Ninety percent of startups fail and with entrepreneurship at an all-time high, the competition has never been fiercer. While this is grim, entrepreneurs can find a little bit of comfort in knowing that their chances of success get incrementally higher with each business undertaken. But it’s more than just closing your eyes, wishing for the best and jumping off the cliff and starting a new company – it’s about knowing when and why.
As an entrepreneur who has made the “jump” multiple times and found the most success on the latest one, I wanted to share some insight and tips I picked up along the way on when and why to jump off the cliff.
The market is changing. That’s a blanket statement since markets are always changing. We are talking about specific changes that change your customers’ behaviors, as it relates to your product.
When we scrapped our product two years ago, it was a combination of both technical and economical market changes. We had worked tirelessly to build great relationships with our clients, and did not want to jeopardize them. However, we knew that to not only survive, but to thrive in the future, we had to change course. Even with our paying clients, the market was just not there for the long haul.
Technical Changes—New technology is adapted that changes people’s habits. YouTube revolutionized how people consumed video. And it opened a vast new market for digital TV. This not only affected the major broadcast and cable networks, but even smaller boutique shops that made a living providing premium video services. They all scrambled, and some even went out of business, when YouTube democratized video.
Economical Changes—There’s nothing like falling revenues and slashed budgets to force both companies and individuals alike to act differently—to produce more with less. Businesses that change course during hard times and survive, typically go on to thrive.
You are losing business and may be forced to shut down. The signs are obvious. Current clients are not renewing. New business opportunities are fewer, and the fight to win them is much more difficult than it once was. This is a good time to take stock, carry on post mortems, and define weaknesses, strengths and evolving market conditions, which you should do to ensure a softer landing when you make your big jump.
Maybe you were forced to shut down your last venture. While it may be painful, having nothing to fall back on will force you to move forward. And it makes risk more palatable. Out of the ashes the phoenix arises.
The best way to know why to jump is to perform an analysis of your situation, of the circumstances affecting your past. This requires deep reflection. Some might find it uncomfortable. But genuinely understanding a problem is 75 percent of the solution. To help you take stock of the situation, you must ask yourself the following questions
- Why did your last business fail? Was it the product or the people, or a combination of both?
- Why did you lose your last sale?
- Why did your customer choose that competitor?
- Why did you lose your job?
- What are you building?
- What resources are you going to tap to do it?
- What is so different this time, as you are preparing for this new venture that will make it successful?
- What is the market opportunity?
- How are you going to succeed this time around?
- How are you going to build it?
- How are you going to sell it through?
The odds are most definitely against you. But the reward, the sense of accomplishment and payout if and when you do succeed is well worth it. It’s the pot of gold at the end of the rainbow. You want it. Period.