Common sense dictates that business success is determined by the obvious, having a smart business idea, well funded, and hard working. But I can tell you that not only are these three factors not that important at all, they can all really work against you! Also, what really matters may surprise you … and I’ll talk about that later.
Why are you listening to me?
Of course I have a Harvard MBA, but I also have a business. experience. Lots of experience. But what separates my knowledge from that of many other entrepreneurs who write about business is that I have a wide choice of businesses. I’ve founded dozens of businesses, from home design to what has grown to become one of America’s leading book publishers, from newspaper businesses to online and multimedia businesses. I have had a lot of huge successes, but also a lot of failures … and I can tell you that you learn key business lessons more from your failures than your successes!
So you have a smart business idea … It’s a red flag!
Forget about a smart new business idea that will change the world! There is no doubt that your new idea will be hugely successful, but your best chance for success in business will not be a new idea, but rather a pivot on an existing idea. For example, I’m thinking of a hairdressing franchise with a sports theme. A very old business idea with a delicate touch.
Unless I’m looking for a completely new idea, it doesn’t mean I’m completely disappointed with the possibility of huge success, like, say, Microsoft or an Amazon. If this is our point of view, then I have news for you. Microsoft did not create the first PC operating system, the first spreadsheet, or the first word processor. But they created viable versions and brought the light of day to the market, including forcing IBM to install its operating system on its first PC.
What if Amazon wasn’t the first online bookseller? No, it wasn’t there. Before Amazon, there was not one but several online booksellers. Amazon just passed them and positioned them.
How about being well funded … there’s nothing wrong with that, right?
Yes, raising a lot of money for your startup is a problem. First of all, keep in mind that startups have a very high failure rate: 75%, according to a famous study. Additionally, I once read an article in the New York Times that referred to research that showed that the success rate of venture-backed firms was inversely proportional to the amount of money they raised. . In other words, those who raised the most money were the most likely losers.
It reminds me of many years ago when a friend of mine proudly told me he was joining an extremely well-funded startup that invests and buys the best of everything, including the best people. Well, they’ve had one of the best bankruptcies as well.
Also read: How to become a successful entrepreneur
So why do funded businesses tend to fail more than poorly funded businesses? Because under-capitalized companies are forced to develop a mentality of modesty and sobriety. How important is it in business? It is extremely important. This is how Walmart dominated offline retailing and how Amazon became the dominant online retailer. But apart from retail, it’s important in any other business.
Think about it! If your fixed cost structure is 20% or 30% lower than that of your competition, there are many other mistakes you can make while being successful in business! I have always run my business at low cost, with incredible overheads, and it helped me especially when I entered areas I knew nothing about and made big mistakes.
Nothing wrong with hard work?
Yes, there is something wrong with that! Typically, hard work is a great attribute and can go a long way in the success of your business. But you don’t want to work so hard that you tire yourself out. And just as important, you don’t want to work hard in the wrong or the wrong direction. As entrepreneurs, we tend to go for the job first and think about it later … a crucial mistake. And like other people in the human race, we tend to be habitual creatures, doing business the same way and avoiding thinking or trying new ways of doing business.
So what are the secrets to business success?
In a nutshell, the keys to success are above all that you must have tremendous motivation. It’s not exactly the same as working hard, but it sounds like it. Bringing a new business to the point where it really seems to be successful is likely to take longer than you initially think, and will likely have a lot more twists and turns and challenges than you think.
The success of your business can be measured by several key options
The desire to continue is therefore very important. But that alone is not enough. You also need to make some good decisions and learn a few skills along the way. I discuss these key decisions in my article and video 7 Keys to Starting a Successful Business.
You can run your business like a dog for years to come, but if you make the wrong choices for a few big decisions, there’s a good chance you’ll still be in a fight if you’re lucky your business survives.