Why business owners should go to the casino and save us all a lot of trouble
Author of Grow Your Service Firm Robert Craven asks, are small businesses worth the gamble?
I have just been introduced to an article claiming that just 10% of companies that America’s top ten VCs invest in actually succeed. This correlates exactly with the yardstick that VCs and seed corn capitalists I know use. 10%!
One chance in ten. We know that only 10% of small businesses actually make it to Year 5 so it could be reasonable to suggest that anything greater than 1:10 (10%) odds would be better than you get from starting a business. Just 10%.
So, is it worth it for a 10% gamble? Well, to put all this in perspective, here are the chances of winning at the casino:
Slot machines: 32% Horse racing: 41% Blackjack: 47% Roulette: 47%
Here is one conclusion (if you are in any way rational).
Conclusion #1: If you go to a casino then do not go near the slot machines (but 68% of gamblers do.)
Some other conclusions might be:
Conclusion #2: If you have money to gamble then do not open a small business (but 4m people have done so in the UK).
Conclusion #3: If you are the Government then do not gamble anything on small businesses but spend the money in the casino.
Conclusion #4: As far as small business owners are concerned maybe it is just not about the money.
Do not gamble at small business unless…
Robert Craven is an entrepreneur, businessman and author who has run Mastermind Groups and action-centred learning with Warwick Business School, Business Growth Programme and London’s Accelerated Growth Programme among others. His latest book is Grow Your Service Firm . He is managing director of The Directors’ Centre.