Taking the Long View in Entrepreneurship

In this day and age, it's hard not to get caught up in the heady images the words "startup", "entrepreneur", and "innovation" conjure in our minds. We all dream (or at least most of us do) of being the guy to create the next Facebook and we will be set for life. Most of us believe that the only requirement to be a successful entrepreneur is one great idea, without considering long and hard the work it takes to turn that idea into a success.

In a research by the University of Tennessee, only 58% of startups were still operating after four years. The failure rate at Year 1, Year 2, and Year 3 were 25%, 36%, and 44%, respectively. There were a lot of reasons for failure stated in the study, but the major causes were:

Incompetence

Learning, whether in business or other endeavors, is important. You already invested much time and effort to launch your business, so why not take the extra time to know more about the business you are in? The more we know, the more possibilities open up, enabling us to apply creative solutions to problems that may arise.

Going into business for the wrong reasons

Fame and fortune are usually not good reasons to go into a business. Consider Bill Hewlett, the co-founder of Hewlett-Packard, who stated: "As I look back on my life's work, I'm probably most proud of having helped create a company that by virtue of its values, practices, and success has had a great impact on the way companies are managed around the world."

Did you hear him say "money"?

Let's face it, money is important. But it should not be our guiding principle when starting a business. Instead we should base our business on our passion and purpose, because these factors will sustain us in the long haul.

Entrepreneur gets worn out and/or underestimated the time requirements

Most aspiring entrepreneurs are not prepared to face the reality that starting a business is even harder work than being an employee. They mistakenly assume that a great idea will take care of itself and all they have to do is reap the rewards for having thought of the idea in the first place. Entrepreneurship ship is not a get-rich-quick scheme.

The entrepreneur falls in love with the product/business

Dan Ariely, a psychologist and behavioral economist at Duke University, conducted a study which found that we tend to overvalue the things we make. He found out that an investment in time and effort gives us a sense of ownership, leading us to value it more than others. While this is generally beneficial, we should not fall into the trap that other people will value our product/business the same way we do. Our job then is to "sell" our idea to as many people and listen to what they have to say.

Can anybody succeed as an entrepreneur? The answer is yes, as long as we go into it knowing what is in store and what it requires from us, keeping in mind that there is no such thing as an overnight success.