For Startups…On Beating the Odds

As entrepreneurs, we tend to be a very optimistic group, ready to take on challenges and believing we can beat the odds. That said, a quick look at the statistics every now and then can be a reality check that keeps us on our toes as we prepare to develop a new product for a startup or an ongoing business.

Estimates for new product failures fluctuate from a low of 33% to a high of 90% depending on the category. Invention launches fare even worse. According to Richard Maulsby, Associate Commissioner for Innovation Development at the U.S. Patent & Trademark Office, the “odds are stacked astronomically against inventors.” Only 3,000 out of 1.5 million patents in effect (or .002%) are commercially viable.

On the business side, the average failure rate for startups is around 25% in the first year and by the third year, 44%. There is no shortage of articles and books on what separates successful small businesses from those that fail. The causes run the gamut from management- to financial- to product-related issues. Obviously, there are many contributing factors, but if we travel back to the beginning of any product-related venture, there is an individual who has what he or she believes is a good idea. From there, decisions are made, a product or service is developed, and a business is underway.

Among the sobering statistics cited, two frequently mentioned causes for small business failures are worth noting: 1.) Owners who can’t get out of their own way, and 2.) Ill-conceived products. The following tips are offered as ways to be preemptively armed against these deficiencies and increase the prospects for success.

Surround yourself with talent; your success may depend on it. As entrepreneurs, we tend to think we can do it all. Of course, we can’t and we shouldn’t. We may be good at one or more aspects of business, whether it’s management, sales, marketing, or financial planning, but certainly not all of them. On the product side, we may be a good idea generator, always coming up with creative concepts to advance the state of the art in a particular industry or to improve existing products. However, when it comes to transforming these ideas into something real, that’s the time to engage a team of talented and objective individuals with the skill sets needed to put each concept through its due diligent paces. The quality of the team we choose can affect the outcome.

It takes a team to innovate. None of the product ideas I originally proposed ever got into the marketplace exactly as envisioned, and that was a good thing. Letting go was not always easy, but success was the reward for getting out of the way, listening as the team weighed in, and allowing the process to unfold. Either the idea was determined to be commercially viable, it needed to morph into something else, or it got shelved. The products that did well did so because a team of professionals with diverse talents contributed to the development process. It took the input, perspectives, and the collective wisdom of the group to succeed.

 Fortunately, we are not statistics but individuals capable of determining our own destiny, of learning lessons over time and with experience, and becoming more enlightened through collaborations that result in informed decisions. The challenges associated with innovation are many and varied, but we are entrepreneurs, and we can beat the odds.  

© 2013, Elizabeth Pierotti

The Inventing Life

www.theinventinglife.com

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