Three key ideas to remember for entrepreneurial success
“Eighty percent of new businesses fail” is a long-standing myth.
Sometimes myths take on energy and strength and perpetuate themselves so long that they become something akin to truth. We have all been told that 80 percent of new business fail, or some other staggeringly high number like. In reality, 75 percent of new businesses that have employees survive the first two years, 50 percent survive five years, and the success rate is even higher for businesses without employees.
The first key to success is to drop your cautiousness and actually get into business. If you try to be over protective of your idea, you will become paralyzed and you will not get your product to market. I worked with a girl who had a really great product idea. Everybody she showed her product to had to sign a confidentially agreement stating that they would not talk about the product or make the product. She kept a logbook of who signed the documents. When she gave me the paper to sign, the logbook had many entries from up to 15 years ago. When she finally decided to make the product and get into business, the market developed and was saturated with her product. She lost 15 years of sales by being too cautious. The business never launched.
Some entrepreneurs will get their product patented to “protect their idea.” This is great if you can afford it. However, most entrepreneurs have a poor understanding of what a patent will actually protect and how long the process will take. A patent will protect your product from being copied, reverse engineered or otherwise manufactured using your intellectual property. But your patent is only as strong as your wallet is thick. You will have to defend your patent if some unscrupulous entrepreneur takes your idea and makes fakes. If you produce a product and are the first to market, you will build strong brand equity without the expense of a patent. The key is to be careful, but not over cautious.
Another key to success is not to fall in love with your own product. Many entrepreneurs feel like their product is a creation or extension of themselves, with a similar emotional connection to the product as they would have with a child. Passion and commitment are important, but sometimes when you are so in love with your own product, you may not be able to pivot when your market has a different desire. I worked with an artisan baker who made wonderful bread using old world recipes. For the people in this market, however, the bread had an “off” flavor similar to sourdough bread. The entrepreneur was so in love with his bread, he was not able to alter the recipe to have the product appeal to a broad audience, and he ultimately gave up his business. The key is to be flexible to the demands of the market.
Another key to success is to have a product that is better than average. Many entrepreneurs will open a business that they are familiar with in the same industry that they work in. They will start a ‘me-too’ business in a market that may have many of the same types of businesses. When your business is in an industry that has many competitors, you will have to have a better product than your competitors to retain customers. If your product is mediocre and similar to your competition, customers will drift to your competitors that are closer to them or less expensive. The key is to have a product that is better than your competition to win customers and have a successful business.
Following these three keys to success is really just the start of a journey to success. You can also use free resources from the MSU Product Center to help guide you to success.
Paul J. Werner is a Michigan State University Extension educator from L’Anse, Michigan. You can obtain free business counseling by registering with the MSU Product Center. Werner has many years of experience in small business ownership and entrepreneurship; he and his wife currently own two small businesses in the Upper Peninsula of Michigan.