Registering an LLC and putting an operating agreement together can be done in less than a day, and in the eyes of the law that constitute a business.
But building a business goes beyond legal documents – 10 percent of startups succeed.
According to Fortune magazine, nine out of 10 startups fail for a number of reasons. However, for the select few that do succeed, there are certain factors that come into play such as the fusion of the right people, the right idea and when lucky enough, the perfect timing.
Emre Toker, executive director of Arizona State University’s Center for Entrepreneurship, said it is a fine line to walk when trying to present a clear reality of entrepreneurship to his students without crushing their spirits.
“You have to consider the trade-off between opportunity costs versus fragileness,” Toker said. “My approach is to present reality as clearly as possible without crushing a young person’s enthusiasm and passion and excitement.”
Founder and CEO of Phoenix-based Black Dog Venture Partners Scott Kelly said entrepreneurs must have tough skin and learn how to overcome failure.
“Fail fast, fail cheap and fail smart,” Toker advised. “Learn something from each failure quickly.”
Kelly said a person overcomes failure by adapting and pivoting ideas to better suit the market: Resiliency and ingenuity determine success.
For Jeremy Greenberg, entrepreneur and founder of New York City-based Avenue Group, there are certain qualities that constitute a successful entrepreneur. Decisiveness is at the top of his list.
“An entrepreneur cannot be stagnant, with lack of action due to fear of making the wrong decision or fear of not doing something perfectly, it’s going to impede success and growth,” he said.
“You have to be comfortable with risks and be willing to take risks,” Greenberg said, adding an entrepreneur needs to be proactive and know that being able to make decisions is crucial.
Kelly, of Black Dog, said an entrepreneur is partly natural and partly made.
“The presence of a mentor or a guide can be immensely helpful to success and some qualities may be tougher to cultivate than others, but that does not mean they cannot be learned,” he said.
Greenberg said the barrier to enter the industry is low – “You can do it in a day” – but entrepreneurship is not for just anyone or any idea.
There is a harmony that needs to occur for a business to be successful, he said, starting with the initial idea. Integral to transforming the idea into reality is testing the market and gathering the right team to execute the idea.
“Very often I meet inventors that have no idea what to do with their invention, and I also meet people that really want to run a business that have no idea what the business will be, they just really want to run a business,” he said.
Timing also plays a factor.
ASU’s Toker said the best opportunities will present themselves when the timing is just right, but unfortunately it is difficult to gauge that timing until it has already passed.
“We have seen lots of companies fail because they were too late,” Toker said. “We have seen lots of startups fail because they were too early and the timing was just not yet right.”
Toker said he trusts that while everyone may not be able to build a successful business, entrepreneurship is a great way of self-discovery—especially for young people.
Failure or success, “It’s not necessarily a waste of time,” he said. “It can reveal who you are, what you’re made of, what are your strengths, what are your weaknesses … in a three-dimensional sense.”