Why do Entrepreneurs Fail?

A colleague and I were interviewing Emmet and Toni Stephenson, founders and namesakes of LSU’s Stephenson Entrepreneurship Institute (SEI). The conversation was part of a strategic planning process necessary to chart the Institute’s course for the next several years. The Stephensons are successful serial entrepreneurs and now serve as principals of their privately held equity investment firm.

 Emmet and Toni spoke to us for over an hour and shared many rich insights. We walked away with not only their vision of SEI, but with business advice only decades of experience can teach.  During the course of the interview, Emmett said two things that struck me as being right on target. I’d like to share one of those with you; I’ll paraphrase:

Young entrepreneurs often fail because they take huge un-calculated risks; they lack the discipline that comes from experience. Older, more experienced entrepreneurs often fail because they are not willing to take big risks.

The hard lessons of life, leadership, and running a business can encumber the older entrepreneur from taking the more significant risks needed to break through and create real innovation.  Conversely, the young “turks” throw caution to the wind; like a teenager learning to drive, they think themselves invincible and immortal. Lacking discipline, they take uncalculated risks often ending up in a “business accident” with consequences of failure and bankruptcy.

The Stephensons believe our business schools can teach the young entrepreneur the discipline necessary to thrive.  By understanding concepts like competitive profiling, strategic planning and financial controls, their chances of failure become more manageable.  And by having more experienced business leaders share their scar tissue and hard lessons in the classroom, success can be nearly inevitable.

I know this model of taking advantage of the attributes of both the young and the experienced can be duplicated in our communities. SCORE is a wonderful example of this model. But I think the best lesson from the Stephensons is clear: when we better understand our limitations and learn to rely upon others to mitigate those same limitations, our chance to achieve sustainable success increases dramatically. Said another way, when we understand our strengths, how to use them and deliberately work with others who “complete us” and offset our weaknesses… we can do just about anything.

What do you think?