What Makes A Small Business More Likely To Succeed

I watched a very interesting video on Tech Crunch TV the other day where venture capitalists David Lee and Ron Conway discuss some of the key attributes of their most successful portfolio company investments. The video is definitely worth a watch if you have a spare 15 minutes or so. You can find the video here as well as my own take below.

Photo By SashaW

While the businesses that I encourage readers to start on MyWifeQuitHerJob.com are not crazy startups where you’re working 16 hour days, trying to hit a home run and earn millions and billions of dollars, there are many parallels between a lifestyle business and a venture backed startup.

In other words, many of the same traits that make a venture backed startup more likely to succeed apply to small businesses as well. Here’s my take on David and Ron’s findings.

Get A Partner

According to Ron and David, startups with multiple cofounders are far more likely to succeed than companies with just a single founder. This is a no brainer in my book. When my wife and I first started our online store, we took turns encouraging each other to push forward with the business when sales were slow or nonexistent. Running a small business is a tremendous mental and physical burden to take on by yourself. Without my wife, I probably wouldn’t have been able to stick it out long enough to experience success.

Whenever I was down about the business, my wife was upbeat, patient and encouraging. Likewise, whenever she was feeling negative, I was there to cheer her up. What’s funny is that we both got depressed about different aspects of the business. In general, I was discouraged whenever we had a bad day of sales. On the other hand, my wife became discouraged whenever we received a product return or a customer complaint. But overall, we kept each other going during the early stages of our business.

What also made us a great team was our complementary skill sets. My wife has a finance and operations background whereas I have a technical background. As a result, the lines of responsibility are drawn very clearly for the business. Whenever there’s an issue with the website or something computer related, that’s my domain. Anything related to finance or product is my wife’s area of expertise. And while we both share the marketing responsibilities for the business, we’re pretty good about not stepping on each others toes.

The other reason why things work with my wife as my partner is that we can be blunt if we need to. If I have an idea that makes absolutely no sense whatsoever, my wife will let me know. Likewise, I don’t have any problems voicing my opinion when my wife is off base.

Of course, expressing my opinion sometimes results in me sleeping on the couch for a night but in general it’s all good:) Overall, I strongly believe that finding a good, reliable partner is the way to go and will greatly increase your chances for success. Find someone who you get along with and complements your skill set

Get Some Experience Under Your Belt

There other statistic that David and Ron disclosed was that repeat entrepreneurs are far more likely to succeed than new entrepreneurs. Once again, this is a no brainer. These days, I have the utmost confidence that if my wife and I wanted to start another online store, we would definitely be successful. We learned so much from the early mistakes of our first venture that we now know what it takes to run a profitable business.

So if you want to increase your chances of success, you need to start a business now and kick start the learning curve. Just because it’s your first business doesn’t mean you are going to fail. But even if you don’t initially make as much money as you would like, you’ll learn a ton of things which will add to your foundation of knowledge.

While making mistakes is a part of entrepreneurship, I personally hate it when I feel like I’ve wasted a ton of time learning something the hard way when an expert could’ve pointed me in the right direction from the start. My time is precious which is why I’m a strong proponent of paying money for training courses and other learning materials which expedite the learning process.

In fact, I spend thousands of dollars every year on books, courses and other training materials which make me a better entrepreneur, web developer and small business owner. Whether you choose to fumble around and learn things on your own or take a training course, you should know that every minute you spend learning something new will increase your chances of business success.

It Only Gets Tougher The Longer You Wait

The last interesting tidbit from the video was that David and Ron found that younger entrepreneurs were more likely to succeed than their older counterparts. In fact, they found that 25 is the optimal age to start a successful business. While I can see why this could be true for a full blown startup company, with lifestyle businesses I strongly believe that you can start at any age and still be successful. However the longer you wait, the harder it will get.

For example if you have kids and a family, it will be more difficult to find the time to commit to your business. But in reality, it doesn’t take a large block of time to start a small ecommerce store on the side, especially if you go the dropshipping route. Consistency is the key. If you can devote just 4-5 hours per week on a regular basis, you have the necessary time to give your business a fighting chance.

So is age 25 the optimal age? Perhaps…but part of being an entrepreneur is defying the statistics. The key thing to realize is that you don’t have to swing for the fences. Unlike a venture backed startup company, you can start your business and go at your own pace and the sooner you start, the better off you’ll be.

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13 thoughts on “What Makes A Small Business More Likely To Succeed”

  1. Hi Steve,

    Very good points. It has been said over and over again, in numerous books and internet articles Ive read, that the more you fail, the more you succeed. The faster you will learn is the main thing here.

    I think in his book Rich Dad, Poor Dad, Robert points out that the education system teaches us that mistakes are bad, by way of giving us failing grades if we do poorly.

    While doing poorly on something could be a signal to give up, that really isn’t the case in most worthy endeavors.

    I do believe consistency is key as well. Ive watched my own blog rise and fall (in visitors and income) as I put more or less work into it. The good thing is that there is a very clear relation between work put in and reward at the end.

    Cheers,
    Jeremy

    1. Hey Jeremy
      I’ll have to bust out my copy of rich dad poor dad again to refresh my memory. I don’t remember agreeing with everything Kiyosaki talks about but his books are always inspriing nonetheless. As long as you are constantly learning something new and changing up your tactics, eventually something will stick. And naturally, the earlier you start, the more you will learn in your lifetime.

  2. The last point is important. We can be an entrepreneur just making $5,000 a month. We don’t have to hit a homerun. That’s just media sensationlism!

    Best, Sam

    1. Hi Sam
      The media always talks up the billion dollar startup stories because that’s what people want to hear about. But realistically, anyone can make decent money with a series of small base hits and more free time. After getting married and having children, I value my family time much more and can’t even imagine putting in 12-16 hour days ever again.

  3. MD says:

    If 25 is the optimal age then I still have two years left :).

    I do like the idea of a partner. It’s important that you have someone there to push you and hold you accountable. I wish I had a partner for Studenomics. I was supposed to launch the site with a friend. He stalled for months. One day I finally got fed up and decided to do it on my own.

    Do you have any tips for finding a partner?

    1. @MD
      Hehe, better get cracking then:) I think having a partner is important but you have to find the right one. Some people like to work with their friends but sometimes a business can get in the way of friendships and end badly. Personally, I would prefer to work with a highly motivated peer, someone who shares my same goals and interests but is someone I consider an acquaintance.

  4. It sounds like you and your wife make the perfect team. Imagine if you had both gotten down about the same things, at the same time. I guess that is why “multiple partners” makes for the best chance for success, because there is the most chance that at any given time someone will be feeling energized, whereas with single person start-ups it is certain that when one person is feeling down, the whole team is feeling down.

  5. Thanks Steve for writing another great blog article! I started my store when I was 25. The growth of my store isn’t quite as fast as I’d like it to be (I wish I had your success!), but I was still trying to finish my PhD back when I was 25 (in 2009), and now I’m still doing my day job while running my online store. All of this is kind of draining, but your blog keeps me sane with all the great perspectives and humour that you have. Thanks again!

  6. This is an excellent post. I’ve had plenty of great ideas for businesses, but always assumed it was beyond my reach. I think you’re right, Financial Samurai, a business does not have to turn into a multi-billion dollar corporation to be successful. I certainly agree with the bit about finding a good partner. It’s important to have someone there to keep you from giving up or getting behind. I’ve also heard a lot of stories about businesses coming between friends and spouses. You and your wife must really work well together! Thanks for the inspiration, Steve!

  7. Julie S says:

    Whilst I agree it’s great for some aspects of business having a partner, don’t be frightened of starting up on your own. My old (failed) business suddenly grew wings when my partner left. You are able to decide your direction and make decisions far more quickly, and drive the business with your vision alone rather than compromising. Also, unless you have clearly defined responsibilities and job descriptions you may find a partner doesn’t always have the same views you hold about who should be doing what.

  8. Rather than transforming, focus on what you are best at where you can excel at your business. Good performance leads to growth. These steps provide improved plan to empower the business. In today’s contemporary time, SMEs success have a special need for them to focus on a specific thing where they stand out of the box and brings a difference in the market. Small business ideas need not be massive but must be unique to make the difference.

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