There have been a few dust-ups in the political scene in the last year where critics of current economic policies have claimed that nine out of ten businesses close within a year. This is a myth. According to the U.S. Small Business Administration, about half of all new establishments survive five years or more and about one third of new businesses survive a decade or more. In fact, the probability of survival increased with a firm's age, as one would expect. So the numbers aren't against you. Yet while starting a business can be a fun and thrilling ride, you still want it to be a success. Here are some of the key factors that might be holding you back.
- The Market. This is probably the strongest factor to consider when you are thinking about launching a new venture. Experts advise that rather than simply playing to your own strengths, take the time to analyze your community's market and see where there is a so-called “gap in the market." If you are thinking about starting a small niche or neighborhood business, be it a dry cleaner or a pizza shop, you want to make sure there's enough business there. Bear in mind that spotting gaps in the market can also happen by chance.
- The Economy. It's an old story: someone feels that their skills and dream go hand-in-hand with the need for what they want to provide. All the odds are in their favor. And then their business fails anyway. If the economy is down or a certain market segment is still recovering after a recession, timing, business size, and revenue to operating costs all need to play a factor in your decision to launch.
- Your Backing. Whether it's a matter of working through the Small Business Administration to get a loan for startup capital, finding the right business partners to help launch your enterprise, or seeking out venture capital interested in your brilliant start-up, the fact is that starting a small business costs money. Unless you're Richard Branson or Bruce Wayne, you need to consider whether you have the financial reserves to make things go your way.
- Your Day Job. One factor that huge numbers of entrepreneurs fail to comprehend is just how much time it takes to launch, run and operate a business. If you're trying to sneak in a start-up while you're still grinding it out as a graphic designer for someone else, you'll just find yourself failing on both ends. If you're going to start a business, commit.
- Your Personality. This is a critical element to consider when thinking about starting a business. You may not be that crazy about your day job, but if you like going to the office every day, working with a team that supports you, and applying your skills in an environment where the entire operation won't come crashing down if you screw something up, entrepreneurship may not be the road for you. It can be an exciting opportunity but running a business also requires long hours, time spent alone, and the thrill that comes from having to learn accounting, payroll, taxes, and marketing, sometimes all at once. If the idea of these issues stresses you out, the thing that's holding you back from starting a business might just be you.
- Lack of Passion. One of the funny things about starting a small business is that it's not something you can just luck into or network until you get it right. You have to really, really want it—enough that you're willing to accept considerable risk and the potential for failure. Do, or do not. There is no try.
- Your Triggering Event. In their book What's Stopping You? Shatter the Nine Most Common Myths Keeping You from Starting Your Own Business, authors Bruce Barringer and Duane Ireland have the insight that most new small businesses are born out of an event that finally pushes an entrepreneur into the market. This can be a positive moment, such as having a “lightbulb moment" that pushes an idea into your head, or a negative one, such as the loss of a job. But by knowing that this phenomenon exists, you can be more aware of the factors that are affecting you mentally and emotionally, and hopefully recognize when a triggering event is happening to you.