I attended the two-day International Entrepreneurship Forum this week, which was held here in Bahrain. It was sponsored by Tamkeen, who are really putting a lot of effort into supporting the Bahrain business/entrepreneurial community. I can’t really say it was amazing, as it was run by academics, pretty much for academics. But still, to give credit where credit is due, Tamkeen does try and the Tamkeen team that worked there did a good job.
For me the talk that stood out the most was by a reserved British lecturer, Prof. David Storey, who – as I understand it – did a study of start ups with or for the Organisation for Economic Co-operation and Development (OECD).
What I found surprising was that I agreed with everything he said 100%, and I usually disagree with academics 100%, especially when they start to pontificate about entrepreneurship. A topic they don’t really know about, living in their ivory towers. But this really resonated with me, as I’ve lived through most of it. Here are some of the points he raised:
- A firm is three times more likely to contract than expand
- 60% of new firms cease to trade in 5 years
- Sales and profits fluctuate massively in the same firm in the short, medium and long run
- Fast growth firms over a long period of time are very rare (but important)
- Only 6% of the Cambridge high tech firm he studied grew year-on-year. Most did not have straight growth lines.
A few more interesting factoids:
Good businesses often don’t survive
Business survival reflects access to resources, alternate employment options and interpretations of “signals.” What I think is meant by “signals” is spotting market trends or general changes in time to react to them.
Medium term growth if very rarely linear
That is certainly what I experienced. I believe it 100%.
Venture Capital (VC) funds make [almost all] their money from 15% of the firms even after all their “due diligence”
Two more points I want to add from his presentation:
– You can do the “right” things and fail.
– You can do the wrong things and succeed.
Professor Storey compared starting a business to gambling. He said that you might think you have the perfect system to “beat” the roulette wheel, but at the end of the day it’s still a game of chance.
I think the roulette wheel analogy is a bit extreme, but I agree that entrepreneurship (pretty much like investing in general) is a game of odds. If you do everything “right” – the right marketing, the right systems, the great customer service etc. – you can still not make it, but at least you’ve stacked the odds more in your favour. Make sense?
Some thoughts on luck
So from the above, it’s fairly obvious that luck has something to do with your success – BUT I think that entrepreneurs make and attract their own luck. There’s a saying by Benjamin Franklin (sometimes wrongly attributed to the bible) “God helps those who help themselves”, so if you are proactive, work hard and don’t have a victim mentality then you are likely to attract good luck. I think that 80% of a business or entrepreneur’s success is his efforts, and 20% is down to luck. That 20% might screw you over, or it might give you that added, unexpected boost.
If you’re a wannabe or budding entrepreneur, don’t let the above facts scare you. Hey, you only live once, right? Even if you fail, at least you get to say that you tried it, which most people are too afraid to do.
Talk to you soon.