Entrepreneurship = ‘The Trend’
In the year 2020, me and my business partner Jamie Raine ran a 3-month workshop program in collaboration with the American University of Phnom Penh, in Cambodia. The workshop topics included Digital Marketing Strategy, Management Skills, Sales Processes, etc.
Both of us had a very enriching experience throughout these sessions. As founders of a technology and media company, being in contact with the next generation of business men and women in Cambodia made us reflect about the current landscape of the business ecosystem and the ambitions of the upcoming high-skilled young professionals.
We were not surprised to find that most of the students (around 60-70%, based on surveys conducted using Zoom) that participated in the workshops, want to create their own business or have already created one.
In the past years, being an entrepreneur has become scaringly trendy in every part of the world, in part thanks to stories of success from the world’s most famous businessmen, such as Zuckerberg, Musk, etc. Cambodia has also been affected by this wave and many young professionals don’t want to work for ‘someone else’s’ company anymore. This can be a huge risk if we take into consideration average failure rates when developing a new business or startup.
Difference between a Startup and Non-startup business (source: Failory)
What is the difference between a startup and a regular new business? Well, let’s imagine you have a new tech solutions company and you build different types of software. In this case you are not by definition a startup due to the following reasons:
- There is no innovation
- Your forecasted growth is linear (↑ projects = ↑ revenue = ↑ resources needed = ↑ costs)
Let’s imagine now that, after running operations for a couple of years, you then realize that there is a specific problem in the market (e.g., HR Management) that can be solved with the use of a software product. Developing such a product would be called a startup project because it is innovative (a new solution) and scalable (acquiring users does not increase the cost of running the business linearly).
Normally, the likelihood of your tech solutions company failing is considered lower than the likelihood of launching a new software product. The reason behind this is that a new software product needs to find product-market fit, however, the potential returns are higher for this type of venture. As always, the higher the risk, the higher the potential return.
After understanding the differences between startup and non-startup projects, it will be easier to understand the failure rates that apply to each venture:
- 9 out of 10 startups fail (source: Startup Genome – the 2019 report claims 11 out of 12 fail).
New ‘Non-startup’ businesses
The Business Employment Dynamics report coming from the Bureau of Labor says:
- 20% failure rate until the end of the 1st year
- 30% failure rate until the end of the 2nd year
- 50% failure rate until the end of the 5th year
- 70% failure rate until the end of the 10th year
Starting a new company, regardless of the type, has many difficult challenges that many entrepreneurs are not able to overcome, and that is backed by data.
Creating a new business vs thinking like an entrepreneur
After discovering the reality, we can conclude that, when taking into consideration the risks of starting a new business, it is worth asking yourself: Do I have an entrepreneurial spirit? And accept that some of us are just not born with it, not everyone needs to have the wish to start a venture with a huge risk, especially when it usually implies investing all your savings and time in just ‘an aspiration’.
If the answer to the question above is yes, awesome! I wish you the best of luck.
If the answer is no, that’s also awesome! But I still encourage you to think like an entrepreneur.
Having an entrepreneurial mindset means having a way of thinking that helps you undertake and overcome challenges, take risks, innovating, being creative, not taking failure seriously and working on what you are passionate about. You can think and act like an entrepreneur while working for a company owned by someone else!
My advice is that whatever your dream is, if you want to have a winning mindset, you stay focused, take decisions and surround yourself with good people.
“If we surround ourselves with people who are successful, who are forward-moving, who are positive, who are focused on producing results, who support us, it will challenge us to be more and do more and share more. If you can surround yourself with people who will never let you settle for less than you can be, you have the greatest gift that anyone can hope for.” – Tony Robbins