Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Don't Believe the Research Until You've Read Steve's Post 3

Posting on his Small Business Labs blog, Steve King wrote: Don’t Quit Your Job Until You’ve Talked to a Small Business Failure. Amen. Everybody even thinking about starting a business should 1.) Read that post; and 2.) do what it says, talk to a small business failure.

Steve cites a couple posts he’s done recently on research showing small business owners feel relatively safe in their jobs. But then he adds:

Several people have asked me does this data mean that small business ownership is less risky than traditional employment?  The quick answer is yes, but only if your small businesses is successful. (emphasis is mine).

I love the irony: the polltakers ruled out failures by asking existing business – which, by definition, aren’t failures – about risk. Steve’s a professional researcher, so he quickly identifies the problem as survivor bias, which he says turns up often in research. He adds:

My favorite example of survivor bias is surveying existing customers to develop satisfaction ratings.  I was once asked to figure out why a company was losing so many customers despite having stellar customer satisfaction ratings.

It turned out they didn’t include customers that left prior to the annual customer satisfaction survey.  After all, they explained, they weren’t customers anymore.

So, as Steve suggests, if you want to explore the dark side of small business, talk to the losers instead of the winners.

(Photo credit: el lobo/shutterstock.com)

  • http://www.stratgrow.com Strategic Growth Advisors

    Hey, Tim. Thanks for the insightful post.

    I have read in a magazine article a few months back that the Internet is the largest and the most prolific source of hoaxes, myths, half-baked fads and pseudo-intelligent information.

    In my own point of view, it is alright to gather everything useful but avoid believing all information you pick as the truth.

  • http://maximumcustomerexperience.com Kelly

    Tim,

    This reminds me of the old joke my dad used to tell to sharpen our b.s. detectors: “All my friends haven’t died of not wearing seatbelts.”

    Mmhm. You get way different data depending on who you ask. Got it, Dad.

    Thanks for pointing the article out. I’ll be sending it on to some other folks ASAP.

    Regards,

    Kelly

  • http://www.doneordoneright.com David Calabrese

    I’ve learned more from my failures than from my successes.

    Those who succeed can rarely tell you what to look out for, but can be good champions and contacts for building a successful business.

    Talk to those who have failed and connect with those who have succeeded.

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