How to Increase the Odds of Staying in Business

You’ve probably seen the scary statistical odds regarding starting your own business – over half fail within the first 5 years. Ouch.

So what can you do? What DO you do – to improve those odds and not become a statistic yourself? Well, you can start by doing some industry research.

Scott Shane on How to Start a Profitable, Long-Lived Business

Scott Shane, Professor of Entrepreneurial Studies at Case Western Reserve University explained how to beat the odds last week on Small Business Trends Radio.  Among his insights:  

  • Certain industries have higher failures rates than others. If you want to have higher odds of succeeding, the first step is to choose an industry carefully. Stay away from retail. B2B, on the other hand, usually has higher success potential.
  • Preparing a business plan increases your chances of success.  It sounds obvious, but it’s not just empty advice.  There’s a correlation between planning and success. 

Illusions of EntrepreneurshipAlso, check out Scott’s new book, Illusions of Entrepreneurship.  It’s the source of much of the material discussed in the interview. It’s also available on Amazon, too.

To hear the interview, click the red and yellow arrow below:

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Small Business Trends Radio Sponsored by: JumpUp.com

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Staci Wood


Staci Wood After being a 20+ year member of "the rat race," Staci traded in her office, opted out, and joined the virtual world and the Small Business Trends community. Staci is the Operations Manager for Small Business Trends, LLC and is also the Producer of the Small Business Trends Radio Show.

6 Reactions

  1. Staci Wood,

    I will quote myself! ;) From my comment on Small Business Trends Radio:

    http://www.smbtrendwire.com/2008/01/17/how-to-start-a-profitable-long-lived-business/#comment-78513

    We have done our background check, writing a business plan, etc., but the hard thing is the marketing and to reach out to the small business owners and get them going through the AIDA (attention – interest – desire – action) process. With today’s tech tools like mobile phones, high-speed internet at home, and so on, it could take some time before small business owners get the sense that they should do business in other places in order to become even more productive. At the end of the day, a business transaction is an exchange between two parties who trade value for value. We are working on implementing an element of storytelling into the business, so the customers reach a positive state of mind by getting an insight how it was in the old days at the coffee-houses. The Economist article, Internet in a Cup (December 2003), has been a great source of inspiration for my part. I think a meeting place is the solution for an universal need to interact and talk with other business minded
    individuals.

    —————–

    Regarding the business plan. Don’t you think it is a living document? Do you have any suggestions on how to write a short & sweet executive summary? Any good resources ? How did the old timers plan their business development? Do you think that Ingvar Kamprad of IKEA sat down and wrote a long “song & dance” plan before he started his business in his youth?

    All the Best,

    Martin Lindeskog – American in Spirit.
    Gothenburg, Sweden.

  2. Hi – a plan sounds so obvious. Yet a lot of businesses either write it and forget; just think it’s a tool to enable them to borrow money from the banks; or don’t bother writing one at all.

  3. Those statistics are really compelling. Honestly, I was surprised to see it spelled out like that – wow. I still think it helps to be a spirited entrepreneur as well though. Every little bit helps.

    A combination of a correctly chosen industry and a determined entrepreneur would be a real powerhouse combo, don’t you think?

    Great entrepreneurial test in the included link, too. I’d advise everyone to take it. Pretty interesting.

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  5. One of the oldest and most effective ways of starting and staying in business is to leverage the power of barter. Organized and ethical companies like Merchants Barter Exchange (MBE) can help offset many cash expenses by turning surpluses into profits.

    Provided everything is done 100% on trade for the same price as cash, just like all MBE transactions, it is in essence just like using normal dollars only they don’t have the same cash impact on a business.

    Why pay cash for things when MBE will let you spend first and proactively drive new business your way? Barter has always made sense and will continue to grow throughout the recession.

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