Secrets to STARTUP SUCCESS

Founder Readiness

How to Prepare for the Entrepreneurial Journey

"It's not the will to win, but the will to prepare to win, that makes the difference."

—Paul "Bear" Bryant, legendary college football coach

As Scott Shane notes in his book, The Illusions of Entrepreneurship, most new businesses fail. “Pretty much all studies agree on that,” he writes. “The only question is how long it takes for a majority of them to go out of business (and why).” Startup failure rates are consistent across different types of companies, across different parts of the world, and across decades. Even investor-backed startups, presumably led by tal­ented founders with better-than-average ideas, fall short at remark­ably high rates. “In short, no matter how you measure new firms and no matter which developed country you look at,” says Shane, “it ap­pears that only half of new firms started remain in business for five years, and less than one-third last ten years.”1

More troubling—and telling—is the state of entrepreneurship among ventures that survive. Only one-third of all owner-operated

Businesses in the United States generate $10,000 or more in annual profits. The typical business owner will make 35 percent less over a ten-year period than if he or she worked for someone else during the same period. And, contrary to conventional wisdom, this lack of finan­cial success is not offset by greater job satisfaction. On average, people who own their own businesses work significantly longer hours and ex­perience higher levels of stress, fatigue, and depression than people who work for someone else.2 Based on these facts, startup founders are clearly not achieving happiness or creating wealth at a level consistent with all the hype and hope surrounding entrepreneurship.

A primary reason for the dismal statistics concerning startups is that too many passionate founders confuse their optimism with readi­ness. At the moment of their entrepreneurial leap—the very point at which the personal and professional stakes could not be higher, the time when knowledge and preparation will make all the difference— emotions escalate and passion takes over. Driven by impatience and unwavering belief, aspiring entrepreneurs plunge forward without ad­equate awareness of what their new business will require and how well they match up against those requirements.

The solution lies not in ratcheting down passion, but in elevating awareness. By pausing early in your startup process to take an objec­tive look at yourself and what you bring to the table—your purpose, goals, skills, resources, and needs—you can develop a highly valuable kind of optimism, one that rests on the rock of clear, honest assessment and willful preparation. I call it earned optimism, and I find it to be much more useful than the uninformed hope that drives many startup founders. It is a quality worth pursuing. Earned optimism will boost your performance and help you sleep at night.

As a reference point, most of us can recall an opportunity from our past that we approached with confidence and passion, but with little awareness about what the opportunity called for, whether it was a marriage that ultimately ended in divorce, a job that didn’t work out, or a business project that went sour. With the benefit of hindsight, it’s instructive to look back and consider how we would have approached the opportunity differently, and more skillfully, had we only known then what we know now.

Years from now, after your startup journey is complete, what ques­tions or issues will you wish you had thought about in advance? What will you regret having learned the hard way? As a new founder, while the clay of your idea is still moist, you have the opportunity to stand on the shoulders of hundreds of millions of entrepreneurs who have come before you, to leverage the wide body of existing knowledge about what works and what doesn’t. The premise of this chapter is that the most fundamental driver of your startup’s early success, or failure, is you—your purpose, goals, skills, personality, relationships, resources, and needs. These factors will either enhance or diminish your ability to achieve your startup dreams and, just as important, de­termine your level of happiness as you pursue them.