9 out of 10 Companies Fail
I read these kinds of statistics a lot, and I think they skew the truth a little. I’ve been paycheck-free and running our company for 8 years, but the journey has been anything but linear, and we could have shut down the company a couple times to start new ones… So let me explain why the stats might not tell the whole story.
My business partner and I started our company to build streaming music players in the early years. They were pieces of hardware, similar to an Apple TV, that you would plug speakers into and stream music from the internet (this was pretty cool stuff in 2007). Shortly thereafter, we shifted to custom software because we realized that streaming music players were cool and fun, but we had no idea how to build hardware and sell it.
SIDE NOTE: good thing, too. Logitech released pretty much what we were trying to build 2 months later. We quickly realized that nobody in their right mind would pay for a more expensive and crappier player from us :)
After our short stint with the fantasy business, we started building business applications for small companies needing custom functionality. So we would build custom software applications that replaced spread sheets or automated some specific work flow that made things run efficiently for the company. It took us quite a while to find the right pricing for our services, and to find the people that needed our services, but after a few years were were doing ok.
We hired a couple employees and started bringing in some money, and things got more stressful. We had to constantly justify the fees we charged because software automation all happens behind the scenes. Most people don’t see the difference between complicated stuff and easy stuff. We also had to keep our employees busy, which meant that we took on any kind of work that came along. This was a long way off from the fun and exciting projects we had envisioned when shifting to software development.
It sucked.
So we burned it all to the ground and started again. We had one client that was doing something we could get excited about, so we kept him. We became “too busy” for all of our other clients and let our employees go. One good client does not keep a 4-person team busy (despite what we told the others).
We spent way too much time trying to build great things for this one client and a couple like him after. We borrowed money to pay our meager salaries, and struggled to find enough business to keep us afloat. We ditched our office space for temporary accommodations to save money (although this turned out to be awesome).
We didn’t realize the the extent of our decision to burn it to the ground, which we talked about in a joking kind of way initially. We had really killed our custom software company and started a brand new one.
We’re now on our third “company”, and it’s working out fantastically. We build the types of things originally envisioned for great clients. Our company name is Boundless Automation, which we shortened to BOUNDLESS most recently to drop the connotations of hardware and industrial-type stuff. However, if we did not have such a flexible name (like “MusicStream” or “Business Logic Inc.”), we would have closed those companies and started new ones for our new ventures.
To the point! — finally (this quick comment turned long-winded quickly)
The point is that just in my personal scope, survival could be expressed like the following two statistics:
Stat #1: Out of 3 companies surveyed, 66% of them fail.
Even though this is also true:
Stat #2: Out of 3 companies surveyed, 100% of people starting a business succeed for at least 8 years without going back to a regular paycheck.
So, I’m not sure what the equivalent statistic for #2 above would be if it were applied to the entire US. Something to consider, though! If you’re still reading, you might find these two articles on point with the original article published by Mandela Schumacher-Hodge:
Weeding Out The Fluff: Your Startup’s Core Purpose
Have fun and { create : awesome }
I own a small company called BOUNDLESS. We help entrepreneurs build apps and launch their startups — http://getboundless.com
