It is the American dream to start a business, achieve growth with that business, and possibly someday pass it along to children or sell it for a profit. In the article, Boomers Can’t Retire, it was explained how some entrepreneurs have found that they are unable to retire. The American dream may not be as easily attainable as some may think. The Wall Street Journal article, Venture Capital’s Secret: 3 out of 4 Start Ups Fail, listed some unfavorable start-up statistics:
- 75% of venture-backed US firms don’t return capital investment
- Around 30% of start-ups fail completely – 95% if the definition of failure is projected return
- Nonventure-backed companies fail more than venture-backed
- 60% of start-ups make it three years and 35% make it ten
Author and Professor at Harvard Business School, Noam Wasserman, has some advice for future entrepreneurs in his book The Founder’s Dilemmas: Anticipating and Avoiding Pitfalls That Can Sink a Startup. In his book, Wasserman explains, “Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin.”
The new entrepreneur must consider problems they may encounter with people, as well as possible pitfalls he or she may encounter down the road. By having foresight, the new entrepreneur can learn to be proactive to change.