Last year, the U.S. gave birth to over half a million new firms. Equally telling, nearly the same number of firms closed their doors in the same period. What this means is that however much we glorify and obsess over success in the workplace, the notion of failure must go hand in hand with it. And in each of these triumphs and tragedies are lessons that would benefit the next person to reach for the brass ring.
One of the crucial lessons is also one of the least obvious: “Success” in the small-business world isn’t always defined by the obvious standards — such as making the most money, getting big fast or even staying in the same type of business. There are more-subtle payoffs, including lifestyle choices and the karmic satisfaction of pursuing a dream — even if it ultimately doesn’t pan out. Interestingly, more than a quarter of small-business owners surveyed believed they were “successful” when they closed, according to a Small Business Administration Office of Advocacy report released last year.
On a practical level, the reasons some businesses stay open and others don’t can vary dramatically. But one study from the SBA suggests some common troubles, at least among those who file for bankruptcy. Highest on their list of woes: outside business conditions, such as higher rent or insurance premiums, new competition or declining real-estate values. Among other factors cited were problems with the Internal Revenue Service, loss of financing, creditor disputes, and personal troubles of the owner, such as illness or divorce.
While these are problems that can plague any size firm, “for small businesses, there is simply less margin for error,” says Dave Anderson, a leadership consultant in Agoura Hills, Calif., and recent author of “Up Your Business.”
However, at the end of the day, he suggests, the most important distinction between those who fail and succeed lies in the DNA of the original brainstorm. “To borrow a phrase: It’s the idea, stupid,” Mr. Hall says. “Did you have an idea that’s meaningfully unique?” He believes the most thriving entrepreneurs are the so-called American dreamers — the ones who see a void in American commerce and try to address it rather than haphazardly chasing any inspiration. For instance, the guy who can’t find a printer cartridge on a weekend and is moved to open an office-supply store; or the entrepreneur who goes to a dirty theme park and decides he can do better. That, Mr. Hall suggests, is where the Staples and Disneys of the world originate.
“Money isn’t the ultimate measure of their success” in the beginning, he says. “It’s the fulfillment of their goal.”