10 Rules to Make Sure Your Business Doesn't Fail
Even though we were in the midst of a deep recession with record unemployment, millions of Americans are taking the chance of a lifetime - they're starting their own businesses.
WHAAAAAAAAAAAAAAT - are they crazy, start a business in these times? Yep, they do. Either out of necessity or passion Americans are an entrepreneurial lot, it's in our DNA.
And here's something that'll really surprise you - 2009 might be remembered as the year business startups reached their highest level in 14 years– exceeding the number of startups during the peak 1999-2000 technology boom according to the Kauffman Index of Entrepreneurial Activity.
Yet despite all the hard work, passion and time millions put into getting their idea off the ground, most start-ups fail and only 18 percent of new businesses last more than five years.
Bill Murphy Jr. is the author of THE INTELLIGENT ENTREPRENEUR: How Three Harvard School Business School Graduates Learned the 10 Rules of Successful Entrepreneurship and says you don’t have to be a doomed-to-fail entrepreneur.
Working with Harvard Business School, Murphy set out to learn how entrepreneurs can improve their odds and create a dynamic and lasting business.
What he found out from countless interviews with those who are truly successful is that starting a great company requires a lot more than a brilliant idea, good timing and a ferocious work ethic.
So what does it take? How can you make you and your idea a success and not a statistic? Murphy has what he calls the 10 rules of successful entrepreneurship - he explains what they are on the next page in his Guest Author Blog, "Stealing Harvard Business School."
10 RULES OF SUCCESS
GUEST AUTHOR BLOG: Stealing Harvard Business School by Bill Murphy Jr. is the author of The Intelligent Entrepreneur
I considered applying to Harvard Business School, but it's really expensive. It now costs about $160,000 for an unmarried student to attend for two years, including living expenses. Moreover, most HBS alumni say they want to become entrepreneurs, but comparatively few do. Even those who do eventually launch their own companies often spend years working for others first.
So, instead of trying to snag one of the 880 or so slots in each class at HBS, I decided to steal a Harvard Business School education instead.
How did I do it?
By interviewing roughly 150 successful HBS alumni-entrepreneurs, studying their experiences, and reverse engineering the secrets to their outsized outcomes. In my former job, I worked as the lead researcher to Bob Woodward of The Washington Post, so I gave these highly successful entrepreneurs "the Woodward treatment." It's amazing what you can learn when you're truly eager to listen.
It took two years---the same time it would have taken to earn a full-time MBA. The difference was, I got paid to do it, and at the end I had written a book about the process: "The Intelligent Entrepreneur: How 3 Harvard Business School Graduates Learned the 10 Rules of Successful Entrepreneurship."
I set a few criteria as I started. I wanted to get to know entrepreneurs who had launched companies from scratch that eventually did at least $50 million in annual revenue, or who had realized at least a $20 million personal windfall. Just as important, though, I wanted entrepreneurs who had created something real. "No financial Jujitsu," was my motto. If I couldn't explain an entrepreneur's business model to an eighth-grader, I found another entrepreneur to talk to.
It turned out there was no shortage of entrepreneurs who fit the bill, but in the book I settled on telling the decade-long stories of three entrepreneurs from the HBS class of 1998:
- Marc Cendella, founder of Internet job site TheLadders,
- Marla Malcolm Beck, co-founder of cosmetics retailer bluemercury, and
- Chris Michel, and Internet entrepreneur who founded both Military.com and Affinity Labs.
Their stories are quite inspiring, and their hardships and eventual triumphs quite nearly knocked the cynicism out of me. They're well worth reading (and if this article makes you think about checking out the book, there's a free preview of the first 32 pages at Google Books to get you started.)
In the end, I broke down the secrets behind Marc, Marla, and Chris's success into 10 rules of successful entrepreneurship practiced by them and by the hundreds of other successful entrepreneurs that I interviewed.
1. Make the commitment
Successful founders commit first to entrepreneurship itself, rather than to a single business model or product. That helps them react quickly to the market, and adjust products or business models that aren’t working.
2. Find a problem, then solve it
Most aspiring entrepreneurs follow the wrong strategy: they come up with a product or service and then set out to convince the market to buy it. That's backwards. It works better if you understand potential customers’ problems first, and then figure out the solutions.
3. Think Big, Think New, Think Again
You might not wind up creating the next Facebook or Google , but the most successful entrepreneurs aspire to that kind of innovation and scale—and they keep innovating until they get it right.
4. You can't do it alone
Teams of two or three co-founders are optimal, normally with a “Big Idea Person” and “Get Stuff Done” person. Most important, however, is trust. If you haven't worked together before, it's better to try a small project together first and see how things go.
5. You must do it alone
It's a paradox. There's always one co-founder who is “more equal” than the others. A startup has to act fast, fail fast, and change fast, so somebody had better be able to make decisions quickly.