Starting a Big Business

There are three kinds of entrepreneurial businesses these days:

[1] The home-based micro-enterprise – a service or sales company that you and/or a family member run out of your home. These are usually agencies of an insurance or finance company; independent product sales online or via e-Bay; or they are MLM sales efforts.

[2] The small local business – a small service business or store such as a law office, medical office, business services, retail store, or service provider such as dry cleaning or repair shop.

[3] The scaleable enterprise - a ‘big idea’ start-up that grows into a company with revenues in the $multi-millions and continues to develop its market space, growing until it is either bought by a larger enterprise or goes public.

All of these have one thing in common: 50% of them fail in the first year. Of those still in business, 50% will fail in the second year. And by the time the third year rolls around, the survivors will once again be cut by 50%, but if you make it past your third year you are likely to continue in business.

Many feel starting a home-based micro-enterprise is the least risky, but it has about the same chance of failure as the other two and often costs as much to start. So, the risks are about the same but, when you create a smaller scale business, the rewards are far less than if you go for the ‘big idea’ scaleable enterprise.

How does one go about starting the third kind of company - the kind with potential to grow big?

The first thing is to identify a business model that is scaleable. By scaleable, I mean a product or service that serves a large target market that can support the expansion of revenues throughout a local, then regional, then national, to global marketplace. Starbucks is an example of a simple coffee shop that could have remained a one-store enterprise, but Starbucks is different because the first store was a testing ground and blueprint for a chain of clones of the original successful store model. Starbucks synthesized the successful qualities of the location, the successful qualities of the store design and ambiance, the successful qualities of the employees, and the successful qualities of the products sold. Once the company knew what worked, they cloned it as often as possible.

The most difficult thing in creating a big company is identifying a scaleable business model.