Comments on: 80% of New Employees Fail Within the First 5 Years

By: Xtreme1

Xtreme1 — Sat, 03 Sep 2005 05:51:26 +0000

I don’t think that i have ever heard anyone but me talk about failure as being your biggest asset in the world of self owned business. I love auto racing, worked at a local speed shop from when i could drive til they went out of business. Since this is all i really know how to do, i opened a speed shop. Remarkably, in the same building as my previous, nationwide employer, i did very well in this location until i was faced with the responsibility of hiring employees. This is the most important decision you will ever make in owning your own business, period! Forty three or so employees later, in four years, i had a severe fire that forced me to close temporarily. The fire, not self inflicted because of employee problems, was uninsured by the ignorant S.O.B., ME, so here i sit with three storage rooms full of hot rod dust collectors and enough cars in my yard to start a wrecking yard making about one one hundredth of my potential because of a simple gliche in my budgeting in insurance. Moral: don’t let ones dreams be taken by such idiotic forgottens, yet make ones forgottens the strength of remembering how easy the dreams can turn to a gut wrenching, bankrupting reallity.
Your planning ideas are phenomenal and should be studied and followed by every potential business owner, which should be everyone at least once!

By: Hallie

Hallie — Mon, 29 Aug 2005 02:13:21 +0000

Steve,
I really appreciated the different perspective offered by this post. I found it very amusing, as a direct challenge to the people too afraid to tempt success themselves, thus thinking it is their calling to make others realize their failure is also imminent. It’s about time!

– Hallie

By: Nick B

Nick B — Sun, 28 Aug 2005 21:31:40 +0000

If a business fails to endure, does that mean it could be considered a failure? Does “fail” mean that the business produced nothing of value or provided no revenue to the owner(s)?

Good point. Who cares if it fails? If you don’t bet, you can’t win. Just use it as a learning experience. As Edison is reported to have commented after being asked about the failure to produce a workable filament after going through 8,000 materials. “Failed? Don’t be silly! I know THOUSANDS of things that WON’T WORK!!”

> I figure that part of the reason why many new business fail is that many of the people who start them are either lazy or stupid or both.

This is remarkably true — While never starting my own business, I’ve seen a number of them start and fail or succeed.

This usually comes down to a few once-pointed-out obvious observations which are the most likely pitfalls.

1) Laziness. Yep, they want to hire others to do the work before they have any income. The successful ones are usually the ones doing 60 hour work weeks for the first few years.

2) Economic incompetence. Basic rule: Don’t spend capital assets any more than you must. Blow cash flow on anything you want, but spend capital assets like they were your gonads you were trading away. Any office equipment? Buy cheap used until you can spend cash flow. Pirate software until you have a visible face worth suing. Don’t spend a damned dime you don’t have to in order for the business to succeed. Yes, to a small extent, appearance matters, so you DO have to do things like buy good suits if you’re in that sort of business — but anything which the outside world doesn’t see? Be a miser. Be the most penny-pinching miser you can imagine. I’ve seen at least 4 out of 6 businesses fail entirely on mis-spending money.

3) Marketing is everything. Everything. Don’t scrimp on this in your planning. “Build a better mousetrap, and the world will beat a path to your door”. It’s a crock, because how the hell will the world know your mousetrap is better? Answer: You have to market it to let them know.
Further, you can have the biggest, most bug-ridden piece of SH** on the planet. Good marketers will sell it as fertilizer. I’ve seen one software company I worked for stay in business for 4 years despite the fact that in almost every known case, the software worked for about 2 months and then crapped out and rarely worked after that, at something like $5k a pop (eventually, they died, but they lived longer than the ones I’ve worked for with excellent products). Oh, and then there’s the big hairy behemoth astride all this — Microsoft. An absolute piece of garbage, but, hey, it’s marketed by geniuses. ‘Nuff said.

Avoid these three pitfalls and you’ll at least be the one that fails of some far less common ailment in the 5th year.

By: Manuel Tenorio

Manuel Tenorio — Wed, 24 Aug 2005 11:40:03 +0000

If 9 out of 10 business fail, it only means you have to be willing to try it 10 times. If you really want to be an entrepreneur that’s the way to do it. Passion and commitment and instead of saying “I’l never try anything again!” after the first crash, one must learn from it and try again. After all, 1 in 10 tries makes it!

By: Multiple Mentality | www.multiplementality.com

Multiple Mentality | www.multiplementality.com — Tue, 23 Aug 2005 16:42:50 +0000

Items of Interest #54

In this issue: a flaming pantload of quizzes and carnivals, stoned cows and their milk, exploding invisible golfish, and more.

By: Wealthy Web » Do You Ever Really Fail

Wealthy Web » Do You Ever Really Fail — Tue, 23 Aug 2005 00:59:35 +0000

[...] Steve Pavlina wrote an article about the failure rate of employees which I found quite interesting. The title of the post is kind of misleading, but it draws you in. Steve talks about the failure rate of employees compared with that of entrepreneurs. People are fond of quoting the failure rate for businesses, but don’t really quote the failure rate of employees, let alone employers. [...]

By: Hector

Hector — Sun, 21 Aug 2005 07:41:28 +0000

I figure that part of the reason why many new business fail is that many of the people who start them are either lazy or stupid or both. I’m not saying that these things are more true about new business people than about regular employees. On the contrary, I think most people are mediocre and choose to remain mediocre because it’s too much bother to try and be anything better.
The thing is, you can get away with being mediocre in an organization. Chances are that (a) the good people will carry you and (b) you’re not going to be so much worse than all the other second rate people around you that you will stand out as deserving special treatment. But if the business is yours, if all the decisions are yours then there’s no place you can hide. If you think that running a business is just a matter of doing the stuff you like and waiting for the cash to roll it, if you don’t research your markets and you don’t care about your customers and you’re not prepared to work like stink to make sure that customers go to your door and not someone else’s then your business is going to fail. Success as an entrepreneur is like success in any other walk of life: if you’re smart and work hard you’re a damn sight more likely to get it than if you are neither of those things.

By: SD

SD — Sat, 20 Aug 2005 20:18:09 +0000

The article title gave me a good, long laugh Steve, I think you would be great at comedy.

By: Insomniac

Insomniac — Sat, 20 Aug 2005 07:59:36 +0000

A good advice for somebody starting a business is this:

Consider what will happen if the business will fail and you will want to work as an employee again. You will have a “gap” in your resume.

It is very important to fill that gap – to show that during the period when you tried to start your own business, you really worked.

This is why I suggest this:

- Keep proof that you worked during the period. Meeting notes, source code, design documents, etc.

- Don’t stop updating your resume, even if you work for your own company.

This will help also if you fail in the first business and want to get capital (from angel investors) for a second business.

By: Michael Muryn

Michael Muryn — Fri, 19 Aug 2005 18:07:15 +0000

Interesting fact about Microsoft, billg is madly selling:
http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=msft
Is this common, I don’t know as I don’t follow that that much, but it is just an interesting fact as I think to invest and for some reason MSFT seem pretty active. Maybe it has some risk, but at less it does move!

Now about the blog entry — the same fact can be said about a lot of thing, like relationship. Some people consider them failure when it ends. That is probably not always the case.

One of the problem sometime thought is to quit. Sometime you don’t want to quit, but you have to. You have to make choice. Sometime it is taking those conscious decision that is very hard. So what I am saying it is not that only quitting is hard, but learning to say no, to make a choice between a lot, to drop an option in favor of another, etc. And it is not as easy as said to begin to shift between that attitude and even when you succeed, you sometime fall back in the pattern. I am sure that what I am saying there applying to a load of people even thought it sound so easy to say “just make the best choice”.