and, ultimately, make enough sales to earn a profit. New businesses frequently fail because small (yet critical) issues are overlooked.
Here are some recommendations to help increase potential:
Plan smartly. Think of planning as a long arduous test with lots of work, incorrect assumptions, and missing analysis. For example, 2022 financial markets have clearly made prior economic and financial assumptions in any plan highly uncertain. The solution is to make plans simple, flexible, and solely for the entrepreneur and not outside parties. It should be a guide, not a fixed template.
Keep plans current and active. A business plan is not a document to be stored on a shelf; it should establish parameters and be developed, tested, and continuously revised. Even with a “perfect” business plan, there will be hiccups and failures along the way.
Learn from failures. This is a critical component of the ongoing planning process.
Focus on passion. This will keep you going through the failures. Additionally, a successful business plan should express why you think the business is a good idea and why it will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.
Set realistic goals. While time frames, levels, and processes can vary, you need a plan to show profitability: the when and the how. You may do what you do for a number of reasons (passion, fun, fulfillment), but at the end of the day, a business needs to make money if it’s going to last. Make sure that you set your passion aside for a moment and make sure you’re on the path to profitability. What resources do you have and need? Many entrepreneurs follow guides related to large venture capital ideas while most small businesses earn less than $1 million per year. Be pragmatic in these matters.
Take risks. This is a critical part of every entrepreneurial win. Frankly, I think we all need more of it. We tend to think of risk as a taboo concept and it’s really not—once you understand it. In order to benefit from risk, you need to define what risk is to you. Some people view risk as the potential for harm or hazard (think bungee jumping). I view risk as an uncertain circumstance in which one manages to maximize the gains. But, how do accomplish this?
Utilize analytics. More analytics in sports is creating opportunities to assess strengths/weaknesses and create new winning strategies. It has enabled athletes to take more three-point shots, hit more home runs, longer golf drives, and score more touchdowns. More knowledge = more informed decision = less risk.
Consider value and probability. These should inform your goals and processes. For example, winning the lottery has an extremely high reward, but also has low probability. Purchasing investment bonds has lower return than buying stocks, but the risk and volatility of buying stocks is higher.
Be flexible. There are a lot of moving pieces involved in a business plan. And curve balls are inevitable as our world is constantly changing.
Remember it’s an ongoing process. It takes time, dedication, and consistent effort. Peloton, which was one of the hottest companies in the country, recently experienced over a 25% decline in sales. So, we need to constantly compare goals, risk, and the potential of alternatives.
Listen to your gut. Sometimes you just have to go for it. We tend to overthink things or let fear stop us from challenging the status quo. But, if your intuition is telling you something, it’s usually worth listening.
Just as there is no single definition of success, there isn’t a certain path to achieve it either. But, you can set yourself up to increase your chances by creating clear goals and understand the risk, the rewards, and the importance of developing a smart business plan. And don’t forget your passion—the reason you started your business in the first place. Success isn’t fun if you’re not enjoying what you’re doing.
Dr. Bert Shlensky, president of Startup Connection, prides himself on his ability to define what is unique about each and every business. He works closely with individuals to develop a personalized approach that targets specific areas of concern and offers solutions based on his 40+ years of experience. His expert team will address your particular needs while working to save you time and money.
You can reach Dr. Shlensky at: 914-632-6977 Or email:bshlensky@startupconnection.net