I was on a plane recently and was chatting with the person sitting next to me. He was a founder who had a huge success at one company and is now running a fast-growing AI startup. He has gained so much experience on his journey as an entrepreneur that I asked him what made him successful. He said a key ingredient was luck.
I knew that serendipity, another word for luck, played a role in our success or failure, but I didn't know how big its role was.
That got me thinking: Yes, attitude is important. Yes, it is so important to know who our customers are and what they need. We need to build a great team. We need perseverance and a few other ingredients. But also luck.
We're in the elevator and a customer comes in whose one purchase “changes our lives.” Or a prospective investor comes in who writes us a check that will give us the cash flow we need for 6 months. Stories like these actually happen.
Luck certainly plays a role in the success of small businesses.
Luck in business comes in many forms: market timing, unexpected opportunities, and even avoiding unforeseen disasters. While skill, hard work, and perseverance are crucial, the element of chance is often a silent partner in both successes and failures. Recognizing this allows entrepreneurs to prepare for both favorable and challenging scenarios.
The unpredictability of business
Starting and running a business is inherently risky because there are countless variables that are beyond an entrepreneur's control. Market conditions can change dramatically due to technological advances, economic fluctuations, or changes in consumer behavior. A product that seems promising today may be obsolete tomorrow due to an unforeseen innovation.
Consider the rise of video streaming services. While Netflix strategically pivoted from DVD rental to streaming service, it also benefited from perfect timing as internet speeds improved and smart devices became more popular. Blockbuster's failure to adapt quickly enough, on the other hand, was not only due to poor management, but also unfortunate timing as the market was changing rapidly.
At the right time in the right place
Some startups ride the wave of an emerging trend and benefit from explosive growth virtually overnight. Zoom, for example, was well positioned when the pandemic forced millions of people to work from home. Although the company was well prepared with a solid product, the global shift to remote work was an unprecedented stroke of luck that catapulted its growth.
On the other hand, many well-planned companies struggle despite having high-quality products or services. They may enter the market too early, before consumers are ready, or too late, when the market is already crowded. The difference often lies in timing – a factor that is difficult to predict or control.
Unexpected opportunities
Chance encounters and events can lead to breakthrough opportunities. A casual conversation at a networking event can lead to a crucial partnership or investment. The founders of Airbnb, for example, stumbled upon their business model while renting out air mattresses in their apartment during a design conference. This serendipitous event spawned an idea that became a multibillion-dollar company.
Such serendipity cannot be planned, but entrepreneurs can increase their chances by networking well and staying open to unconventional ideas. The key is to recognize and seize these opportunities when they arise.
The dark side of happiness
Economic downturns
Economic recessions can ruin even well-run companies, especially in certain industries. For example, the financial crisis of 2008 led to the collapse of numerous companies in the real estate and financial sectors. Many of these bankruptcies were not due to poor management, but to an unprecedented economic collapse.
Most recently, the pandemic has shown how unforeseen global events can turn entire industries upside down overnight. Tourism, hospitality and event companies have faced existential threats through no fault of their own. In such cases, bad luck can overwhelm even the most experienced and prepared entrepreneurs.
Unforeseen obstacles
Natural disasters, sudden regulatory changes, or global events can derail a business in ways that are impossible to fully predict. A startup could lose important data in a fire, or a change in import regulations could disrupt an entire supply chain. The semiconductor shortage that began in 2020, for example, caught many industries off guard, impacting everything from auto manufacturing to consumer electronics.
While comprehensive insurance and contingency planning can mitigate some risks, it is impossible to protect yourself against every possible setback. Sometimes bad luck just strikes and tests a business owner's resilience and adaptability.
Luck and ability in balance
Preparation meets opportunity
While luck plays a big role, successful entrepreneurs are those who are willing to capitalize on favorable circumstances. They combine skills, knowledge and willingness with the ability to recognize and exploit unexpected opportunities.
Amazon's success, for example, wasn't just luck – Jeff Bezos was well prepared to use the emerging e-commerce trend to his advantage. He combined his understanding of technology and markets with the opportune timing of the internet boom. Successful entrepreneurs often create their own luck by positioning themselves to take advantage of favorable circumstances.
Learning from setbacks
Bad luck is inevitable in business, but resilient entrepreneurs use misfortune as a catalyst for growth and innovation. They view setbacks as learning opportunities and adapt their strategies accordingly.
After the dot-com bubble burst, many internet companies went bankrupt. However, those that survived, like Amazon and eBay, emerged stronger by learning from the crisis and adapting their business models. Entrepreneurs who can refocus and learn from bad luck are often better positioned for future success.
Diploma
There is no denying that luck influences the success of businesses and plays an important role alongside skill, effort and strategy. Recognizing its importance does not diminish the value of hard work and planning. Instead, it leads to more realistic expectations and more robust strategies.
Smart entrepreneurs prepare for both good and bad luck. They remain flexible, recognize opportunities, and are resilient to setbacks. By acknowledging the role of luck, entrepreneurs can better appreciate their successes, learn from their failures, and navigate the complex path of entrepreneurship with greater wisdom.
Ultimately, while we can't control luck, we can control how we respond to it. The most successful entrepreneurs are those who can ride the waves of good fortune and weather the storms of misfortune by always adapting and moving forward.
As someone who has started five companies and sold three of them, my ability to adapt and innovate has served me well.
Image: Envato