To succeed as an entrepreneur could be likened to having a buccaneering pirate spirit. To set sail on unsailed seas. To be brave and prepared to fail is a likely map to treasures of gold, sapphires, jewels and dreams coming true.
Entrepreneurs are said to succeed when they ‘fail.’ Yet, typically those saying it is ‘OK to fail’ have lived a very low risk career, with a comfy safety net.
What they tyically mean is it is ‘OK for others to fail.’ The ability to live vicariously through the rare few willing to take risk, because 90%+ do not have the guts to get anywhere close, is why television shows such as Shark Tank are so popular —thrills with none of the failure, risk or spills.
For any entrepreneur who has truely failed, it REALLY sucks. Massive potential ramifications—personally and professionally. Embarrassment and reputation impacts are often the least of the problem, add to this breakdowns in personal relationships, potential legal breaches, financial repercussions such as bankruptcy, major debt or losing all of one’s hard earned assets and savings, and the need to start all over again… phew. Such a reality can take the wind out of any entrepreneurial pirate’s sails.
No wonder mental health, depression, anxiety and how to manage these have become professional development priorities in Silicon Valley and other start-up communities (read interesting article here ‘The Psychological Price of Entrepreneurship’). While everyone seeks to tell stories of glory, the reality of an entrepreneur’s life is less certain.
Even the bravest entrepreneur does not want to repeat shipwrecked failures ever again. Likely they feared the end, as happens in a pirate’s life, but somehow they survived to sail again… phew.
There are two options for those seeking to (fail and) succeed as an entrepreneur.
- Be willing and able to fail, learn and try again. The advantage of starting a buccaneering entrepreneurial pirate’s journey earlier than later in life is potentially less risk from the need to feed a family, pay a mortgage and other obligations, combined with a level of naivety and enthusiasm to conquer the world, plus time to rebound and try again (and again…).
- Plan to not fail, and maximise the chance of success. Be aware, have a robust understanding of reality, and be ready for the treacherous waters likely to be faced. Likely many unexpected monsters and challenges will be faced, yet being ready and waiting and having an accurate map is better than assuming that dreams come true from being brave and hard work alone. Resilience is essential for success, but so is minimising failure and accurately mapping the journey to be sailed.
Below are four potentially scary monsters and unexpected challenges from my own entrepreneurial adventures and stories told by others, worth preparing for to navigate the most direct route to treasure with minimal failure.
- Money—The biggest killer of any exciting buccaneering pirate adventure is money. It feeds a business, pays the bills, the crew and allows investments essential to build a great product, sell it and innovate. There also needs to be sufficient cashflow to pay the entrepreneur(s) enough to survive, cover living (and perhaps family) expenses and live a reasonable lifestyle. Self sacrifice with the hope of ultimate success has its limits, and could potentially stretch for longer than preferred. Whether self-funded, funded through sales, gaining the support of a bank and/or attracting investors, all come with pros, cons and serious legally binding obligations. The quicker a business can be self-sustaining and profitable the better. Dreams, hard work and wishful thinking do not pay the bills, keep founders out of potential bankruptcy or fund growth. Investors, banks and others will likely need to see strong profitability projections, which are far easier set than acheived. The vultures will likely start to circle when the business finances are looking vulnerable and potentially putting funders at risk. This may seem totally obvious, but the single biggest killer of businesses old and new, big and small is NO MONEY (i.e. insolvency). Create realistic budgets and projections, even pessimistic, as it is far better to exceed revenue and other projections.
- People —When you listen to successful and unsuccessful entrepreneurs, people generally come to the top of the list as fundamental. Developing the right tribe of people is critical to a successful journey. Yet, being infected by the wrong people can be a tidal wave of distraction and a life threatening tornado if not defended without delay. The entrepeneurial ship may launch driven by one or two buccaneers, yet success means that the founder vision is spread to the needs of many. An eager crew, likely with differing drivers, passions, skills and weaknesses. Failing to recruit the right people is an unavoidable challenge. Quick action to resolving, and if necessary having toxic interlopers walk the plank to somewhere else is critical. A like minded crew, customers, co-founders, partners, investors, mentors and board is essential to smooth sailing. Ensuring that there is a clear articulation of the vision, and values is important to entice the right people, as is confidence and commitment to nurturing a positive culture. Another critical person is the captain. When a crew is too reliant on the captain, this can be risky if no one else can steer the ship in event of an unexpected small or significant illness, needing a break or sharing responsibility. The captain’s mental and physical health is critical. As is the health of other mission critical staff. However, what will happen if the captain and others are hit with significant illness, cancer or crippling injury and need to step away from work for a few days, months or longer? Is adequate insurance and contingency in place? A loyal and trusted crew, and support network of family and friends is likely the most valuable asset of any entrepreneur.
- Dreams —An exciting entrepreneurial adventure typically starts with a dream, or passion and much procrastinated. It can be easy to get lost in the dream, and spend hours, days, weeks, months, years pondering, thinking and over-planning. No question that innovation often comes from dreaming, yet critical is the need to act on the dream. And, once the journey towards the dream has commenced, a critical balance needs to be found between not forgetting the dream, and continuing to evolve it. Avoid unnecessarily compromising on the cultural values, and the product, target market and vision for short term gain in trouble seas. Yet, realise the importance of having a beginner’s mind to dream of whatever might come next, the ideal route to the vision and finding the treasure.
- Reality – While dreams may sometimes come true, the one thing that gets in the way is reality. This may be money or people, yet there is a long list of other realities that can get in the way of achieving any entrepreneur’s dream—legal, compliance, taxation, professional liability, workplace safety, director responsibilities and slips in product and service quality control. Proper processes, adequate insurances and training are critical. A poor product or service can translate into reputation challenges, and spreading negative word-of-mouth. However, perhaps one of the biggest reality based challenges is misreading and inaccurately mapping the market. Assuming that the dream and passion that started the exciting adventure actually has a viable market (or product-market fit) to allow for a robust financial model to be built. Family and friends will likely be enormously proud of the entrepreneurial bravery. Or, the DIY research seemed to illustrate much potential, but the data was biased, methodology poorly constructed and offering no statistical rigour nor strategic robustness, and any analysis by the entrepreneur reeks of confirmation bias looking for support, without critique. Here in lay the role of professional market research. A valuable investment in planning to not fail, and maximise the chance of success. Rather than sailing towards the horizon with bravery, enthusiasm, naivety and a high chance of failure that could have easily been avoided. Professional market research provides a reality check, to measure the market, priority geographic, behavioural and psychographic segments, find optimal pricing and define the best way to promote, sell and grow.
If you dream of treasure and long to live a buccaneering pirate entrepreneurial life, prepare to set sail sooner rather than later. Be brave and prepared for the certainty of unexpected failure. Enjoy the exciting adventures, and wherever possible avoid failure – as failing can REALLY suck.
‘Ya ho me hearties!’
The above was inspired by my own approaching 13 years as a buccaneering entrepreneur with Square Holes (following six years as GM of another successful business owned by others), at times feeling like I was failing more than I would have preferred, and stories other brave and bold entrepreneurial pirates shared with me. We have also worked with many, many start-ups and innovators over many years (as well as many more much larger businesses) and have seen the errors made in the eagerness to set sail without a reliable map and adequate sense of reality.
DO YOU WANT MORE!!!???
Here are 11 interesting related articles …
- 90% Of Startups Fail: Here’s What You Need To Know About The 10% (Forbes)
- Why 95 Percent Of Startups Fail (And How To Be In The Winning 5 Percent) (Huffington Post)
- Why startups fail, according to their founders (Fortune)
- The grim reality of start-ups: 95 per cent fail (Sydney Morning Herald)
- 90% of Startups Fail: Here are 4 experts tips to improve your odds (Startup Grind)
- DEAR ENTREPRENEURS: Here’s How Bad Your Odds Are Of Success (Business Insider Australia)
- Silicon Valley’s culture of failure … and ‘the walking dead’ it leaves behind (The Guardian)
- What percentage of businesses fail? (Success Harbor)
- Why startups fail: The main reasons why tech startups fail, from market fit to burn rate (Tech World)
- 7 Lessons From 100+ Failed Startups (ThinkGrowth.org)
- Five Reasons 8 Out Of 10 Businesses Fail (Forbes)