50% of Small Businesses are Dead in 5 Years. Here's Why.

Thinking about going at it alone and starting your own business and being the BOSS? You ask yourself, “is this the right time to start my own deal?"

I went into business for myself at the age of 29. I quit my job because I thought I was treated unfairly and rather than going to work for someone else I did the very thing I was most 'scurred' to do - start my own business.

That was 28 years ago and I have since started several businesses from scratch. I have been very lucky that most of my ventures have worked out well. It has gotten easier but every time I have been 'scrurred'. The first time I was terrified, with no business plan, no money and just enough guts and maybe crazy enough to go for it. 

Do you have a great idea, new piece of technology, something that may revolutionize the world or maybe just some simple idea that will allow you to work for yourself, call the shots and provide for your family? Whatever your motivation is if you elect to go it alone you are in for an incredible adventure to say the least. Working for yourself can be very rewarding financially and personally when it’s successful, and very expensive and painful when it’s not. I know I have done both.

To make it work you need to go in with eyes wide open and know what it takes to be successful. Here are some things that I learned that will help you when you finally jump:

1. GET REAL - Don’t make the mistake of thinking this is a way to escape your problems working for someone else. If you don’t like your current boss you are going to hate your next one - YOU. If there are things you don’t like about your current job you need to realize that you will have to do everything you hate and more, because you probably won’t have the capital to pay someone else to do it. If you want to go it alone because you want your own time or want more time off welcome to slavery because neither will exist. Not trying to be naysayer here, but you need to get real. I know people that try to use this logic, “if I am going to suffer I would rather be the boss.” That justification will not pay the bills nor make your business successful. Fifty percent of all businesses fail within five years, and over 65% of all small businesses break even or lose money before they bust out.
2. GET ME THE MONEY DON'T SHOW ME THE MONEY -  Every day someone writes me with a ‘fool-proof' billion dollar idea for a new business based on the market potential. “Grant if I only get 1% of the market we will make a fortune,” says the new entrepreneur. Building a business plan based on how big the market is, does not mean you can get the marketplace to actually give you money. Understand that if you were to give your product away for free and it could solve the problems of the world you will still have difficulty even getting the attention of the marketplace. Go into the marketplace yourself and see how many people will give you money for your product. Don’t go to the banks or investors go to users and see if your potential customer will actually exchange money for your idea.
3. GET OBSESSED - The ideas of turning off will no longer exist again for you - this is slavery 24/7, 365. The idea of balance, quality of life, time off, weekends and vacations will be nonsensical luxuries that you will no longer be able to afford. Tim Ferris, author of the Four Hour Work Week, may have figured it out, but I haven’t. Prepare to live, breathe, eat and sleep your new company. Seventy percent of all small businesses have no employees, with the owner responsible for everything. Take off and the business stops. There is no clock or calendar for the successful entrepreneur unless you want to be a statistic. The greats all talk about being obsessed with the idea of their business unable to turn off even when they are off. Maybe that’s why they made it - healthy obsessions! If you aren’t completely obsessed with the idea and willing to sacrifice everything back away from the ‘go it alone’ table - you will be served as the dinner, not the one having dinner.  
4. GET READY FOR A PAY CUT - Be ready to take a pay cut from what you are currently being paid. I have never met anyone that made the transition from working for someone else to working for themselves and their pay went up. It took me three years in my first business to just get back to where I was when I left my previous job. I thought I would be making more money in three months and it took 36 months, 10X longer than my most conservative calculation. Even when I did finally exceed the income from my previous job I couldn’t use the money because I knew that I was going to have to plow that money back into the business to continue my growth.
5. BUSINESS PLAN WON’T GET YOU BUSINESS - The problem with business plans is they never take into consideration all the things that are going to keep you from doing business. I didn’t plan that in 2009 the banks I owed 42 million dollars for real estate loans would go out of business or that some criminal would try to sue me for something I didn’t even do. Your business plan is just a document that might get you a loan or a lease on a building, but it won’t get you business. Most of what is going to challenge you in your new business, you will never forecast. Would any sane human being anticipate 911, Sandy, Katrina, economic collapse of 2008, electrical outages, water shortages or war as I'll talk about on How to Make Millions in Business, people’s business plans fail them because they only take enough actions to get them through normal conditions. Whatever your business plan assumes is necessary you would be smart to 10X all your estimates.
6. CHEAPER ISN’T A BUSINESS - If your business concept is based on you operating at 1/2 the margins of the leader in the field you will die a slow painful death. If one more person tells me, “it worked for Walmart,” I will throw up. Businesses that try to operate with skinny margins will cease to have positive cash flow and limit their ability to reinvest to steal market share from competitors. Walmart's business plan works because they do have margins and do have volumes while advertising the lowest price. Businesses fail because they are unable to sell their products in volumes great enough and at margins fat enough to continue to reinvest and sustain unexpected events. Great companies like Apple, Google, Caterpillar, CocaCola, Starbucks, and WholeFoods are companies that have both volumes and margins. You must have both volume and margins to succeed. Cheaper is not a business plan, it’s a guaranteed slow and painful death.
7. STICK AND STAY POWER - As a startup founder, remember that the buck always stops with you and so does the business. When you are done the business is done. How much staying power do you have? I don’t just mean money, but energy, belief, stamina, and courage. Contributing factors aside, most startups fail because someone quits, not because they run out of money or time. You must work on building your own personal staying power and surround yourself with people that believe in you and your idea more than you even do. Surround yourself with mentors and board members and force yourself to invest time in new information and personal training so you have the motivation to stick and stay. If you have had problems with several companies, you may be part of the problem.
8. BECOME A SALES EVANGELIST - Ninety percent of your time running a business will be spent selling employees, spouse, investors and yourself on your new business, and that's before you even sell your idea to a customer. Almost 70% of workers claim to be disengaged with their jobs and guess who you will be hiring? When you take on starting your own business you must become the consummate evangelist sales master; constantly selling those around you on the business. The ability to sell is what will determine the reality of your dream and that is before you start selling your product to users. Become a master at selling others and your products or services and no one will be able to stop you. My sales ability is what has ensured my businesses were successful.

If these eight points haven’t scared you out of becoming the BOSS, then you just might be ready. I didn’t write this to try to talk you out of becoming your own BOSS; I wrote it to tell you what it will take to be successful.

If you elect to go on the adventure, I am here to help you.

All great adventures come with things beyond your control and can't anticipate otherwise it wouldn’t be an adventure. I hope your adventure works out for you as well as mine have for me.

If you have any questions I will do my best to respond.  

Be Great,

Grant Cardone

----

Hey, I want to get to know more Success-Minded people so hit the "follow" button at the top of the page.  Also, I'd love to get your feedback on questions in the comments below.