Everybody knows the statistics:  Startups fail at a staggering rate.  An SBA study a decade ago indicated that 50% of small business startups fail within 4 years.    I’ve heard other numbers, but it’s a pretty dismal outlook.

I was interested, then, to run across today’s report from FranNet entitled Survey Data Show 91 Percent Success Rate for FranNet-aided Franchises. That’s 91% survival in two years, versus 64% for the broader population of startups.

I’m not promoting FranNet in particular, but it’s an instruction for how to enter a new business.  They have some good practices that we can all learn from.

  1. It can be easier to take on a franchise than start out a new business from scratch.  If it’s a well-founded company, then you’re getting a business model that’s pretty well debugged.  Not foolproof, mind you, nothing is.  But a system that has successfully worked in other locations.
  2. Goal alignment matters, and this is one thing that FranNet does pretty well.  They match up your needs and goals for a business with the various franchise opportunities out there in the market, and they have some reasonably rigorous processes for determining which might be right for you.  I see a lot of people who go out there and sign up for franchises or MLMs who are entranced with the product or visions of dollar signs, but who don’t spend much attention on whether they’ll be satisfied with being the business owner and all that implies.
  3. Do the numbers.  I’m shocked sometimes at how many people have started up businesses with only the vaguest understanding of how much money they’ll burn through before they start making a profit.  I’ve even seen quite a few that could never make a profit at ANY size, until we take on some of the deeper structural issues.
  4. Get some support.  As a new business owner, many fall into the entrepreneurial dream.  You’re the white knight on the golden stallion, forging off to fix the world.  But because that superhero is smarter than everyone else, he certainly doesn’t have to ask for help.  Well, a business is hard work.  Suck up your pride and surround yourself with smart people who will ask the tough questions and help you make progress.  Otherwise, in a few years, there’s a disturbing chance that your business will fail.  Sorry, but it’s the honest truth.

As a reminder, you might want to go back and look at what I recommended about having a business plan!