One can walk into any pub, in any town, anywhere in Australia and find a good business idea. These business ideas usually spill out of people who consider themselves “ideas people”. Interestingly, we are yet to find any of these “ideas people” in the hall of fame for business entrepreneurs.
Unfortunately, a good business idea rarely leads to fortune. Many inventers are buried in a pauper’s grave.
We read many statistics in relation to new businesses. Twenty percent of business survive the first year of business. At the end of five years, they say that forty eight percent of those twenty percent have also disappeared! Therefore, one in ten businesses only succeed in the first five years. After ten years, the percentage is as low as one percent. In simple terms, survival rates for businesses are low.
If businesses were animals, we would have a royal commission regarding their extinction rates.
Nonetheless, what is clear to see for everyone, is that success in business is limited to a few. There should be a reward for those who reach the ten-year mark.
One of the reasons for early failure is the cost of setting up the business. We hear stories of people mortgaging their homes, spending their last few dollars and living in cars, whilst investing in their new business concept. Often, notwithstanding how good their product is, their money runs out before success arrives.
The advice that Leverage’s offers to anyone starting out, is to:
• Not spend money unnecessarily on professionals building a structure. Start making money, and if you then make money, use that money to hire the professionals to set up corporate structures which make you tax efficient, saleable, valuable and profitable;• Not throw away a job for the dream of working for yourself. Gradually leave the work force to become a business owner. This ensures that the important things in life are still maintained; food, shelter, family and relationships. It is no worth being a millionaire, alone!
If you have an idea, start it in a disciplined manner, don’t dream!
This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.
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