Of all the businesses started just 10 years ago, only one-third are still in existence. That’s according to data from the Bureau of Labor Statistics. One in five startups fail in their first year. Agriculture and forestry businesses survive the longest (but only half were in operation 10 years later), and a quarter of mining, oil and gas firms made it that far. The bottom line is that a whopping number of new businesses – about 66% – go out of business within a decade.
Why do so many businesses fail? Of course, there’s not just one reason.
Some people start a business without enough capital. Others find the time required to be too much of a stressor on their personal lives. Some do it too early in their careers and lack experience. Others say the passion was missing, or the market was bad, or the economy went south. More than a few don’t understand how to read a financial statement. All of these reasons are legitimate. But in my experience, there’s something that surpasses them all, and if you want to really understand what that something is, then look no further than David Pelayo.
Pelayo is an eBay reseller who also helps others become eBay resellers. Recently, he posted this video explaining the typical day in the life of an eBay reseller. If you want to run a business, you should watch it. Why? Because it’s boring.
Pelayo videos himself retrieving orders and messages from his site. Then you see him going into his vast warehouse to start pulling orders of shoes and shirts and other boring things. Then you see him methodically printing out shipping tickets and attaching them to packages and boxes. After that, he’s loading the boxes in his car and taking them to the post office. Still with me or have you fallen asleep?
When done, he goes to a thrift shop in search of more used clothing, shoes and electronics to buy and resell. Then he spends the rest of the day taking photos of his purchases to post on his site. Pelayo basically buys other people’s junk in one place and then resells it to people located somewhere else. It’s boring. Good for him.
I don’t personally know Pelayo and I don’t know where he got the money to start this business. I don’t know how profitable his business is. But here’s what I do know: he works hard. And it’s not easy. The guy starts his day early and ends late. His business isn’t sexy or cool or changing the world. This is the reality of running a small business: it’s boring and it’s a lot of work. And a lot of headaches.
I have a good friend who was a school teacher for a number of years and then started up a non-profit in the education space. He sometimes jokes that he “started this business as a Democrat and is now becoming a Republican”. Unlike Pelayo, he has a dozen employees, all of whom come demanding health benefits, retirement plans and the right to work from home. His insurance bill went up 15% last year. He spends more on his attorney and accountant than on supplies. And he’s competing with countless other non-profits that are battling for donations in his space.
My advice when people ask me about starting a business? I say don’t, unless you are really ready to leave your corporate job and face a cold, harsh, uncaring world.
But if you’re a masochist and you still want take the entrepreneurial plunge – despite the high odds of failure – then do it the right way: buy an existing business. Hire the owner to make them stay on for two years. Take something that’s already been built and has a customer base, employees and an infrastructure and turn it into your own thing. This at least gives you a head start. But it doesn’t guarantee success. Like Pelayo, you’re still going to be getting up early and staying late and dealing with boring bullshit all day long. If you go into business ownership with that attitude, you’ll probably last more than 10 years.
