After 14 years running my own businesses, I’ve failed a lot. I haven’t kept count thankfully, but I’d say I’ve started at least 50 businesses / ideas and out of those, 3 have worked. And when I say worked I don’t mean staying in business, I mean resulting in either a decent income for me at the time or a decent asset that’s worth something to me or someone else. With all the risks you take as an entrepreneur, I don’t see replacing your job and getting to work from home as a significant enough reward to count as success.
The startup community likes to glorify failure but I don’t. Failing sucks. Failing slow sucks infinitely more. That’s why it’s OK sometimes to give up, to free you up to move onto an idea that could bring you something that the startup community doesn’t talk about near as much: actual fulfilment and success.
Related: Perhaps you should give up.
Knowing when to give up is near impossible and the emotional baggage that comes with making the decision to give up is unbearable. That’s why entrepreneurs, myself included, waste years of their lives on shitty ideas that will never work, following the popular trend of “ideas don’t matter, only execution matters”.
Ideas matter a lot, and if yours is a shitty one, for you, at that time, with the resources you have, it will almost certainly fail.
Here is a list of things to look out for when things might be set for failure. These are based on my failures and the failures I’ve seen around my circles (mostly self-funded online business folk).
1. You are completely clueless about what you are getting yourself into
Being willing to go into something you are clueless about can be a great trait for an entrepreneur, but only to a point. Sometimes entrepreneurs overshoot, I’ve done it myself. I started a business selling kids toys without any experience in retail or without knowing anything about kids, I tried to start a business making pot plant stands despite not being a gardener and having zero experience in manufacturing, I tried to build an app for surfers despite being a terrible surfer and having zero experience building apps and no app development skills, the list goes on and on.
If I think about the ideas that have worked for me, I’ve been able to utilise a lot of my existing skills to make them work. And where my skills weren’t enough, I’ve worked with other skilled people as partners to pull it off.
Over the years, I’ve seen so many people try to start businesses, especially online businesses and apps etc without any clue what they are doing. Successful software startups are almost always started by well connected, super smart entrepreneurs in big startup hub cities, or people who are really great software engineers themselves. It’s extremely rare for an individual who isn’t a programmer to think up a software idea and turn that into a successful company.
Yet people try all the time (myself included) and wonder why it doesn’t work out. Your chances go up a lot when you stick with something you know extremely well, or at the very least have co-founders who know the field very well and your skills are equally valuable.
2. You are working on more than 1 thing
I used to do this all the time, with 4 or 5 ideas bubbling away at once all the time. Lots of people do the same thing. I think they heard some generic advice that said millionaires have on average 7 different income streams, and they think that means they have to have 7 businesses. I can tell you 1 great business is a hell of a lot more valuable than 7 shit ones. It’s near impossible to split your time, attention and dedication across multiple projects.
It’s also very hard to avoid those entrepreneurial impulses, particularly when one project isn’t going well, it’s tempting to dabble in a few at once. But I claim at least temporary success at battling this impulse. I stopped doing it about 3 years ago.
My last business suffered immensely because of this. Both me and my co-founder worked on multiple projects while running the business. In the end, none of our side projects did very well at all, and the approach took a toll on the main business.
I took these lessons into my current (only) business Black Hops Brewing. Once I started working full time at Black Hops, I shut down all of my other personal projects. One of them was generating $40-$50k a year in relatively passive income which was more than I was getting as a wage via Black Hops at the time. I switched it, and all of my projects off to focus on Black Hops.
And it was the right decision. I haven’t thought about any other projects since we started and Black Hops has grown into one of the countries fastest growing breweries and one of the state’s largest independent breweries. Size wise it’s already 6-7 times the revenue of my last business, and it’s worth 8-10 times as much after less than 4 years.
It pays to focus, especially if you really believe in the thing you are focusing on. Turning down lower value opportunities for higher value ones is something great entrepreneurs do all the time.
3. You are the wrong person for the job
This might come across as harsh but have you had a really good think about whether you are the right person for this particular idea at this particular time? I think sometimes people look up to these outlier heroes who started amazing outlier companies and think they can do it as well. It’s OK to have some ambition, but it has to be tempered with some level of self awareness.
Steve Jobs famously said “Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you.” This is a neat inspirational quote, but is it actually true?
I’m a reasonably smart person, when I went to school I was slightly above average for my school. I got a good enough grade to get into Business at university and went on to start a few of my own businesses. But what about all the kids that were smarter than me at school do?
When I look around, I see amazing houses that were designed by Architects after acing school, getting through a gruelling 5 years at university, a further 2 years in monitored practice, passing the Architects Accreditation Council of Australia exam then probably worked under an amazing Architect with 20-30 years experience for 5 years at least before they designed the house I’m looking at. The roads and the bridges and the buildings are the same, built by engineers who were the smartest in their school, attended the best colleges, completed the most difficult of degrees and professional accreditations and then eventually got to create the thing I get to look at.
Businesses in many ways are not that much different. The successful restaurants are normally started by the industry’s best and most award-winning chefs, software apps are created by some of the smartest entrepreneurs and software engineers in capital-rich startup hubs like Silicon Valley. Have you ever listened to an interview with any of the founders of any of the major tech giants of our generation? Zuckerberg is a computing genius, an insanely aggressive risk taker, he has balls of steel and an unwavering belief in what he’s doing despite pressure that I know I would not want to even try to absorb. Elon is an eccentric billionaire genius who famously worked 24 / 7 on his early companies, doing much of the computer engineering himself. The same goes for almost all of these companies and founders: Bill Gates, Jeff Bezos, Larry and Sergey, Reed Hastings, Peter Thiel, Marc Andreeson, Paul Graham, the list goes on. These are not normal people, they aren’t like you and me. Trust me I’ve listened to some of my interviews back and listened to theirs, we aint’ the same!
Not to say there’s no place for you and me in a world filled with access and enormous opportunity. But should we be trying to start the next Facebook? Probably not the right people for the job.
4. It’s not a business it’s a charity
I’ve noticed a lot of younger entrepreneurs have a strong social conscience, which is a great thing. But the idea of starting a charity of sorts that’s also a business is a tricky one to get my head around. There are certainly examples of companies who have been started with a strong social conscience that have also been fantastic businesses. But for every one of those, there’s way more companies that seem to make a lot of vague claims about donating a “% of profit” to a certain cause, that raise my skeptical hippo eyes more than a bit.
When I think about entrepreneurs who have given large amounts to causes, the ones I think of like Bill Gates, Michael Bloomberg, Jeff Bezos etc were all ridiculously successful business people first, and philanthropists later. Many, like Gates, were well known for being ruthlessly competitive, happily monopolising industries and obliterating competitors. These guys were hard entrepreneurs, driven by creating revolutionary products and making shitloads of money.
And that’s completely fine as far as I’m concerned, that’s what entrepreneurs are supposed to do. If you can build some good natured help for people in need into your business model (or more importantly your brand), then go for it. But it should be a business first. There is a lot of nobility in starting a business that entrepreneurs often don’t get credit for. Small businesses power our economies, they support families, they employ tax paying citizens and they pay their own tax that all goes back to helping people in need. There’s no need to feel like that’s not enough. If you can start a business that pays taxes and employs a bunch of people, that is an awesome result for society. If you make shitloads of money taking the enormous risks to do it, then you deserve it.
5. You can’t build a story / brand around it
Marketing is the biggest problem in business, I should know after failing marketing in Business School and failing at marketing in most of my businesses. Convincing anyone to do something different to what they are currently doing is near impossible. I know you know this, as business owners we know when we have a good product or service or event or app or restaurant, we look around at our competitors and size them up and feel like our offering is just as good if not better. But we don’t have as many customers as we want, because it’s excruciatingly difficult to get customers.
In my circles of mainly self funded smaller businesses, we don’t have the big budgets to acquire customers with paid ad spend. Even if we could, we don’t have the analytics to know if the money is well spent or not. Figuring all of that out is expensive and it takes time. So normally what we do is we build a nice brand and a nice story around what we do.
In my case my last business I had this ongoing (very real) story about an entrepreneur who failed for 7 years and then started a neat little productised service business in 7 days.
The fact that it was 7 years of failure and 7 days to success was pure luck. The fact that the entrepreneur was me was even luckier.
The business would offer unlimited WordPress fixes for a fixed monthly fee, the first of its kind with this type of idea. It took off. My failure story turned into a success story, and me and my co-founder used that story and momentum to build a nice business which we sold to GoDaddy less than 3 years later.
With my current business, it’s a similar story (but way better). 3 guys sat around at a bar discussing brewing ideas, we decided to have a crack at one of the ideas and after realising it was a hit, we took the plunge and built our own brewery (with a lot of other cool shit happening along the way, which we happily accepted into our story).
In both causes we took our community and our audience along with us as we built the business, and we built the businesses while spending close to $0 on advertising.
But this wasn’t about us geniuses thinking up a cool story and using it as a branding exercise. We just happened to find ourselves inside a great story. We were of course very happy to use that and be part of it and make it the centrepiece of our marketing.
For these 2 businesses I’ve got enormous amounts of free marketing and publicity over the years. We’ve had international attention from the likes of Activision (Call of Duty’s first official beer), TechCrunch, Fox news, Mashable and more. We’ve had local attention including featuring on an episode of a TV show on Channel 9, being on 9 News and 7 News and the Gold Coast Bulletin and the Courier Mail and more. None of that cost us a cent, and without that kind of advantage how would we possibly convince consumers to change their behaviour?
But what if you don’t have that luxury? What if you don’t find yourself inside a great story. I guess you could make it up, an approach that makes me ill to think about, but a lot of companies do it and it works for some. But I like to think most consumers see through it. The more likely outcome is the business won’t gain traction. You’ll miss out on the easiest solution to businesses biggest problems.
It’s not great, but maybe it means you have to search out for an idea where you will find yourself inside a cool story.
6. You are trying to change buying habits
One of the biggest traps for new entrepreneurs is they try to change the world too soon. They are inspired by entrepreneurs like Steve Jobs and Elon Musk and they want to be ‘disruptive’ and ‘make a dent in the universe’.
Being inspired is great and super important, I’m also very inspired by these people and have been over many years. But trying to change too much is a struggle that most entrepreneurs aren’t ready for.
Can you imagine the gargantuan task of convincing people who have driven petrol cars all their life to no longer buy petrol cars? Can you imagine being a startup car maker and competing against iconic companies that people tie their identities to? Competing against companies who have more than a century of lessons and innovation and brand building to fall back on? You want people to ignore all of that and buy a golf buggy?
That’s what Elon faced when forming Tesla. It takes a special type of crazy person (meant in the most endearing way), to even think something like that would be possible.
Elon made it happen with a shitload of money, a very healthy dose of luck, and because he’s a once in a generation entrepreneur.
Most people don’t make this happen. Most good solid companies are started with a slight point of difference, a cool story, a good brand and a well timed offering. They won’t drastically change people’s buying behavior. This is especially true for underfunded entrepreneurs, who already have an enormous marketing challenge just to make people aware that they exist.
As far as making people completely change their habits as a consumer? Good luck with that. Much better to provide a solution where customers are already paying for a solution.
7. You are operating mainly on assumptions
At the risk of repeating everything I said in The 7 Day Startup, it’s a very bad idea to make decisions based on assumptions instead of actual customer data. A founder’s only goal in starting a new business should be to get a viable product or service into the customers’ hands as soon as possible.
This is a roadblock that new entrepreneurs have a huge issue with. It’s so much easier to just post a link in a Facebook group and ask for feedback, or jump on a mastermind call and discuss what hypothetically the customer might want.
I don’t want to downplay this mistake because it’s an excruciatingly difficult challenge. It’s not as simple as putting out a shit product and hoping for the best. Products have to be good (viable), if they don’t look good and feel good and solve a proper problem and provide a different enough experience to what people are used to (without changing major behaviours), then they probably aren’t viable. So how do you create something with all of those restraints with not much money in a very short timeframe and on top of that somehow find the right customers for it! I said this was hard right!
But the alternative is pissing around for months, or years on ‘potential’ ideas fabricating hypothetical scenarios in your head based on assumptions, that only delay the inevitable. Having customers tell you they hate your idea, or not pay for it, or even worse, not being able to find customers, really sucks. But there’s something that sucks way harder. Spending months or years of your life on the wrong idea and ultimately having it fail. I’ve done both, trust me the latter is a lot worse.
8. Your offering isn’t interesting enough
This one shouldn’t come as a huge surprise, but there does have to be something interesting about your product or service offering. It doesn’t have to be a major change, in fact massive changes could do a lot more harm than good, it just has to be worth talking about. When I look back at my failed ideas, they weren’t particularly interesting. When I look at the few that have gone well, they’ve all had some little point of difference.
And the thing that is interesting has to be interesting to the customer, not just to you. This is why I think sometimes it’s a bad idea for entrepreneurs to “scratch their own itch”. It’s super easy to be interested in your own shit. It’s way harder to get people to part with their money to purchase something that they were otherwise not planning on purchasing. There has to be something in your idea that is interesting to talk about.
In my case my WordPress support business was the first of its kind to offer a monthly recurring fixed price service that was traditionally either invoiced hourly or quoted for larger jobs. It’s not a massive change, I was doing WordPress support for years and years before WP Curve. But I’d never done human services for a fixed monthly cost, and others in the industry hadn’t done much of it either, and that idea was interesting.
In the brewing world I can apply the same methodology. The brewers that have done well all have something interesting about what they are doing. Whether it’s a cool founding story, excellent branding that grabs attention, or just awesome experimental beers that drive people to talk about them. The good ones are all doing something interesting.
If what you are doing isn’t especially interesting to your customers, it’s going to be very difficult. And if you aren’t sure, look at what your customers are saying about it. And I don’t mean in reply for a testimonial request. Look at the words they use, how they use the product, how they say it’s different, how excited about it are they. That will give you some hints, just be wary of people’s tendency to support their friends and be excited about new things. Look for signs of genuine interest, and if you see it, you might be on the right track.
9. You are getting bad advice
Humans are constantly getting advice from their surroundings, and new entrepreneurs are so easily influenced it really worries me. I see and hear so much awful advice given out to entrepreneurs in Facebook groups, and in mentoring sessions, and from friends and family etc. New entrepreneurs take it all in.
Fuck advice. You don’t need it. You need awareness, and it’s very difficult to cultivate, especially when you are a new entrepreneur.
But since you are seeking some kind of advice (otherwise why would you be reading this), here’s my advice on taking advice:
- If you need advice, give a lot of thought to why. Are you not qualified to do this? Do you not have enough expertise in your founding team? Do you not have the courage to make your own decisions? Do you want to seek permission from someone?
- Don’t take business advice from friends and family full stop.
- Try to avoid taking business advice from people who say they are experts. People who are good at business, spend their time running their businesses, not “educating” others on how to run theirs.
- Look for category-specific advice. If you find someone who is epic at email marketing, it makes sense to get some advice on that topic, but don’t hero worship someone into thinking they are a suitable person to give you advice on all topics.
- Don’t take the approach of asking questions and taking the answer as a solution. Instead gather data and be an entrepreneur and make your own decisions. The best places to gather data is to talk with your team or co-founders (if you have them), or talk to or observe your customers interacting with your offering.
- Do what feels right, sorry I can’t do better than that but if it feels right it probably is.
Is your business likely to fail?
Firstly thanks for reading this article. Is your business likely to fail? I don’t know, only you can know that but I hope these thoughts help you with that decision. And while I don’t want to glorify failure, moving from an idea that doesn’t work for you to one that does is a beautiful thing. It’s a scary move, but maybe it’s the right move.
I’m writing about Storytelling for business in my next book. Jump on my emails here to learn more.