Increase Your Odds to Stay in Business (Part 1 of 4)
According to the Bureau of Labor Statistics, about 20% of new businesses fail within their first year and nearly 50% close within five years. While we were researching this, we also found out out that a total novice in Las Vegas sitting down at the blackjack table has about a 16% chance of winning—meaning your odds of beating the house in Vegas are almost the same as your odds of making it through your first year in business.
And yet we entrepreneurs bet EVERYTHING we have on the business. Not just $500 or $1,000. EVERYTHING! Our income, our savings, the equity in our house, often times our relationships with significant others, our quality of life, and even our children’s future.
In Vegas, you can improve your odds by studying the system and game. In fact, if you devoted enough time you could increase your odds of winning all the way up to 47% by becoming a “Master”, according to Vegas statistics. You can do the same in business and dramatically increase your odds by knowing what to look for and reading the signs.
According to Christine Christian, CEO of Dun & Bradstreet, 80% of all companies that fail do so as a result of “Poor Financial Management.” Increase your knowledge of how to manage your business from a financial perspective and your odds of success go way up. Learn what numbers to watch and what they mean. Install the systems to collect those numbers and you increase your odds. You don’t have the time? Really? You only have three choices.
- Make the time
- Find someone with experience to outsource to
- Rely on Lady Luck to carry you through
Because the odds of your success without this knowledge are really poor.
Our entire company exists because of owners who don’t have the time or skills or desire, but you have to do it or get ready to lose.
The attitude of, “I’ve been in business 12 years so I must be ok”, is like the guy falling from the building and as he passes the 3rd floor he says, “So far so good”. Think about it, how many companies, even large ones, can you name that were in business 20 years ago. The stats are clear, whether you try to argue them away or not.
The good news is, you can beat the odds—if you take action. Knowledge, systems, and consistent attention to your financial health are the difference between surviving and thriving. In Part 2 next week, we’ll dive into exactly how to read the financial warning signs early and what simple steps you can take to prevent disaster before it starts. Stay tuned—you don’t want to miss this one.
