In article two, in the Needle in the Haystack Series, I asked myself a simple question, if you want to be successful in business or become a “Haystack Needle Pro”, where do you need to start? Two ancient sayings state, “you don’t know what you don’t know” and “wisdom is knowing you don’t know”.
Most adults know they do not “know everything” about anything. But teenagers, for example, are notorious for thinking they know almost everything about life. This attitude is prevalent with them for two reasons: 1) They don’t know what they don’t know, and 2) your awareness of what you do not know develops as you are exposed to new things.
Teenagers do not know much about life, so it is easy for them to think that they can quickly master it. What if we approached the opportunity of starting a new business venture or becoming a “Haystack Needle Pro” from this “teenage” perspective? We would have to learn one of the most critical and difficult lessons. That is, accepting that we need to work to know what we need to know, in order to become successful in our endeavors.
While we may be aware that there is much to learn in life, most would-be entrepreneurs act like teenagers. They simply do not know or are unwilling to find out what work is required. Many want the prize with little work. I call it “the Las Vegas Rule”. In the casino, every time someone wins, the bell rings. Hearing the bell ring, especially the big bell, encourages everyone to put more money in the machine. Everyone who gambles, knows the odds are with the casinos, but they “go for it” anyway and lose billions. The fact is, that if the bell rang every time someone lost, the ringing in the casino would be deafening.
In the first five years, eighty percent of new businesses fail. Less than ten percent of the successful businesses produce more than $250,000 of revenue (not profit). This fact means that less than two percent of new businesses achieve any real success. Is it possible to have a successful business without a lot of work before you even start? The answer is yes. But is it probable? The answer is no!
Learning by trial and error or your own experience is a thousand times more expensive than learning from someone else’s experiences. The following is anecdotal proof: In the first five years, only five percent of startup businesses that are franchises fail compared to the eighty percent of independent startups. Most franchises generate more revenue than $250,000 and hire more than one person. A start up franchise business has a whopping 1,960 percent better chance of profitability than a typical start-up. This is in large part because a good franchise greatly reduces the number of things that you don’t know you do not know. They are able to specifically identify the relevant stumbling blocks you could face and provide tried and true solutions to prevent you from failing. If you just go for it, your chances of reaping a profit from your business is much less than playing the slot machines.
I made a decision as a college student that I wanted one day to run my own company. I decided it was safer to have an advanced degree and cheaper to learn on someone else’s dollars and time. So I pursued a doctorate degree in Chemistry. I made a discovery in my first job and received less than 1000th of what I thought it was worth. I decided that day I would be excellent in my corporate job but my goal was to gain experience and knowledge enough to start a business. I wanted a business that had a potential to produce at least $10 million in revenue.
I selected what I thought were the fundamentals of business: research and development, manufacturing, sales and marketing, strategic planning, business development, business management with profit and loss responsibility, personal development and mentorship. Over the next decade, these experiences were directed, suggested and provided by a number of mentors, including: Earl Graves, founder of Black Enterprise; Dr. Bill Guillory, nationally recognized corporate coach, and the first African-American chemistry department chairperson at the University of Utah; John Eldred, professor at Wharton Business School, and the senior VP of the multi-billion-dollar company, Rohm and Haas.
While I impatiently prepared myself for over a decade, little did I know how blessed I was to have had all these corporate experiences, the mentors, the coaches and the courses paid by the company. In addition, I had just under a million dollars in the bank which I saved during my ten years in corporate America. However, I still did not know what I did not know.
Before the new company was incorporated (Remote Source Lighting International), I made a mistake that could have ended my success. I discovered a way to use a powerful optical design tool in fiber optics. I negotiated an exclusive license with a group for a five percent royalty. After I left Rohm and Haas, they changed the terms, to owning ninety-five percent of my company for the exclusive use of the optical tool. I negotiated, but my lack of knowledge ultimately cost me forty percent of the company.
I have had a number of successes. Rohm and Haas was my first customer. In the first three years, we sold over twenty million dollars of products in twelve countries. Now, twenty-three years later, I know that learning by trial and error is hundreds of times more expensive and often fatal. Learning from someone else’s experiences is the only probable way of being successful. To harvest a great company requires sowing a great deal of time and money. Tall buildings require deep foundations. You must dig deep before you start building upward. If you are thinking about starting a new business remember the Las Vegas Rule. You have to work smart to increase the probability of a successful business.
In the coming articles, we will discuss selecting coaches, mentors, courses, consultants and partners. We will discuss topics such as determining your personal vision and business idea as well as the cost of your foundation. It is difficult to give real directions in a short article. So we have developed some guide posts. We will begin to make audio, video, and materials available online in the coming months. So email us at email@example.com and we will let you know how to access the complimentary information. Also, email us if you have a specific skill and want to become a Haystack Needle Pro.