“Over 80% of businesses fail.”
I’m sure you’ve heard that line before.
It’s not entirely accurate, and it doesn’t tell you the whole story. In some ways it’s a very low estimate. In other ways, very high. See, it’s too broad of a statement to extract any valuable information from. People just regurgitate it as if they’re proclaiming some wisdom. All they’re doing is repeating meaningless statistics they heard somewhere about something that’s irrelevant.
It’s like if we said that x% of athletes become professional athletes. It means nothing, other than letting people know that it’s extremely hard to become a professional athlete. However, it’s not difficult to become successful as an entrepreneur if go about it the right way, yet that regurgitated statement would make you falsely assume that it was.
Aspiring entrepreneurs tend to look at a broad statement like that and assume they’re going to be a failure the majority of the time. They go in expecting failure. This keeps most people from even trying at all, and instead deciding to settle for a mediocre life to avoid the possibility of becoming part of that 80% that they’ve heard so much about.
Except 80% isn’t the right number to be using.
If you decided not to pursue creating your dream life to avoid that potential failure, you’re actually in a different equation all together. You’re in the 100% group. 100% of the people who avoid taking a risk to create their dream life, fail by default.
I became “ForeverJobless” by taking risks. I took a “risk” to become a professional poker player.
I could have failed. Most people thought I would. I didn’t, so reaped rewards I wouldn’t have reaped without taking the “risk”. If I had stayed on the sidelines, I would have gone through that period of my life without “risking” failure, but guaranteeing I would not reap those rewards.
I have taken many “risks” in starting businesses. I could have been a failure as an entrepreneur. I have had some good successes, so I have gained rewards I wouldn’t have gained without taking the “risk”. Much like poker, if I had stayed on the sidelines, I would have avoided potential failure, but as a byproduct of avoiding that failure, would have avoided any success.
Playing it “safe” would have actually been the riskiest thing I could imagine.
If you’re reading this and getting the feeling that you’ve played it safe up to this point, do a real honest self-evaluation and ask yourself if you’re happy with the results this “safe” route has gotten you. Chances are, the dreams you had for yourself 5, 10, 20 years ago have not come to fruition. If you’re not taking “risks”, they can’t, because as a byproduct of avoiding the risk of failure, you’re guaranteeing avoidance of success as well. Avoiding giving yourself a chance at success also means avoiding living the life you aspire to live.
As I’m writing this, I’m sitting here in Australia overlooking the water and having my morning coffee. I’m here right now because I took “risks” in the past that now enable me to live a life that allows me to travel where I want, when I want.
What I want you to understand is the “risks” I took, and continue to take, aren’t really all that risky.
I probably fail more than you. I’m okay with that. Once you understand that temporary failure means nothing, it allows you to take “risks”, because they’re not really that risky.
It’d be a much scarier risk to not give yourself an opportunity to live the life you want to live.
Pursue opportunities where your losses are capped, but your ceiling is uncapped. Reading and re-reading Millionaire’s Math will help you with this process.
Let’s talk about the 80%.
What does this really mean? Well… not much.
First of all, comparing your chances to any random aspiring entrepreneur is not a good benchmark.
Those 80% of people are either going in clueless, or jumping in with bad advice from someone. Some might not be getting any advice at all- although I’d argue that taking advice from people who don’t know what they’re doing is probably more dangerous.
Just avoiding taking action based on bad advice will lessen your chance of failure.
Listen to those you aspire to be like. Ignore everyone else.
For the people who do jump into the game of business, a certain % of them will only take action for a few weeks, or a few months. At the first sign of uncertainty or difficulty, many of them will quit. Maybe they would have failed, but maybe they were closer than they think to success.
I see businesses all the time where a slight tweak would change everything for them. In The Incubator I teach the 4-step process entrepreneurs need for a successful business, and sometimes a tweak to one of their steps will change the whole outcome of their venture. Turning what would have been a dud, into a profitable business.
If you don’t have a process to follow, you may jump to another opportunity not even understanding where you went wrong on the last one, which means your odds on the new venture won’t necessarily improve, or you may quit altogether and decide the “safe” route of a job will protect you. The only thing it’s protecting you from is living the life you’d rather live.
So, if you avoid taking bad advice, and also continue taking action rather than quitting like most do, you again move the odds even more in your favor.
Now, if you’re one of the few that actually invest in yourself, you’re going to substantially move the needle further in your favor. Avoiding bad advice is great, but if you’re not investing in yourself to make sure you’re getting good advice, that’s still an investment choice you’re making. You’re just choosing 0% returns. Personally, I think investing in myself is one of the greatest investments I can make. There’s nowhere else I can get such a high return. I’m constantly investing in conferences, coaches, consultants, masterminds, books, that will help increase my chance of success.
If I invest $0, I’m not “risking” money, but I’m risking my chance of success, which in turn, risks earning money.
Every time I’ve attempted to do things 100% on my own, my results have not been anywhere near where they’ve been when I’ve invested in myself by getting guidance from people who’d been where I wanted to go in that specific space.
When I played poker, I hired poker coaches. For my fitness, I have a trainer. As an entrepreneur, I get business coaching. Could I have gotten the results I’ve gotten on my own? No. No where near the degree I have. Would I had saved money? Sure. Short term money. Saving the short term money would have cost me long term results. The long term results I produced have returned me many, many multiples the investment that I made in myself. Think of yourself as a stock. You’ll make much bigger returns investing in yourself than you will other investments. Yet, most people bet on everything else except themselves.
If you aren’t willing to bet on yourself, this will keep your chance of success much lower than it should be.
Investing in yourself also helps increase the % chance you’ll keep taking action instead of quitting like most do, since continuing to take action is a lot easier if you’re confident you have a roadmap to get to your end destination. Investing in yourself by acquiring knowledge from people who’ve already been where you want to go helps give you that roadmap, rather than trying to navigate everything alone, or navigating with a broken compass because you took advice from people who haven’t been where you want to go.
Another reason the 80% number is irrelevant is because temporary failures mean nothing. I feel like many aspiring entrepreneurs fear that number as if it means something. We already talked about why so many fail, and how you can avoid being one of them, but even if you do have a “failure”, it’s nothing more than a learning experience as long as you continue playing the game.
You increase the chance of success on the next on one. Here’s a short podcast episode where I explain this concept: The Entrepreneurial Coin
As Mark Cuban says,
“You only have to be right once”
So, again, I don’t think entrepreneurs fail 80% of the time.
I think aspiring entrepreneurs probably fail more than 99% of the time, because most do not take any action. They fail by default. They’ll live in mediocrity forever to avoid risk, but all they avoid is living a life they’d actually prefer to live.
“When I’m old and dying, I plan to look back on my life and say ‘wow, that was an adventure’, not ‘wow, I sure felt safe.” – Tom Preston-Werner
On the flip side, I think entrepreneurs that invest in themselves, get advice from the right people, and take continuous action based on that good advice, fail much less than 50% of the time. If you do fail, it’s only a temporary loss of time and money. When you succeed, you’ll make substantially more than when you fail, and it’s often a long term income source, so even if you theoretically failed 50% of the time(which you won’t), it’s extremely + EV.
Remember to weigh the odds in your favor as much as you can.
The odds will go one way no matter what, so you might as well do what you need to do so that they’re pointing in your direction.
There’s millions and millions of aspiring entrepreneurs, but only x% of those will ever take any action.
Only x% of the ones that do take action will do so past the first few weeks or months.
Only x% of those will get over the mental barriers of investing in themselves, and getting direction from people who’ve already been where they want to be, to shortcut the process.
Only x% of those will continue past the first big hurdle or failure, many not realizing it’s nothing but a learning experience which will improve their odds even further.
Most aspiring entrepreneurs are only that. “Aspiring” to become an entrepreneur, but they only dream about it and don’t take the necessary action that will get them there. So, they go around claiming how “risky” business is and adding to the number of people who regurgitate irrelevant numbers like the 80%, to attempt to justify their decision not to take action. Talking and dreaming about entrepreneurship is easier.
As I hope you’ve learned from this post, if you invest in yourself and learn from others who’ve been where you want to go, and take continuous action without giving up, you actually have an extremely high likelihood of success. When you do hit temporary hurdles or failures; realize it’s just that, temporary. Nothing more than a learning stop on your journey, Even if you don’t hit a home run on the first one, you will if you keep swinging.
The decisions you make today will give you the life you live tomorrow. If you woke up today and didn’t enjoy what you had to do, take a risk to change it. Or, you could just keep doing what you’re doing, which would be the biggest risk of all.