newest book is
A Real-World Approach. Register for
her free business-tips newsletter
But I’ve looked at the statistics for business
births and deaths closely, and I know of no
credible study showing anything close to a 90
percent death rate—or even a 50 percent
“failure” rate in five years.
What they do show is that half of new
businesses disappear from any public records
within five years. But in most cases, while it
may be true the company has closed its doors,
it hasn’t necessarily “failed.” In fact,
a company that is thriving may be
counted as a failure.
For instance, I had my own
successful consulting practice for
many years. Like most sole
proprietors, I reported my business
income on my personal income tax
return, using my own Social Security
number. As the business grew, I
incorporated and my business got its
own tax number. So my first
business probably shows up in
statistics as a business “death,”
even though it was actually thriving.
Often, businesses don’t die or fail; the
owners close them for reasons unrelated
to whether the business is making money.
Take restaurants, for instance. Restaurants
I once heard a distinguished professor
make an outrageous statement: 90 percent of new businesses fail. Repeatedly,
I also hear small-business “experts” say
that 50 percent of all businesses fail
within five years. Hogwash!
When I hear “facts” like that, it’s
like fingernails on a blackboard. I know
numbers like that scare people away from
starting a business or discourage those who
are already in business. “If so many businesses
fail,” some will think, “what chance do I have?”
in our digital
have a notoriously high “failure” rate. Yet, one
study showed that reasons other than
economic necessity made the owners decide
to throw in the spatula. They cited divorce,
poor health and, most important, an unwillingness to continue to make the immense time
commitment necessary as reasons for
shutting their doors.
Most businesses close because of “I had
no idea” syndrome: The entrepreneur didn’t
really understand what it takes to run a
company. To greatly increase your chance of
success, find out as much as you can before
you open your doors.
So, what about that 90 percent failure
rate the professor cited? Listening closely, I
realized he didn’t mention any time period.
So, perhaps the professor is right after all. I
think it’s safe to assume that within some
period of time—let’s say 50 years— 90 percent of all businesses will close. I can live
with those odds. C
More in archives
On Costco.com, enter “Connection.”
At online edition, search “Rhonda
knowledge in 2013
Are you confusing people with your leadership style?
CHRIS A RUSNAK
“YOU’RE UP ONE day and down the next.
No problem—the people who work for you
can just go with the flow, right? Wrong,”
says Karen Wright, whose company, Parachute Executive Coaching (
executivecoaching.com), is a Costco member
in Toronto. Wright, the author of The
Complete Executive: The 10-Step System for
Great Leadership Performance (
Biblio-motion, 2012), offers these tips on creating
a steady leadership persona.
Stay cool. Your people need to know
the difference between a mood swing and a
major business issue. Help them out by
staying on an even keel at least 90 percent of
the time. When you’re down they’ll know
it’s serious, and when you’re up they will
know there is real cause for celebration.
Walk your talk. The higher you rise on
the ladder, the more people are watching—
and the more easily you’ll be called out if
your actions don’t match your words. Make
sure you are a living example of the values
you expect others to uphold.
Get your story straight. If you have
achieved success, chances are people are
going to want to hear about how you made
it to the top. Don’t embellish or inflate. The
more relatable it is, the better. Besides, the
truth will always catch up with you.
Keep it real. Never assume you’re
doing fine, and never presume you know
what others are thinking. Ask for feedback,
whether directly or through a confidential
survey process, and be open to what you
hear. You can’t expect the people around
you to accept feedback if you are not willing to do the same.
Stand for something. If you’re in a
position to inspire people and lead them
toward something important and exciting, don’t be shy. Let your passion show.
Your authentic excitement will be infectious. And if you are not a naturally comfortable public speaker, get trained and
practice, practice, practice: Few skills are
as important in a leader as the ability to
energize a crowd. C
IF YOU’RE A small-business owner or contemplating becoming one, but feel like you
still have a lot to learn, you can go back to
school or take expensive training classes.
Or you can check out the Small Business
Administration’s Small Business Learning
Center for free 30-minute training programs,
on your own time (
MARCH 2013 ;e Costco Connection 11
SBA training courses include:
• Young Entrepreneurs: An Essential Guide
to Starting Your Own Business
• Encore Entrepreneurs (for individuals
planning to start a business after earlier
• How to Write a Business Plan
• Government Contracting 101
• A Veterans’ Guide: How to Win Federal
• Women-Owned Small-Business
Program—A Guide for Contracting Officers
(about increasing contract opportunities for
women-owned small businesses)
• Business Technology Simplified (basic tech
tools to help you run your business more
• Take Your Business Global—An Introduction to Exporting
• Disaster Recovery: Guide to SBA’s Disaster
Assistance Programs. C