Ohn all the companies created just 10 years ago, only a third still exist. It is according to the data of the Bureau of Labor Statistics. One in five startups fail in their first year. Agricultural and forestry companies survive the longest (but only half were in business ten years later), and a quarter of mining and oil and gas companies made it that far. Ultimately, a considerable number of new businesses – around 66% – go bankrupt within a decade.
Why do so many businesses fail? Of course, there isn’t just one reason.
Some people start a business without enough capital. Others find the time required too stressful in their personal lives. Some do it too early in their career and lack experience. Others say the passion was lacking, the market was bad, or the economy took a turn for the worse. Many don’t understand how to read a financial statement. All of these reasons are legitimate. But in my experience, there is something that tops them all, and if you really want to understand what that something is, look no further than David Pelayo.
Pelayo is a eBay Reseller which 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 monitor it. For what? Because it’s boring.
Pelayo films himself collecting orders and messages on his site. Then you see him enter his vast warehouse to start placing orders for shoes, shirts, and other boring things. Then you see him methodically print out shipping tickets and attach them to packages and boxes. He then loads the boxes into his car and takes them to the post office. Still with me or did you fall asleep?
Once finished, he goes to a thrift store looking for used clothes, shoes and electronics to buy and resell. Then he spends the rest of the day taking photos of his purchases to publish them on his site. Pelayo essentially buys other people’s waste in one location and then sells it to people elsewhere. It’s boring. Good for him.
I don’t know Pelayo personally 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 know: He works hard. And it’s not easy. The guy starts his day early and finishes late. His activity is neither sexy, nor cool, nor changing the world. That’s the reality of running a small business: it’s boring and it takes a lot of work. And a lot of headaches.
I have a good friend who was a school teacher for several years and then started an education nonprofit. 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 are demanding health benefits, retirement plans and the right to work from home. His insurance bill increased by 15% last year. He spends more on his lawyer and accountant than on his supplies. And it competes with countless other nonprofits fighting for donations in its space.
My advice when people ask me about starting a business? I say no, unless you are truly ready to quit your corporate job and face a cold, harsh, uncaring world.
But if you are a masochist and still want to pursue entrepreneurship – despite the high risks of failure – then do it the right way: buy an existing business. Hire the owner to stay for two years. Take something that has already been built and has a customer base, employees and infrastructure and turn it into your own business. This at least gives you a head start. But this does not guarantee success. Like Pelayo, you’re still going to get up early, stay late, and deal with boring shit all day. If you go into building a business with this attitude, you’ll probably last 10+ years.