Starting A New Business? Read This First

Many people are tired of working in companies where they feel they are not valued. Some have come to professional crossroads. All want to express themselves.

This is the theme for all those banking and investment commercials. Spread your wings and fly. Realize your dreams. Stop being a faceless drone and start selling handcrafted artisan free-range gourmet emoji donut holes.

Dreams are one thing, and success is another. Most new business ventures fail. Reports of just how many vary widely, according to source, definition, and industry category. Credible sources say 60%, 70%, or 80%, but all agree most fail.

Do you know the one thing all startups have in common? Every one believes they have a great idea. When their base assumption is that their idea is a great one, they believe their enthusiasm will carry the day. They press on, ignoring any and all evidence to the contrary.

Here is what they miss: If all new business owners are enthusiastic and most new businesses fail, then enthusiasm is not a predictor of success – it is a predictor of failure. Why?

Because too much enthusiasm leads to blindness and an unawareness of the risks faced by every new business.

A small investor group asked us to punch holes in their idea. We found lots of problems they hadn’t identified. They concluded their idea wasn’t so hot after all, and any investment would be unwise. They thanked us and gave us a four-figure bonus, saying we had saved them much more than that.

We advise all people thinking about starting a new business to spend as much time tearing their ideas apart as they do putting them together. Spend more time questioning and less time asserting.

Experts tell us most new ventures fail because someone underestimated costs, overestimated revenues, and didn’t identify potential problems.

If we don’t know what the problems are, how can we develop plans for dealing with them?