This question has been on my mind a lot lately: Why have startups become so sexy? I definitely get it to a certain extent (I'll get to that later), but I wonder... What is wrong with just trying to start and grow a sustainable business? Below are my thoughts on why you may or may not want to attempt the startup game.
Why Startups Are Sexy
There are a few reasons that I think that startups are sexy and appealing:
- The chance to do something to change the world. The Internet changed the world. Google changed the way that people search. Uber disrupted the transportation industry in a way that nobody thought possible. We all want to change the world for the better.
- Make your mark on the world. The reality is that when we are gone physically from the earth, we want to be remembered. People naturally want to be liked and remembered. Startups allow their founders to make their mark on history and be remembered for something great.
- Future opportunities. Founders and employees of successful startups can look forward to great opportunities in the future. Part of having a successful startup is the doors that opened for you in the business world and the strengthening of your personal reputation in the startup community. C-level employees of successful startups get respect, introductions to other successful entrepreneurs, big-time job offers, and numerous board member requests as well as investment opportunities.
Issues With Startups and An Alternative
Low Success Rate
Startups have a notoriously low success rate. According to Neil Patel's article in Forbes, nearly 90% of startups fail. This failure rate begs the questions: Why the heck would anyone want to found a startup? Are there low competition levels and barriers to entry?
Brutally Competitive
If you think there is low competition in the startup space, then you are wrong. Even if you identify a new market niche that has not yet been exploited, don't worry because the competition won't be very far behind.
Additionally, there are some big fish out there with whom you get to compete. Like Mr. Wonderful says on Shark Tank, "What's keeping the big guys from coming in and squashing you like the cockroach that you are?" Usually the answer is nothing; but is it worth their time and effort yet?
If you do get some traction in the market, you will most likely need a good amount of funding to even think about competing and becoming a market leader. Looking for funding that works for you as an entrepreneur can be a total grind. All of this leads to the question: Why is founding a startup so attractive?
Is It Just for Bragging Rights?
Do entrepreneurs love the startup game just for bragging rights?
Or is it about making money?
I would say that the answer to both questions is typically "No" for most entrepreneurs. So why do people love startups?
What is Wrong with Starting a Successful Business?
There is no doubt that I painted a great picture for why startups are sexy. However, with such high failure rates, not to mention the notoriously demanding hours, and high stress levels, why are so many entrepreneurs attracted to startups rather than just trying to start a sustainable business? Another big question I have is this: Why do most small businesses never grow beyond one person?
A shocking 75 percent of U.S. businesses are non-employer businesses, meaning that they have no paid employees.
Why do most businesses never grow beyond the founder? I think there are two main reasons that businesses never hire help. First, they are scared and second, they don't know how to grow in an effective way. So they try to do everything. Inevitably, by trying to bite off too much, they face burnout and eventually failure.
While it is not difficult to start a business, it can be difficult to turn it into a success. Typically, we find that the owner of the business is the one holding it back, preventing it from becoming a success. Delegating, letting go, and trust are things that owners struggle to do and it holds their businesses back from becoming successful.
Having a successful startup is hard, but having a successful small business doesn't have to be.
This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.