Early retirement … the depressing truth?

Posted on June 14, 2011 by Adrian

Pinyo‘ s Twitter account pointed me to a great essay by Philip Greenspun about early retirement.

In it, Philip breaks some myths about early retirement, particularly the one where people think that they will do everything in retirement, but end up “waking up at 9:30 am, surfing the Web, sorting out the cable TV bill, watching DVDs, talking about going to the gym, eating Doritos, and maybe accomplishing one of their stated goals.”

Having said that, it’s pretty much my ideal of the early retirement 🙂

But, it was actually this paragraph that caught me, as it’s something that I had experienced but just below the level of conscious thought – maybe it’s something you will one day experience, too:

Tattoo Your Net Worth on Your Forehead … otherwise folks will greatly overestimate your wealth. If someone at a party asks you what you do and you answer “retired”, if you appear to be under the age of 50, almost always they will greatly overestimate your wealth.

The magazine Elite Traveler, depicts the lifestyle to which Americans aspire. A watch costs $30,000, a survey of hotel accommodations in Mexico or New Orleans shows suites ranging in price from $3,000 to $20,000, getting from point A to point B costs $5,000 per hour in a private jet, partying for a week involves chartering a yacht for $200,000. When you say “I’m retired” the other person at the party hears “Even without working anymore, I can afford to live the Elite Traveler lifestyle.”

I have retired with a few million (the title of my blog underestimates my wealth), yet I cannot live the “Elite Traveler lifestyle”, at least not in good fiscal conscience.

I usually travel business class, but sometimes fly coach (I always fly coach domestically); I could afford a Ferrari but drive a BMW (OK, I’m not exactly slumming it: it’s a current model M3 convertible); we travel overseas twice a year (this year we’re ‘saving money’ and only traveling o/s once); and, I live in what can only be described as a mansion (with a ‘spare’ one in Chicago).

But, I certainly don’t consider myself in the Elite Traveler league.

What I did notice – retrospectively, after reading Philip’s essay – is that my friends do make comments indirectly about my wealth (“oh, you don’t have to worry about that” when talking about spending $x on $y), kind of assuming that I’m Oprah.

I’m not. And, I still budget …

… kind of: sometimes, I count millions (“oh yeah, the business is worth $1m; the house in Chicago $1m; the house in Australia $5m; the two development lots are worth another couple …” and, so on); I do this when I get nervous about money … when you live in a ridiculously expensive house, with another you can’t get rid of, and don’t really have anything (yet) that brings in an income, even millionaires worry about money. Hopefully, totally unnecessarily … but, they still worry.

I remember the survey conducted a while back by The Spectrem Group who analyze America’s wealthiest families; when asked how much the average millionaire or multimillionaire thought they would need to feel truly wealthy, they overwhelmingly answered: “about double”.

That’s how I feel … but, don’t feel too badly, I’m sure I can learn to live with it 😉

Would you cash in your 401k to fund your new business venture?

Posted on June 9, 2011 by Adrian

There was a question on Quora that asked something along the lines of “what is the most overlooked factor in starting a business?”.

This applies equally to an online or offline business … and, I was surprised that none of the responses mentioned it:

Risk

In order to launch a business, you need to be able to overlook risk.

Even though risk can be managed, if you sat down to think about all the possible things that could go wrong with your proposed business, well, you would never start it.

So, I think you need to be able to overlook risk – and, move well out of your comfort zone (unless you are already into extreme sports and other forms of death wish!) – if you are to think about starting a business that consumes considerable time and/or money (no ‘hobby businesses’ here).

Hopefully, this now paves the way for a sensible discussion around a rather controversial Wisebread article sharing Darwin’s thoughts on How to Start a Business With Your 401(k).

Darwin’s view is that, rather than taking on expensive debt, it may be better to start your business by withdrawing all or part of your 401k using “a little known, but increasingly popular provision in the tax code referred to as the Rollover as Business Startup (ROBS). It allows someone to start up a new business venture with funds from an old 401(k) account without incurring the dreaded early withdrawal penalties meant to deter people from using their 401(k) accounts like piggy banks.”

A sensible – negative – response is offered by one reader:

To avoid going into debt is a pretty bad reason to raid your 401(k). If your business fails you can always declare bankruptcy – bankruptcy can’t touch most 401(k)’s – you’ll still have your retirement savings…roll it over into the business instead, have it fail…and you’ll have nothing.

And, I agree – to a point: your 401(k), although woefully inadequate for its intended purpose (i.e. ensuring your retirement) is useful as an insurance policy when all else in your financial life goes wrong.

Cashing in your insurance policies because you need money is the last thing that you should do!

But, this viewpoint ignores some basic realities:

1. Going into business, for a true entrepreneur (the type that can build a $7m7y business) is a “must do”.

Starting my own business was all I could think of for 4 years (yes, I was slow to act), and risking everything (career, etc.) was simply par for the course. I’m not saying this is ‘right’, just that it’s how an entrepreneur thinks.

2. Raising significant debt finance is almost impossible for a new business.

Sure, you can (and should) tap out your sources of traditional finance: refinancing your house (if you’re not already upside down on your mortgage); max’ing out your credit cards; trying for a personal loan (fat chance once the bank manager finds out what it’s for).

I do not think cost of the debt is an issue (if it’s available TAKE IT because it’s deductible and you’ll pay it off if your business is successful). I do think access to debt is … I think you’ll find it’s just not available; at least, not in the amounts required if your business requires access to substantial capital (e.g. for shop fit-outs, software builds, stock purchases, etc.)

3. Equity Capital can be equally difficult

The first place you should go for funds for your new venture is the 4 F’s: Founders (see above), Family, Friends … and, Fools. These days, Fools are very hard to find (they’ve already had their pockets emptied in the crash!) and Family and Friends are less likely to dig into their pockets than ever before.

So, that may leave your 401(k).

If that’s the only source of funds for your new venture, what will you do?

Anatomy Of A Startup – Part VIII

Posted on June 6, 2011 by Adrian

It seems that most of my readers are happy for me to – at least occasionally – talk about startups.

So, with your blessing, I thought that I would answer the most common [Internet] startup question that I come across:

How do you develop an idea into a startup? I have an idea that I think would be a very good startup but I am new to this industry and trying to figure out how to better develop this idea into a startup.

Here’s a summary of my process:

1. Spend 1 to 5 days on Google keyword searching EVERYTHING I can about my idea, possible competitors, available research (if anything), market size and so on. Basically, I want to absorb the available knowledge around my idea. Others may consider this step non-productive and do it in 2 hours.

2. I then formulate my idea into my first real attempt at a Unique Selling Proposition; fill in the blanks: “_(Name)_ is _(keywords)_ just for _(who should look for it)_ who want _(best thing)_. There’s no other _(category)_ like it because _(name)_ has _(what makes my eBiz different)_”

3. The next step is to create a 2 page executive summary of your idea, with one paragraph or so under each of the following headings: 1. problem (being solved) 2. solution (being offered 3. business model (i.e. how you intend to make money 4. sales and marketing (how you intend to get your product to market 5.the competition (come on EVERYBODY has competition!) 6. the team (please say you have a cofounder and that one of you is tech!) 7. financial overview (I don’t necessarily do any financial modeling at this stage, but you can add this para if you like).

The reason why I do this document is that it forces you to summarize all that you think that you know with the benefit of a) honing you elevator pitch (you DO have one, right?!) and b) having something to send people if, by some miracle, some investor or strategic partner falls into your lap. That’s also ONE of the reasons for taking the next step:

4. Create your first powerpoint pitch deck; I base mine on Guy Kawasaki’s Art Of The Start http://blog.guykawasaki.com/2005…
(but, you can go online and find any number to copy; just keep it short).

The second reason for having one of these pitches is so that you have something to show (with little screen mockups that I create with Paint but you can create with Photoshop or one of the myriad prototyping tools out there like bo.lt).

Now that the background stuff is out of the way, I like to waste even more time by creating ‘wire frames’ (a fancy term for sketches) of what the main screens and workflow will look like.

[AJC: the new ‘lean startup’ movement pioneered by the likes of Steve Blank and Eric Ries will tell you that this step is way premature, and should be done after you have interviewed lots of potential customers to see if they even want what you are thinking of building and – if not – what they would rather you build. I’m slowly coming around to their way of thinking]

5. Then I create a landing page in LaunchRock (there’s NO reason why you shouldn’t make this page as soon as you have your USP / Step 2 … it’s just that I’m a procrastinator. [DISCLAIMER: I am an investor in LaunchRock).

Don’t forget to grab your domain names, and FaceBook and Twitter handles (HINT:fiverr.com is a great resource for getting the necessary ‘likes’ if you are short on friends)

6. Create a short Google Adwords campaign and/or FaceBook advertising campaign and see if you can get anybody to signup to your Landing Page.

7. Talk to and/or survey some real people (potential customers, not your Mom and Dad) about your idea.

8. Go back to 1. until you have Proven Kick Ass Idea With Real And Tested Market Potential.

9. NOW you can stop procrastinating and DO IT.

Reader Poll: Are you a fellow blogger?

Posted on June 2, 2011 by Adrian

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PLEASE feel free to elaborate via the comments (or, via e-mail [ajc AT 7million7years DOT com] should you choose to remain anonymous) 🙂

The perfect side business?

Posted on May 31, 2011 by Adrian

My good blogging friend, Kevin, mounts a good case for – naturally – taking on blogging as a side business.

Because I don’t monetize my blog at all, nor do I expend any effort on promoting it or driving traffic to it, I can’t really comment.

But, I can say that for my audience it’s probably not the right type of business for you.

Well, let’s backtrack a little; as I once said: “you can’t save your way to wealth“!

So, the only reason for starting a side business is so that you can build up an investing war-chest to use elsewhere.

[AJC: another perfectly valid reason might be so that you can grow it to one day replace your day job. Another reason might be to gain experience in business. All valid reasons, but not directly in the context of getting you to $7m7y]

If you do that, then you’re essentially beefing up your Pay It Twice strategy, so I have little more to add here.

But, if you do want to reach $7m7y (or some other large number / soon date), then I do have the perfect side-business for you:

If you are a programmer, go find a friend with some online marketing experience (here’s where a blogger can come in real handy!) … if you’re a fellow blogger, go find a great programmer who also likes to burn the midnight oil.

Then go and build your own startup!

If you come up with a cool idea aimed at small businesses or the self-employed, then you can build up a neat revenue stream and end up with something quite salable.

Just like the guy/s at Freckle (an online time accounting tool) who took their site from $1k/mth revenue to $20k/mth in just two years.

Firstly: SaaS (Software as a service, which just means tools that run online without needing to download software) companies typically operate on high gross margins (70% – 90%) and ‘in the cloud’ (which means that they don’t need to run or maintain their own hardware or operating systems) using ‘open source’ software (which usually means they’re free).

This means the owners make good income, with few (if any) fixed overheads, be it full-time or part-time.

Secondly: Unlike blogs, eBay businesses and many other types of online/offline ‘side businesses’, these types of internet businesses can scale; that means the sky’s the limit as to how much income they can generate.

Thirdly: They can be financed (by angel investors and, later, venture capitalists) for expansion.

Lastly: They can be sold … for a lot!

Just ask the guys who are financing Airbnb (started by just three regular guys) or Groupon what they think those businesses are worth 😉

[AJC: actually, these are not examples of SaaS businesses, but they also generate revenue, so there’s nothing wrong with going down that path, either, but you really need to be lucky to find the right ‘slam dunk’ niche]

Now, you may not be as successful as any of these guys …

… but, I submit to you, that you are just as likely to be successful in a true / salable online business as you are in any other kind of part-time business (including blogging) and that it takes just as much work.

So, why wouldn’t you try the one that has a chance of getting you to your – shall we say, audacious – financial goal?

The Pay Yourself Twice Wealth Strategy!

Posted on May 26, 2011 by Adrian

As you have no doubt worked out for yourself paying yourself twice is in itself just a stepping stone to financial success.

Let’s just quickly recap for new readers:

The likes of David Bach (The Automatic Millionaire) like to tell you that you needn’t do much more than ‘pay yourself first’ (i.e. save) 10% – 12.5% of your gross salary in order to live an idyllic life (well, at least retire well) … going so far as to call this “A Powerful One-Step Plan to Live and Finish Rich”.

The reality is that this is actually a dangerous financial strategy to pin your financial future on.

Whilst the idea of saving money is to be commended – in fact, saving is absolutely necessary – the sad reality is that you would need to pay yourself first 75% of your gross income, starting now and continuing for the next 20 years, just to maintain your current standard of living in retirement.

Clearly, my solution – which is to Pay Yourself Twice 15% of your gross salary – does little to bridge the gap.

Of course, it’s what you do with the money that counts:

I assume that your current ‘pay yourself first’ savings are going into some sort of employer sponsored, tax-advanatged retirement plan …

… which we already know cannot possibly be enough to support your current lifestyle in retirement, let alone set you up for that hammock in the Bahamas with free flowing Pina Coladas that you crave 😉

However, I do want you to keep your retirement fund going – and growing – because it is insurance, if all else fails.

But, it’s the “all else’s” that will make the difference between an austere retirement in 20 – 40 years or a certainly more memorable (and, very early) retirement with $7 million in 7 years … or a happy medium, if that’s more your speed.

And, that’s why you need to Pay Yourself Twice:

– Once to maintain this insurance policy, and

– The second time to build your investing war-chest.

If the power of compounding at bank to mutual fund rates of return (i.e. 4% – 10%) is not sufficient, then it stands to reason that you need to start investing at (much) higher compound returns.

This means building up a modest starting capital amount and ‘rolling the dice’ with higher risk / higher reward investments e.g.

A few minutes with a good compound growth rate calculator will (a) confirm how well your current strategy is doing against your desired retirement needs, and (b) tell you how deep into the above table you need to dive to bridge the gap.

It goes without saying – so, I’ll say it anyway (!) – that I hope that you all succeed with your investments, be they in stocks, real-estate and/or businesses. However, if you should fail … well, by continuing to Pay Yourself Twice, it won’t take too long to build up enough starting capital to have another go.

And, it might take one, two, five times before you are successful …

All the while, you have a 20 year backup plan (by also continuing to pay yourself first) just in case 😉

My circle, my prison.

Posted on May 24, 2011 by Adrian

1998 capped a long period in my life when I was imprisoned by a circle.

I suspect this is the same for most. What separates me from the others – and, I suspect you, too – is that I broke out.

The ‘circle’ was my life and the things that I was trying to deal with:

– Keeping myself sane in an increasingly mad world

– Keeping my family safe, fed, and healthy

– Trying to earn a decent living to pay the bills and keep a roof over our heads.

This type of existence is inherently inwardly focused … we focus on ourselves, our immediate family, our friends, and our work colleagues (probably in that order) and little else.

The reason why it’s a prison – well, a financial reason (there are others beyond this scope of a humble personal finance blog) – is that our ‘investments’ are similarly inwardly focused; aside from what little we manage to save in our bank accounts and 401k’s, our so-called investments center around the things that make our inner-circle lives a little better.

We invest in our health (as much as we can – or feel motivated to do), our education (often because our parents tell us that “it’s an investment in our future”), our home (because that’s what our parents did) and, of course, our cars & possessions (because that’s what our friends and colleagues do), and so on.

Why do we invest?

So that when our income stops we can try and continue living within our circle and simply maintain what we have?

But, when I broke out of that circle my life began to change!

My First Big Realization was that my life wasn’t about my money … so why was I spending so much of my life – that precious, finite resource – attempting to earn money?

When, in 1998, I found my Life’s Purpose, which included what was in the circle (family, health, and so on) but also a lot more than I had ever felt desirable or even possible, I was forced to look outside the circle … way out.

Interestingly, and logically, I also realized that the investments that I had been making for my circle-bound future would no longer be adequate for a far less bounded life.

Not only did my thinking have to move beyond the circle, but so did my finances. And, if my finances wouldn’t be adequate for the life that I really wanted to lead, then neither would my investments!

So, in 1998, my investment strategy also shifted … and, shifted dramatically.

[AJC: if you want to understand a little more about this process, then check out this free site: http://site.shareyournumber.com/]

No longer would I try and upgrade my home and my car.

No longer would I try and upgrade my lifestyle in an attempt to keep up with the Jones’ (and, I had plenty of those to try and keep up with!) …

… I would simply begin to apply every spare penny to investing outside of the circle: in true investments that I could not eat, live in, drive, or share over a beer.

Now that those investments have born fruit, finally freeing me up to live my Life’s Purpose, I realize that living outside of the circle has actually also helped me live within.

The difference is that my inner circle is no longer my prison but my sanctuary.

The sooner that you identify what is in your circle and what – if anything – outside of the circle truly drives you, the sooner you will be motivated to seriously start making money and investing.

Then this blog will suddenly become very interesting to you 😉

Pay Yourself Twice!

Posted on May 12, 2011 by Adrian

It is commonly taught that in order to build wealth, you first need to save; and, the best way to save – so common financial wisdom says – is to pay yourself first.

Investopedia (the online investment dictionary) explains Pay Yourself First:

This simple system is touted by many personal finance professionals and retirement planners as a very effective way of ensuring that individuals continue to make their chosen savings contributions month after month. It removes the temptation to skip a given month’s contribution and the risk that funds will be spent before the contribution has been made.

Regular, consistent savings contributions go a long way toward building a long-term nest egg, and some financial professionals even go so far as to call “pay yourself first” the golden rule of personal finance.

Whilst certainly better than the other 99% of the population who don’t even bother saving anything, paying yourself first doesn’t go far enough:

Never mind underestimating what it costs to live a reasonable lifestyle, realize that the old “retire a millionaire’ ideal is no longer adequate; this is largely because of inflation i.e. over 40 years, you will suffer roughly two doublings in the cost of living.

Another handy way to think about this is to think of your retirement date & financial target:

Think of a ‘number’ … the amount that you think is reasonable to aim for in retirement, given the financial strategies that you feel that you can employ. Can you save $1,000,000 by your expected retirement date? Less? More?

Don’t guess; there are plenty of retirement saving calculators around to help you with this task …

1. If 20 years out, ask yourself: “would I be happy with living off no more than 2% of that number, each year?”

2. If 40 years out, ask yourself: “would I be happy with living off no more than 1% of that number, each year?”

If your answer is a resounding ‘yes’ then you are done … it looks like your retirement savings strategy will work.

Congratulations!

Now, stop reading this $%@@# blog, it will make your head spin 😉

But, I’m guessing that the answer will be ‘no’ … then what?

Then, you have to face some realities about your current “pay yourself nothing” and “pay yourself first” and “no debt in my life” strategies:

– A million dollars in 20 years (= approx. $500k today) to 40 years (= approx. $250k today), is too low a target,

– 10% isn’t enough to save,

– 20 – 40 years is too long to wait,

– Your 401k – more importantly, the underlying investments – isn’t the right place for your money,

– And, you are probably under-leveraged.

Today, we’ll deal with the first issue:

If you have two reasons to save money (1. to pay down debt, and 2. to build your investment war chest), then it stands to reason that you should pay yourself twice!

But, most people pay themselves second, if at all.

From now on, I want you to concentrate on paying yourself twice … before you spend money on anything else (other than taxes and social security); here’s how:

1. Pay Yourself Once: If you currently participate in an employer-sponsored retirement plan, then you should continue to do so, and

2. Pay Yourself Twice: You should save an additional 10% of your take-home pay – for now, this can be in an ordinary savings account clearly separated from your other funds.

If you do not currently participate in an employer-sponsored retirement plan or if you and/or your employer are currently contributing less than 5% of your gross pay into your retirement account, then you need to increase your pay yourself twice target to 15% of your take-home pay.

Of course, this is easier said than done: if you had 10% of your take home pay just lying around, by definition you would already be saving it …

… in other words, you are already paying yourself twice; if not, all of your take home pay is currently spoken for!

So, let’s start slow:

Step 1 – Could you save just 1%?

Take a close look at where your money is going: do you think you could find any spending areas where you can cut back enough to allow you to save just 1% of your take home pay?

If you are already saving – but less than the 10% / 15% Pay Yourself Second target – do you think you could find any spending areas where you can cut back enough to allow you to save another 1% of your take home pay?

[AJC: No need to start at 1% if you can find ways to save more; start at (or, adding) 2% or even more, but make sure that once you start that you never turn back … be realistically aggressive in setting your Pay Yourself Second target]

Step 2 – Wait 3 months and double it!

Over the next three months, perhaps by scouring the personal finance blogs on the internet, dedicate yourself to finding ways to double your savings rate i.e. if you started at 1%, after three months you should be saving at least 2% of your take home pay. If you started at 2%, don’t take your foot off the gas … double your savings to 4% of your take home pay.

Step 3 – Repeat

Keep doubling every three months until you reach 8% of your take home pay; three months later, save that 8% plus an additional 2% of your take home pay.

Step 4 – Almost there

What you do next depends on your Pay Yourself Second target:

– if you are already saving at least 5% of your gross pay in an employer-sponsored retirement plan (or similar), then you are done! Keep saving that 10% of your take-home pay.

– if you don’t participate in a retirement plan, or if you contribute less than 5% of your gross pay (including employer contributions), then you should keep saving 8% of your take-home pay plus you should concentrate on doubling the additional 2% every 3 months (i.e. 2% to 4% to another 8%) until you reach your combined target of 15%.

Step 5 – NEVER give up

Start today and never stop!

Unfortunately, as I’ve already pointed out, saving alone won’t get you to Your Number … it won’t even replace your current salary!

So, next time, I’ll help you decide what to do with your Pay Yourself Twice savings …

More on the the myth of paying yourself first …

Posted on May 9, 2011 by Adrian

You can play with numbers until you go blue in the face, but unless you understand the principles you won’t be able to make the right life choices.

So it is with the myth of paying yourself first.

It’s usually pitched as putting aside the first 10% to 15% of your paycheck into your 401k with any excess (when your 401K’s maxed out) I guess being put to work elsewhere. Some offer slight variations on the theme, like David Bach’s one hour of salary a day (or 12.5% of your gross).

Any way the ‘gurus’ put it, the alluring promise is of following this discipline your whole working life to ‘finish rich’. David Bach – author of the book to the left – goes even further calling this a powerful one-step plan to live and finish rich.

We have to examine this promise very carefully, because following this line of reasoning for 40 years to see what happens leaves very little room to maneuver if you come up short.

If the ‘normal’ working life is 40 years – to me this concept is almost incomprehensible – then, picking a mid-point in your career and a mid-salary of $50,000, adjusted for inflation, that you think (another terrible assumption) that you will be happy with for the rest of your life, then in my last post I showed that you would need to save almost half of your pay packet (again, indexed for inflation) until you retire …

… simply to replace your $50k salary (by then, inflated to roughly $100k but so have all of your living expenses).

But, what if you start young – as Bret @ Hope To Prosper suggests – and are happy to work 40 years?

Firstly, I would have to ask why you’re reading a blog titled “How To Make $7 Million In 7 Years” 😉

Putting that aside, you would need to save a tad under a quarter of your paycheck if you want to maintain your $50k per annum lifestyle beyond retirement (inflation would have roughly halved your buying power twice in that period, meaning that you would actually be withdrawing around $200k per annum just to maintain the same lifestyle that $50k buys you today).

Unfortunately, you are unlikely to reach your desired salary so early in your 40 year working career …

So, if you’re a graduate with a starting salary of, say, $30,000 and you somehow ramp that up to $50,000 after 5 years (at which point you start saving for retirement), you would need to save around one third of your paycheck for the remaining 35 years until you retire.

To be clear, following the common wisdom and “paying yourself first” 10% of your $50,000 gross paycheck (then indexed for the next 40 years for inflation) as recommended by many (if not most) personal finance ‘gurus’ is a sure-fire way to make sure that you retire on over $60,000 a year.

However, far from being a pay increase, because of inflation it actually represents less than 50% of your current $50k salary. Work and save diligently for 40 years and cut your paycheck in half …. nice 🙁

Any way you look at it, paying yourself first is no Powerful One-Step Plan to Live and Finish Rich as claimed by David Bach and his ilk.

Next time, I’ll share a plan that will work much better …

Anatomy Of A Startup – Part VII

Posted on May 5, 2011 by Adrian

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Please let me know (in the comments) if my slightly off-topic forays into the world of internet-startups are interesting, boring … or, somewhere in between.

If you’re still not sure, read today’s post then answer the poll 🙂

I’m sure that many people are put off the idea of starting a business – any business, not just a web-business – by the perceived failure rates: the ‘urban myth’ is that 9 out of 10 businesses fail in their first five years, so I wouldn’t blame you for simply dismissing the idea of becoming an entrepreneur!

For you, though, the chance of failure is 50/50: either you will fail … or you won’t.

Statistics (i.e. what happens to OTHER small business owners) mean nothing to you … but, your personal success or failure means everything.

Even if you subscribe to the statistics more than my philosophical view, we can still agree because the real numbers are much closer to 50/50 than 90/10 [click on the image to enlarge]:

[Source: Amy Knaup, Monthly Labor Review]

The chart shows that the four year survival rate for small businesses across the USA is anywhere from nearly 40% to nearly 60%. While not quite 5 years, and not quite 50/50 (you can reduce these 4 year survival rates by approx. 10% for each succeeding year), it’s certainly not as glum an outlook as the 90% failure rate that the popular press would have you believe.

So, how would you like a surefire way to tell IN ADVANCE if your Internet-business has an 85% chance of surviving, with an additional 9% chance of being sold for millions of dollars, and with a ‘booby prize’ of at least a 75% chance of achieving a huge amount of additional funding (an average of $500k)?

Fortunately, for the Internet entrepreneur there is a super-reliable way of doing this:

Simply apply to join one of the respected Venture Accelerators springing up all over the world!

If you DO manage to make your way through their selection process, here’s what you can expect in terms of survival/success after 4 years:

[Source: Techstars]

Time to dust off that business plan?

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