When you think of a successful startup, revolutionary companies like Apple, Facebook and Google come to mind: companies that have changed the world as we know it, led by geniuses like Steve Jobs, Mark Zuckerberg and Larry Page. Most of us forget about the hundreds of thousands of businesses that swung for the fences and failed. In fact, one-quarter of all startups fail within their first year, and 71 percent fail by their 10th year. However, there are also hundreds of thousands of small businesses are that very successful, but don’t share the limelight with the likes of Google and Apple.
Don Fornes, CEO of Software Advice, recently shared his thoughts on why boring businesses have a better chance of being successful. For starters, he thinks that boring industries are less likely to be home to fierce competitors like Zuckerberg, Page and Jobs. Keeping a low profile and embracing being boring can pay off–but whether you decide to follow this path will depend on the kind of entrepreneur you want to be.
Here is summary of Fornes’ thoughts on why entrepreneurs might have more success keeping a low profile in lieu of shooting for the stars:
Shooting for the Stars
Many entrepreneurs have a passion to change the world, or the desire to be a cutting-edge innovator with a product that’s a household name. Others want to be famous, like Steve Jobs, and have billionaire wealth. Society needs these types of entrepreneurs, and Fornes encourages them to go out and start the next Apple.
The “shooting for the stars” mentality is driven by the venture capital community, which is constantly looking for the next big startup with the ability to change the world. Venture capitalists are willing to invest in these risky businesses because they only need one Facebook or Google to be extremely successful. Their diverse portfolio strategy helps them come out ahead, and absorb the losses from all the startups that didn’t make it.
For entrepreneurs, however, the repercussions are much greater. Most entrepreneurs don’t have the necessary capital to make gambles–they invest everything into their one dream company. If you are motivated by fame and fortune, Fornes encourages you to follow your passion, but if you’re not, there is a great alternative.
Keeping a low profile
For entrepreneurs not driven by billionaire fortune and fame, keeping a low profile might be a great strategy. Many entrepreneurs are driven by simply being their own boss, leading a team, defining a company culture or just having a sense of ownership. Maybe you want to make very good money, but you don’t have the desire to have more wealth than entire nations. Maybe you don’t consider yourself a revolutionary thinker. Maybe you just don’t like reporting to other people, and you enjoy controlling your own destiny.
Keeping a low profile also makes it easier to be profitable: you can increase your chances of success, even though the ultimate payday is smaller in size. For example, a 50 percent chance of making $100 and a 5 percent chance of making $1000 both leave you with a $50 payout.
Being a “boring” entrepreneur also makes it easier to bootstrap your company, because you can build your business with debt. And once your debt is paid off, the business is truly yours. When you seek out venture capital funding, on the other hand (as is necessary in most high-tech markets), the investors will always take a high percentage of ownership in your company–and they’ll make their money back long before you receive anything.
Embracing boring pays off
In the early 1980s, a Harvard Business School graduate pioneered the “search fund” model: buying a business, running it successfully and then selling it. This strategy is a perfect example of a smart individual deciding to go down the boring path, and seeing great financial success as a result. By buying a boring business and bringing high-level execution, strategy, management and talent to it, you are more likely to have a long and successful career than the entrepreneurs who are struggling to to start the next Google.
You can be a millionaire too
Becoming a boring entrepreneur might not make you the next Mark Zuckerberg, but it does have the power to make you very financially successful. In fact, the number of millionaires in the US is close to 9 million, and is projected to reach around 17 million by the year 2017. Two-thirds of these millionaires are self-employed entrepreneurs. These entrepreneurs don’t all run the Googles of the world; rather, the majority have become financially successful in boring industries such as farming, construction, welding, or owning mobile-home parks and gas stations.
Not everyone has the creative genius to be the next Steve Jobs, but many boring entrepreneurs are still great at their jobs. They are organized, diligent and give it their all every day.
So if you are not trying to go head-to-head with Zuckerberg and Page, all you need is a solid business model, and to be diligent and make well-thought out decisions. If you enjoy leading a team, hiring people, and controlling your own destiny, boring might be great for you.
Report provided by Robert Bellovin, Media Relations at Software Advice.