Successful entrepreneurs: busting the myth of overnight success
You’ve probably heard about overnight success stories and would like to mimic their path. But, although lightning fast success can happen, it’s not common – and you’re probably setting yourself up for disappointment (and failure, unfortunately) if that’s what you expect. Here’s context.
FastCompany.com lists some examples of overnight successes that weren’t:
- Angry Birds, the successful game, was software maker Rovio’s 52nd attempt in eight years of trying – an effort that nearly led them to bankruptcy
- James Dyson created 5,126 prototypes of his vacuum cleaner before finding success with #5,127
- WD-40 lubricant got his name because it took 40 tries to get it right, and stands for “Water Displacement – 40th Attempt”
Entrepreneurs Club Radio shares another example. It took Jason Sullivan ten years to develop his product – an “OnStar”-like product for your wrist with a 911 panic button, GPS system and cell phone, all in one – and that’s before he started to search for funding.
More realistic route: patience and persistence
“Patience, persistence and perspiration make an unbeatable combination for success.” (Napoleon Hill, 20th-century author who often wrote about success)
“The three most important traits of an entrepreneur are persistence, drive and patience.” (Stephanie Jadotte, participant in the MP Star Financial entrepreneurship survey)
Two thoughts by MP Star Financial:
- Patience and persistence: now, that makes sense!
- The need for entrepreneurial persistence never goes away. How long, though, does an entrepreneur need to be patient before being profitable?
To answer point #2, we took a look around the web to find out a reasonable pace for success in today’s business climate, that sweet spot of profitability that requires both persistence and patience.
Timeline of profitability
According to Quickbooks.Intuit.com, what we’re asking is in fact the burning question for new entrepreneurs. They write, “How long will it take for my business to become profitable? It’s quite possibly the most common question new business owners ask. After all, many leave well-paying jobs to set out on their own, and it only makes sense that they want to know when their risk will pay off. But, unfortunately, the answer isn’t always cut and dried.”
Although this article can’t give you the magic bullet answer (nor can any other article, for that matter), the writer describes two types of profitability, with the second one being the goal (and side comments made by MP Star Financial):
- ramen profitability: barely making enough for the owner’s small salary and living expenses (not to be confused with ramen-noodles profitability, which is making only enough to eat ramen noodles every meal, but much the same concept)
- corporate profitability: after salaries and expenses are paid, capital remains (without having to eat ramen noodles every meal)
The article shares important information about break-even analyses, to help you monitor a key step in the growth of a business. More specifically, “Once your business begins to break even every month, you can stop infusing it with personal cash because the business has begun to pay for itself. This is the first step on the road to profitability, and it’s important because, after reaching this milestone, every dollar earned will be considered profit.”
Forbes.com writer hazards an estimate
We did find one brave soul willing to say that, on average in his industry, “it takes 5-7 years to build a company of any significance. And typically even longer than that to build a sustainable, independent public company.” That’s Michael Skok in May 2013’s article, As A Budding Entrepreneur, Where Do You Start? and the industry he’s referring to is entrepreneurial coaching and training.
Skok adds the following: “So, while I hope you’ll find a breakthrough to prove those averages wrong, be compassionate with yourself if you find it’s taking longer and proving harder than you thought . . . Some of our greatest investments took longer and traveled more tortuous and twisted paths than we could ever have imagined but then ended up being bigger successes than we ever thought possible. If you can just get back in the flow and enjoy the ride, you may never want it to end and that’s the basis to build something really enduring.”
More points of view
Although we’re quoting next from an article intended for a franchisee audience, it contains an important truth for any business owner and that is, “How fast you reach profitability can also be affected by your personal growth objectives.”
The article lists three options on how entrepreneurs can use money brought into the business:
- First, they can take it home as owner’s profit.
- Second, they can pay down debt.
- Finally, they can invest in future growth.
“As an owner, you have to choose. Some owners really want to see a quick profit. As a result, these owners will take the first dollar out of the business as soon as they can. They are achieving a fast break even but they are sacrificing longer term growth. On the other hand, if you are focused on growth and scale, you will forego early profit to achieve your longer term goal of building a bigger business. This will force a longer road to profit.”
Beth Kuhal in Money.USNews.com also agrees that success comes through a combination of patience and persistence – and she adds that discernment is key. “. . . we admire people who have achieved long, happy marriages and overcome difficulties in life, and [that’s] why we esteem businesses that have shown sustainability through difficult economic times. Those individuals and companies have patience and persist even when it doesn’t appear that success is guaranteed. They teach everyone there is value in not expecting immediate results or instant happiness. Some things are worth holding on and waiting for. Discernment is knowing which ones are worth it.”
Are cash flow problems holding back your success? Apply for invoice factoring online at MP Star Financial now.