When I closed the doors eight years into my first real business in June 1992 I felt like the biggest klutz on earth.
As I tried to find out where I went wrong, I learned how only four out of every 100 startups survive 10 years.
As I dug deeper into these stats I saw half of all startups close within their first year.
It might be much worse than that. In 2014 the SA Minister of Trade and Industry said 70% of start-ups close in year #1.
In other words, starting up on our own is a triumph of hope over reality.
It does not help that we spend more than 8 days each month fighting red tape.
It’s not only the complex laws. It’s finding the right person to speak to. Then getting to the same place at the same time as them. The Davis Tax Committee claims the cost of all this compliance is about R18000. Per month. (Based on R200/hour.) And these were Rands in 2014.
And yet, it’s still tempting to feel the biggest doos on earth when your startup closes.
Forgive the harsh language. But some of us take own own lives when we lose everything.
It’s tempting to blame yourself. And I did. For a long time. As do most of the folk I know.
But take a step back to look at those numbers. If one startup closed during the first year we could agree the owner might be at fault, or unlucky. But if seven out of ten cannot survive 12 months there must be a problem with the system.
Lets look at a recent example. Eskom. (Bear with me. I know they aren’t a startup.)
When you started your business Eskom actually worked. It was a given that electricity would flow. In every contract you signed you assumed electrons would trickle out of the plugholes every day. Contracts like the lease on your premises, employment contracts, bank loans for equipment, …
Of course we could predict short shortages. Not that the contracts we sign cater for these. If our startup loses 25% of each day what chance is there of success?
- If our staff can’t come to work because traffic lights don’t work.
- If the office lights don’t go on while staff are there.
- If the machinery can’t switch on.
- Or worse, if the machinery switches off in the middle of, say, mixing a batch ofconcrete.
When the lights go out in your business literally it’s not long before they go out metaphorically as well.
Some of my clients complained how load shedding was a problem. But it isn’t really a problem if you have a laptop. You can work for hours. You upload your work when the electricity goes back on. Or when next you go to a coffee shop. Your sales happen in background from places with enough electricity for people to order from you.
Since 1992 I’ve dreamt of a business without the risks and costs and red tape of a regular business. A business not dependent on electricity. Or staff. Or my local economy.
It took 14 years until I set up such a business back in 2004. It’s offered enough freedom to live in 5 countries. All with electricity.
When I closed back in 1992, a single judgment stopped me from opening a bank account. And stopped me from registering a new business. And stopped me from accepting credit cards.
This made it impossible to start again. That same system killing 50% of startups stops you restarting. We don’t reward you for the experience you paid so much to gain.
That’s why I love helping folk take themselves online. You can start for free. Nobody cares about your credit record either. You can be bankrupt, in the legal sense of the word, and you can operate an online business with impunity.
Without local rules the local punishments fall away. That’s as close to freedom as you can get without moving house.
I will be looking for new clients who want to be independent of ESKOM at the end of April. If you’re interested in hearing more please pop me an email. (peter (at) petercarruthers.com)