Last week and the week before, contributors to this column, Steve Gibson and Robert Wood, discussed two of six basic but vital business concepts. Being aware of these six critical factors or concepts, and building a business based on them, can dramatically improve the probability that the business will succeed and even have high growth and profit potential.
Being unaware of all six of these factors or ignoring any of them as you build your business and as it grows and develops often results in flaws in the venture. These flaws will usually result in a failed business, or at least one that does not reach the potential that was dreamed of by the entrepreneur and his or her backers. Time and money are often wasted, and lives and relationships are permanently changed when a business venture "does not work out."Studies have indicated that between 50 and 80 percent of all new businesses do not survive. Those are venturing "facts of life." In any other area of our lives, that kind of a failure rate would not be ac-cep-ta-ble.
Imagine going to a new car dealer and being told that, yes, you can buy a new automobile, but there is somewhere between a 50 and 80 percent chance that it won't work. Imagine being told by your doctor that, yes, you can have a child born to your family, but there is between a 50 and 80 percent chance that it will not survive. What would your reaction be to these "facts of life"? You would be outraged. They would be totally unac-cep-table.
Yet in new business formation, these percentages do represent the venturing "facts of life," and they come at great cost. In fact, a quick calculation of small-business census data shows that if we could keep only 2 percent more businesses operating in the economy, we could double the jobs created in only 10 years, instead of taking the 25 years it has most recently taken. In a time of corporate and government downsizing and general transformation in our economy, that small percentage change could have a positive economic effect on the lives of many individuals and families.
These are the some of the facts that inspired Ronald K. Mitchell, professor of entrepreneurship and frequent contributor to this column, to essentially declare war on the unproductive failure of new businesses. Just as advances in medical research reduced the mortality rate of infants and lengthened the life expectancy of adults, so advances in entrepreneurship research can result in the knowledge stricture and technology necessary to reduce new venture failure rates and extend and improve the productive life of valuable businesses.
In a free-enterprise economy, the market acts as the engine of an ecological system where "fit" organizations survive, and where the "unfit" do not. Some ventures succeed, while others fail. This phenomenon suggests that there may be systematic differences between the ventures that the market "selects for," and those ventures that the market "selects against." Mitchell's research has resulted in a systematic approach to building a business, a technology of entrepreneurship, which tilts the odds of success favorably. His objective is to maximize the probability that your venture will be "selected for" in the marketplace.
This innovative entrepreneurship technology will be discussed at a one-day seminar on June 14 at Utah Valley State College. The title of the seminar is "Six Secrets to High Potential Business Ventures," and the objective of the training will be to transfer to the attendees the knowledge and technology to evaluate, advise and build high potential business ven-tures.
The training reviews in detail the six critical factors, trains you to use the New Venture Tem-plate , a computerized diagnostic management tool that detects these success factors in a business venture, and provides guidelines to evaluate and enhance these factors in a new or existing business. It provides a unique tool for entrepreneurs, business advisers (CPE credit for CPAs), investors and managers to evaluate and structure any given business venture in terms of the six critical factors for high potential business ventures.
Wayne Roberts Beeson is director of the New Venture Institute. For additional information on this training, please call the Institute information line, 1-800-259-0559 or the Small Business Development Center at UVSC, 801-222-8230.