More Than 50% of Startups Fail Within 5 Years. Here's How to Not Be a Statistic.

In this series, professionals share how they embrace the entrepreneurial mindset. See the stories here, then write your own (use #BetheBoss in the post).

Most of us have probably dreamed of striking out on our own, leaving our employer behind, and starting up a business that would be our labor of love.

Maybe it’s a rare bookstore or a neighborhood coffee shop or a quaint bed-and-breakfast in some idyllic countryside. In my industry, I know a number of talented and successful investment professionals who left their firms to start their own hedge funds. 

In my case, I am lucky that even after several decades with the same firm, I still feel excited and challenged when I come into work every day. So I’m happy where I am. Still, in the back of my mind, I harbor that little daydream too. My business would be a tiny brewpub, where I would serve beer on tap that I made on site. People could come in whenever they wanted for a chat. It’s a nice idea because in the dream I don’t have to worry about making enough to live on, pay rent, deal with suppliers or fend off fierce competition.

But if you really want to pursue your dream – and are willing to take on all the challenges that come with it – you should keep a couple of things in mind before resigning your current job.

Have All Your Ducks in a Row

There’s an old saying that failing to prepare is preparing to fail. That bit of wisdom is absolutely on point, given that 50%-90% of startups fail in the first five years, depending on the industry and which data provider you believe.

Good preparation starts with a solid business plan, and there are many great books and resources that can help a fledgling entrepreneur develop one. Once your business plan is done, it’s imperative to have someone experienced in the business you hope to enter review and evaluate it . He or she may see flaws and holes in the plan that are not obvious to you.

Beyond a strong grasp of business fundamentals such as financing and where to get it, identifying suppliers, and differentiating your business in the marketplace, it also helps greatly to have a strong support network. A spouse, partner, family members or friends can help you stay motivated through the early days, when you might experience more downs than ups. If your enthusiasm starts to waver, the encouraging voices from your personal cheerleading squad will keep you going.

Expect the Unexpected

Even with an airtight business plan, we all know things don’t always go according to plan. For example, it may take longer to become profitable than you’d planned. That means you’ll also need an adequate personal financial cushion – beyond the capital required to start your venture – to keep you in the game long enough to eventually turn a profit.

You’ll also want to establish realistic criteria for success:

• Set a goal or a benchmark that, once reached, means you can tell yourself you’ve succeeded.
• By the same token, if you don’t reach it, you’ll understand you probably need to do something else. Be realistic and honest with yourself about whether your new venture is working or not.

You may be in love with your idea – indeed, you should be if you are committing to it in such a big and life-altering way. But bounce your great idea off a large network of people. If the response is tepid, your idea may not be the world-changer you believe it is.

Abandoning something we’ve nurtured is not easy. You have an emotional investment in it but, at some point, if you’re going to be successful you have to look at it without being influenced by emotion.

When you come to that critical point when you have to weigh your next step, it does help if you’ve kept all of your options open. You never want to burn a bridge you may have to cross again. In the worst case, you may look to get your old job back; in the best case, your former employer may become a valuable customer.     

Follow Your Passion

Having advised against being delusional about your prospects, I fully recognize that you have to be at least a little delusional to have the courage to pursue your dream. The odds are unquestionably against you. Yet millions of people still strike out on their own, knowing full well that success is not guaranteed.

Through history, it’s been people’s willingness to take risks that has brought great innovations and kept the economy, and our civilization, moving forward.

If you beat the odds and become a success, the new business you establish might even create jobs for other people and make an important contribution to your community. As every successful entrepreneur can tell you, there is immense personal gratification that comes from building a thriving business. So if you are bold enough to take a chance on yourself, the potential rewards, both financially and psychologically, could prove to be enormous and well worth the risk.

Follow your passion because psychological rewards do count. The shame isn’t in failing; it’s in not trying.