Here’s what we are told to do

• quit whatever we are doing
• go all or nothing
• start our startup
• give ourselves the no back

Apparently this is a key to the mandatory “we must succeed” mentality. It’s probably the worst advice that exists for budding entrepreneurs.

Here’s what actually happens

We take the advice above, run out of money, and or steam, and often end up back in corporate cubicle land because most of us have cost of living realities which are unavoidable.

It’s a simple fact that 9 out of 10 new businesses (even the non trendy web / digital based ones) don’t survive the first year. A fact that we falsely believe wont be a factor for us, because we are clearly more talented, special and hard working. But it’s also worth remembering that the reason the we hear about the ‘Failure was not an option’ success story is that it makes for much better reading than the 9 out of 10 people who did fail.

Inevitably startups fail, sometimes it’s a choice when we quit and sometimes it’s a flame out. But there are better ways to avoid getting sucked back into a job you hated, or facilitating another entrepreneurs dream and working in their startup. And here it is:

We need an underwriting strategy.

Just like ventures across the sea in the mercantile era needed some backing for ship wrecks, we should back up our own startup version of sinking. And most of us can do it. It’s the simple act of creating an alternative revenue stream which keeps us in the startup game.

Just as companies have a portfolio approach to their revenue, entrepreneurs should do the same. Think about it. Does a company stop making and selling all their existing product range as they enter a new category, or do they keep them running concurrently? You know the answer. iPods continued when the iPhone arrived. iMacs continued when the Macbook arrived. They hold on to as much revenue as possible as they enter the new market. They want to reduce risk by maintaining existing revenue streams as they navigate new territory. As the new market grows they reduce the focus on the less desirable market place.

As entrepreneurs we should and can do the same, but instead of having a portfolio of products in the market simultaneously, we simply split our time up into a portfolio mix of activities we give segments of our time to. It’s a low risk, stay in the game longer, find a way to succeed method for entrepreneurs. It’s a smart plan for those of us who are not lucky enough to have funding, parents paying our bills or a wealthy spouse.

It’s simply a matter of thinking about the process as a couple of levers.

As startup income (or funding) increases, we can pull back on the consulting or freelancing revenue. Or the part time work. Simple. It’s something which I did on my first couple of startups – had life de-risking revenue – which would have kept me in with a fighting chance. I didn’t, and a couple of times I had to go back to a corporate job with my tail between my legs.

For every time a startup succeeded 9 others failed. It’s a simple game of probability. As Entrepreneurs we need to have a good understanding of probability. The reality is that the odds are against us, therefore we need get the odds in our favour by having extraneous revenue streams which allow us to roll the dice as many times as possible. We need to have a revenue source which allows for the inevitable failures and lessons we’ll need to have to find a path to success. If startup science has taught us anything the more experiments we can run, the greater our chance of success.

Featured image source: OnClassical