A lot of people think that entrepreneurship is about risk-taking. It’s the brave and the passionate that create businesses! That’s the common narrative of business media.
But it’s not true.
Academic studies show that successful entrepreneurs are not risk-takers. They are risk-mitigators. They think through what might go wrong and make decisions to minimize the cost of failure. Because failure is what is most likely to happen.
Entrepreneurs are playing a game they will lose most of the time.
80% of businesses don’t exist 5 years later. In other words, 80% of businesses fail. Accepting those odds will take you a long way. You have to get a lot of things right to succeed; and even if you do get all those things right, you still might fail for reason outside of your control.
Here’s how I deal with this losing game: math. If 80% of the times I play I’ll fail, play as much and as fast as possible. If I start 5 business, there’s only a 32.7% chance that all of them fail (follow me here, nerds: .8 x .8 x .8 x .8 x .8 = 32.7%).
If you want to have a successful business, you should try a lot of businesses. And likely, the more you start businesses, the better you’ll get at it.
To me, it feels presumptuous to think that with something as difficult as starting a business, with so much competition, that one would succeed the first time around. As Thomas Edison wrote about searching for the right filament for his light bulb, “I have not failed. I've just found 10,000 ways that won't work.”
So the key for getting into business is to minimize the cost of failure. Or, fail quickly, pay attention, and build on the successes. Mycelium did just that.
Mycelium did not enroll any students for our 5-month small-business business school. We attracted a rad group of interested folks but no one ready to commit the time and money to the learning community.
We have plenty of ideas for how to pivot and iterate to keep serving those who had shown up. Some people asked for 1:1 coaching instead. We considered offering more workshops or a short series of classes on a specific topic. We looked at whether we had the right people but the wrong offering for them. Or had we not attracted the right people to what we had to offer. Or whether we needed to reposition our offering more effectively for the audience we did have. Or did we just need to push harder on marketing the original offering to reach a larger audience faster? There is no lack of possibilities for how to keep trying to succeed but . . .
Then we took our own advice.
In one of the early parts of our curriculum we had small business owners assess their interest and ability to fulfill the required roles of entrepreneur, manager, and technician (see E-Myth Revisited). A lack of adequate attention to and investment in all three of these roles is one of the reasons 80% of businesses fail.
Ultimately it turns out that like so many others, we too most want to be technicians. Together we are great at teaching, facilitating, and designing experiences for others to learn and grow. We most enjoy doing this in groups and know it’s most effective with strong relationships built over time with shared experiences. We had a fantasy that we could quickly build a business to do just that and people would show up easily.
However, in February we realized that our work would be more and more marketing and less and less teaching. Our data was telling us that we weren’t getting traction building our own audience.
It’s disappointing of course. Yet, we are happy to find out before we invested a lot of time and money into our endeavor.
We didn’t rent office space. We didn’t even set up a bank account. All we did was incorporate, put up a website, and print business cards. For a few hundred dollars, we found out that our first experiment didn’t work. And we also learned we didn’t want to run more experiments because we got clearer for ourselves on what kind of work we wanted to be doing. We want to be technicians who teach, facilitate, and design experiences for others to learn and grow. And it turns out we don’t have to launch a new school of business to do that.
So, remember that 80% of businesses fail.
Of course no one ever goes into business intending to fail. You have a dream and you put everything you could into making it succeed. And yet there’s an 80% chance of failure.
How fast and with how little investment can you fail so you can get onto the next thing and get closer to that one that succeeds?
Our Silver Lining
People talk about business relationships as akin to marriage. Fortunately, this marriage has ended in one of those rare divorces where everyone is truly happy.
We are grateful for the community we gathered along the way, the clarity and direction we helped cultivate in business owners, and especially for the business marriage and its “conscious uncoupling.” We learned so much about ourselves through our successes and now through our failure. We succeeded in learning about our strengths as individuals and as partners, what we do and don’t want in our lives, and how each of approach failure. The most important success of all is that we failed together, and are closer friends than 5 months ago. We still regularly walk our dogs together, socialize as friends, and ask for and give each other advice almost daily. We are grateful to each other and for you who gave us the reason to kick off this idea to start with!
You can find Douglas at School of Financial Freedom where he continues to regularly share his thoughts via his mailing list. You can also find him at PUGS teaching Financial Freedom. Suzanne is taking it right now and hard pressed to figure out any friend she wouldn’t recommend it to.
You can find Suzanne teaching, facilitating, or partnering with groups or teams looking to increase their alignment, fun, and outcomes in classrooms, boardrooms, or retreats. She’s online here or reach out directly at suzannepflaum[at]gmail.com.