In the world of business start ups, you are more likely to fail than succeed, but you already knew this. If you are reading this blog, chances are you are well aware of all the scary business statistics out there. Over half of all new businesses in the US will fail in the first 5 years. To me, this doesn’t mean much. I am more interested in subjective data. How many of these failed business owners regret opening a business? How did it feel to run your own business and being your own boss? My guess it that much less than 50% of them regret opening a business. For many of them, I am sure it was exhilarating, educational, and somewhat therapeutic. This sounds like a win/win situation. Open your business and be wildly successful, or fail but have a blast doing it and come out the other end with new knowledge. This is a classic case of loss aversion. People tend to avoid loss rather than realize gain.
I learned this next theory from Tim Ferriss’s book The 4 Hour Work Week. Let’s take a look. From the previous paragraph, it seems that failing in business probably isn’t that painful. Maybe a 4 or 5 out of 10 on the emotional pain scale, but the upshot is your dream coming true. Serving your customers while achieving financial freedom. This seems like a solid 9 or 10 out of 10 on the emotional joy scale. What it comes down to is most people would rather avoid the perceived emotional wreckage of failure than realize the bliss of making it happen.
Alright, now that all the emotional baggage is out of the way, it’s time for you to start your business.
Make it digestible.
Unless you are already a millionaire, the first thing you need to do is make your idea digestible. Let me give you a first hand example. I have a friend named Red (I changed his name). Red wanted to start a company that would sell t-shirts and then use the profits to plant cover crops in order to reduce your carbon footprint. One $30 t-shirt would plant $10 of cover crops. He was under the impression that to get started had to purchase hundreds of t-shirts and have enough money saved to plant hundreds of acres of cover crops (he already knew farmers). This start up plan would require a minimum of 50 k. For most of us, this is a lot of money. Too much to risk losing.
How do you make this business idea digestible for small timers like us? It’s pretty simple.
Start with 20-50 shirts. This is going to cost you between $250 and $650. Then find an organization that plants cover crops that you can donate to. Donate all of your profits to this organization. If it works, do it again, but this time buy 100 t-shirts. If it doesn’t work you’ve only lost about $500 but now you have a bunch of sweet t-shirts that you can give as gifts and wear around town. Once people see how cool your t-shirts are you can try it again. A loss of $500 is a heck of a lot easier to swallow than 50k. Despite what you may have thought, you don’t have to go all in with a production contract, storage facility and a sales team.
Once you’ve achieved mild success with selling your 50 t-shirts you still don’t have to go all in! Double your investment and buy 100 t-shirts. Do it again and again until you are comfortable with jumping into the deep end.
Starting a business isn’t really as scary as you think. It might seem like there are a million barriers to entry and everything is pitted against you, but the truth is, the government wants you to start a business and succeed! This country was built by businessmen and businesswomen. There are many programs in place to help you out along the way. Most colleges have a robust business program that is ready to launch small businesses into the stratosphere, and most cities have grant programs to help small businesses grow. When small businesses succeed, we all succeed.
