There are numerous studies which state that 8 out 10 entrepreneurs who start a business fail within the first 18 months. Bloomberg for example makes this case – meaning 80% of these businesses are toast within a year and a half.
There are numerous reasons why this happens. When asked, many of these entrepreneurs will say they ran out of money. Although in fact this may be true, my thought is there were a few things which happened earlier which might have changed the outcome.
A question one of my coaching clients might be asked at some point by me: “What amount of money would you like to set this year or next year as your target?” More often than not an answer might be something along the lines of: “One million dollars!” My response is: “Okay, great, by the way how much is the most you have ever made in any one year in your entire lifetime?” The silence is deafening! Allow me to re-phrase the question: “Have you ever earned over six figures in your own business of any type ever before?” For many there is still silence. A few might say once or twice they have achieved it.
My next question is: “Would you consider a more realistic or achievable target of possibly 50% more than your best one year total ever working in your own business instead?” The point of this conversation is to not allow the thought of a near term unachievable goal become the driving force behind the operation. It is not my intent to become a dream killer. It is to allow the dream to become a reality.
If the “One Million Dollar” mark has to be there then let’s move the target date to achieve that type of number out a few years so it becomes a more realistic and achievable goal. A sure way to doom the enthusiasm of an entrepreneur and their team is to set the bar so high they will have absolutely no chance of hitting it.
In a world where everything is able to be measured and reported rapidly and easily, it would become quite obvious to everyone, unless the business was a miracle business opportunity, that the far reaching unrealistic expectation would never be achieved. It is far wiser to select a stretch goal with a bit of wonder and fear attached to it which would still be attainable than to set an unreachable goal. The entrepreneur and their team would be able to see the results moving toward the goal and potentially shift one or two things along the way to improve results in order to achieve the goal. This is how momentum and a driving spirit are created and maintained. This is one item to consider early on in setting up your business and revisit at least once each year.
Mitch Tublin is a business consultant, advanced certified personal and executive coach and a professional speaker based in Stamford, CT.
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Mitch, great article. I agree that having reasonable goals is important and we don’t want to doom someone for failure by setting goals too high. I think it’s a delicate balance between helping biz owners set reasonable goals and making them stretch goals to motivate them.
Mitch I particularly like your statement about revisiting your strategic goals as an entrepreneur at least once a year. My other thought is that being in business for oneself gives you the toughest boss you’ll ever have (certainly in my case that’s true!)
Long time ago I heard David Neagle ask someone “why do you just knee-jerk reaction say you want a million dollars? Why do you even need that?” If there is no substance behind the number it is meaningless and has no energy so therefore no one will actually work toward it. It’s a pipe dream.