AHA! I found the main source of the discouraging lie so many repeat without thinking. You know the lie, “8 out of 10 businesses fail in the first five years, and another 8 out of 10 of those fail in the next five years.”. It is from “The E-Myth Revisited” and it is complete bull.
Those numbers are a classic example of lying with statistics. They count all business state-changes as failures, and assume that all ends-of-businesses are failures. If you follow the supposed web 2.0 business model of building to flip, and against all odds you make it happen, have you failed? By this way of thinking, you would be counted as a failure. The business is no longer in existence, it got absorbed. So, a failure, even if you made millions. Ridiculous!
Perhaps you killed your LLC in one state to create a Delaware Corporation. That’s a normal move in the early life of a lot of businesses which are growing and thriving. By the E-Myth way of calculating, that would be a “failed business.” That’s a skewed statistic indeed, and I think people need to challenge it more often.
As an even more basic observation, let me point out that studies show that more than half of businesses which really do go out of business do so for reasons which have nothing to do with “failure”. They are for personal reasons such as relocation, family issues (including divorce). In the majority of these cases, the profitability of the business was never in question, in fact the majority were profitable when they closed the doors.
Starting a business is hard, but it really isn’t the complete crapshoot that the lying statistics would have you think. Don’t let the doomsayers and the seminar peddlers (like the E-Myth people) lie you into making you think it is any harder than it actually is.
For what it is worth, I do like a lot of what I read in “The E-Myth.” There’s a lot of value in there, but when a book starts with a lying twist on statistics, purely to pump an agenda of “look how wrong everyone else is and how right I am”, I personally have a hard time looking past the lies for the nuggets of truth. In fact, I question whether it is worth my time, which is why I’m having a hard time finishing this book.
Technorati Tags: statistics, entrepreneur, small business, e-myth
You’re an idiot and you missed the point completely.
Thank you for the helpful response. I’m sure the author would appreciate your insightful rebuttal to my article.
OK, I agree statistics are sadistic but I’m not quite sure what you are trying to say in your article.
Without insult or smart remark responses let me explain why your article is flawed.
1.) According to your article, the E-Myth “lies.” You then end by writing “For what it is worth, I do like a lot of what I read in “The E-Myth.” There’s a lot of value …” I’m so confused. You declare one should not read the book because the author quote “starts with a lie.” If you were that insulted or disagreed that strongly with the author why did you read the book and give one excuse not to read the book. One lie but the rest of the book was good? Huh!? You never explain yourself. Why does one statement make a book unreadable?
2.) How many businesses would you say “fail?” In your article you conveniently never give any figures of failure/success of businesses yourself. Very smart on your part that way you aren’t called “a liar” with your numbers. I applaud you. Federal and local governments are always giving the entrepreneur sadistic, I mean statistics. If you start a business without a plan and/or understanding of business, sales, etc. your business WILL FAIL.
3.) So finally I will ask, what are you even talk about a book being the worst advice ever and then ending the article that the book has a lot of good points. Which is it?
You are very confusing.
There now insult me by never answering so I can tear your answers apart. But before you lie, I mean answer just to let you know I’m a SCORE adviser, Business Professor and advisor to the Small Business Administration in D.C. and ALWAYS quote statistics to budding entrepreneurs who come to my office and as a gift give out a free copy of the E-Myth Revisted to all my clients.
Cite your source for the lie–liar!
@judy – I don’t think that is a helpful response. I can’t even tell if it is directed at me or at @Mane Horse.
@Mane Horse – I think you are describing a false dichotomy. For a person who claims to be a professor, you show a remarkable lack of flexibility in your thinking.
Even as a non-professor, I am fully capable of learning something from a book, while being aware that it is presenting data in a misleading manner in some areas. A single lie doesn’t make the book worthless.
Do not put words in my mouth, I never said it was the worst advice ever. I said “Don’t let the doomsayers and the seminar peddlers (like the E-Myth people) lie you into making you think it is any harder than it actually is.” I stand by that very important point.
Here are a couple citations to support my assertions:
“Depending upon which statistics you believe, the chances of a new
[small] business surviving for five years are between 30 and 50
percent.” (Starting a Small Business,
http://www.4shared.com/file/39385812/32d108cd/mt9510.html )
“Although many people believe that 80 percent of all small businesses
fail within five years, statistics from the U.S. Census Bureau reveal
a different story. The Census Bureau reports that 76 percent of all
small businesses operating in 1992 were still in business in 1996. In
fact, only 17 percent of all small businesses that closed in 1997 were
reported as bankruptcies or other failures. The other terminations
occurred because the business was sold or incorporated or when the
owner retired.” (Small Business in America, U.S. Department of
Labor: http://www.dol.gov/odep/pubs/ek00/small.htm )