There’s a pretty simple rule of thumb for starting a new business, but most people don’t take it seriously.
The rule is this: No matter how good an idea is, how connected the entrepreneur is, or how hot the market is, a new business will take three years to five years to get going to something close to full speed.
By nature, entrepreneurs don’t believe this rule until they experience it firsthand, so it’s not uncommon for reasonable people to think they’ll beat the curve. But the reality is that it just doesn’t happen very often – not even with sliced bread, seemingly the greatest thing on the planet.
Even if you still think your idea is the greatest thing since then, let’s look at reality. The first sliced bread machine was built in Davenport, Iowa, in 1912. When was it successfully commercialized? Only 16 years later! Yes, sliced bread is a great idea, and the inventor didn’t make money for almost two decades. It takes time.
Here is the upshot of this rule. Let’s say that you are working for someone else, and you get an idea to start your own business. If you quit your job and put all of your effort into your new venture, you should fully expect an all-out struggle for at least the next three years. I have seen many businesses fail because the entrepreneur expects to get going faster and doesn’t plan for limited income during this startup period.
Before you ditch your comfy job to pursue a dream with one month’s income in the bank and a load of personal debt, remember that it really doesn’t matter how much experience entrepreneurs have under their belts. I have seen entrepreneurs who have started multiple businesses go into new businesses and take the full five years to accelerate. It even catches them off-guard because they had gotten so used to success.
There are a lot of reasons it can take so long to reach full speed with a new company. Businesses are complicated. All of the pieces must be in place for them to work at peak efficiency. The brand must be established. The company must have a clear message – and a great product – for its customers. All systems need to be in place.
Starting a business means investing time and effort into a series of assets that will become absolutely critical. It means establishing solid relationships that are based on actual collaboration rather than on potential. It means making some mistakes, learning from them and doing things better.
In case you are wondering, I certainly did not beat the three-to-five-year curve. In the fourth year of my business, I could really see how all of my work was starting to add up. I would close a new client and look back at how it happened, which is basically due to a solid set of assets, including a clear product, testimonials and being established as a business owner in the community.
Perhaps most importantly, I negotiated the contract without seeming too hungry. I was really looking for a good match based on my experience.
Without these assets, my new client relationship would have been significantly handicapped. I wouldn’t have met the clients, or if I had met them for some reason, they would have had no clue who I was and wouldn’t have discovered my reputation if they looked for it. I wouldn’t have had a clear product or the professional marketing materials to share. I certainly wouldn’t have had any war stories to tell. I wouldn’t have landed that client.
The three-to-five-year rule is applicable across multiple industries. I’ve seen veteran business owners go into the retail business with some genius marketing. They draw clients very quickly and know how to run the business. Still, it is the details that keep them from getting to full speed. They start off without a client list so they can’t reach out to their customers. They struggle with finding the right products and controlling their costs. They struggle with hiring employees. The new business smell wears off and the owner must find ways to convert customers from saying, “Let’s go look at the new shop,” to say, “This is my favorite place.” It’s hard, and it simply takes time.
Do you have the time and resources to make it work?
Don Harkey is a professional speaker and entrepreneur who owns Galt Consulting and co-owns Leadership Book of the Month in Springfield. This column originally was published at www.ezinearticles.com. Harkey works with organizations to employ strategic systems that allow them to be more effective and find renewed passion and productivity. He can be reached at donharkey@galtconsulting.com.[[In-content Ad]]
