Here’s the short answer – YES it’s true that 90% of all businesses fail in the first 5 years BUT it’s not because of economy, or luck or lack of capital. It’s because of something else. Something we can control 100%.
Author’s Note: This entry is part 2 of the series “Business Myths” if you are curious about starting a business or have some questions to ask about starting one, please leave it in the comments section below.
As the primary closer of all the deals that occur in SEO Hacker, I do a TON of meetings every week.
In some of my meetings, the agreed upon location is the local mall.
One thing that I noticed a hundred percent of the time, is that malls are full of people – even on working hours on a regular working day.
This has been one of the most stupendous things about Metro Manila malls for me – that it is filled with people even on days that it shouldn’t be.
This is also one of the main reasons why so many businesses that start out as a micro business, and grow up to be a small business – end up going in smokes.
Because people who get their first paycheck from the business, spend it not on assets, but on liabilities and personal leisure.
The first paycheck (or paychecks for that matter) ends up being used to purchase something for entertainment – a gadget, a console, a vehicle – or something else that is completely unrelated to the business.
Instead of the business growing by having a regular, much-needed infusion of capital, it ends up receiving the short end of the rope – by getting what is left of the receivables after the owner has spent for his/her own happiness.
Business is not about happiness.
It’s about fulfilling needs.
It’s about having solutions to real problems.
It’s about having the discipline to say NO to a lot of things.
It’s about deferred gratification.
The problem for 90% of failed business owners is that this is not the heart of why they started their business.
And because of that, they proceed to carry on with bad behavior.
In the end, it all goes up in smokes.