I was on a flight recently and was chatting with the person next to me. It so happens that they’re a founder who had a big exit in one company and now leads a fast growing AI startup. He’s had so much experience on his entrepreneurial journey, so I asked him what was it that made him a success. He said one important 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 much it played.
It got me thinking, yes mindset is important. Yes, knowing who our customers are and what they need are so important. We have to build a great team. We need persistence and a few other ingredients. But also luck.
We’re in the elevator and in walks a customer, who their one purchases “changes our life”. Or in walks a future investor who writes a check to give us the cash flow we need for 6 months. Stories like this do happen.
Luck plays a role in small business success for sure.
Luck in business manifests in various forms: market timing, unexpected opportunities, and even avoiding unforeseen disasters. While skill, hard work, and perseverance are crucial, the element of chance often acts as a silent partner in both triumphs and failures. Recognizing this can help entrepreneurs prepare for both favorable and challenging scenarios.
The Unpredictable Nature of Business
Starting and running a business is inherently risky, with countless variables beyond an entrepreneur’s control. Market conditions can shift dramatically due to technological advancements, economic fluctuations, or changes in consumer behavior. A product that seems promising today might become obsolete tomorrow due to an unforeseen innovation.
Consider the rise of video streaming services. While Netflix’s pivot from DVD rentals to streaming was strategic, it also benefited from perfect timing as internet speeds improved and smart devices proliferated. Conversely, Blockbuster’s failure to adapt quickly enough wasn’t just poor management—it was also unfortunate timing as the market shifted rapidly.
Right Place, Right Time
Some startups find themselves riding the wave of an emerging trend, benefiting from explosive growth almost overnight. Zoom, for instance, was well-positioned when the pandemic forced millions to work remotely. While 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 flip side, many well-planned businesses struggle despite having quality products or services. They might enter the market too early, before consumers are ready, or too late, when the space is already crowded. The difference often comes down to timing—a factor that’s difficult to predict or control.
Unexpected Opportunities
Chance encounters and random events can lead to game-changing opportunities. A casual conversation at a networking event might result in a crucial partnership or investment. Airbnb’s founders, for example, stumbled upon their business model when they rented out air mattresses in their apartment during a design conference. This serendipitous event sparked an idea that transformed into a multi-billion dollar company.
These moments of serendipity can’t be planned, but entrepreneurs can increase their chances by networking widely and remaining open to unconventional ideas. The key is recognizing and acting on these opportunities when they arise.
The Dark Side of Luck
Economic Downturns
Economic recessions can devastate even well-managed businesses, particularly in certain industries. The 2008 financial crisis, for instance, led to the collapse of numerous companies in the real estate and financial sectors. Many of these failures weren’t due to poor management but to an unprecedented economic meltdown.
More recently, the pandemic demonstrated how unforeseen global events can upend entire industries overnight. Tourism, hospitality, and event-based businesses faced existential threats through no fault of their own. In such cases, bad luck can overwhelm even the most skilled and prepared entrepreneurs.
Unforeseen Obstacles
Natural disasters, sudden regulatory changes, or global events can derail a business in ways that are impossible to anticipate fully. A startup might lose crucial 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, affecting everything from automobile production to consumer electronics.
While comprehensive insurance and contingency planning can mitigate some risks, it’s impossible to safeguard against every potential setback. Sometimes, bad luck simply strikes, testing an entrepreneur’s resilience and adaptability.
Balancing Luck and Skill
Preparation Meets Opportunity
While luck plays a significant role, successful entrepreneurs are those who are prepared to capitalize on fortunate circumstances. They combine skills, knowledge, and readiness with an ability to recognize and seize unexpected opportunities.
Amazon’s success, for instance, wasn’t just luck—Jeff Bezos was well-prepared to take advantage of the emerging e-commerce trend. He combined his understanding of technology and markets with the fortunate timing of the internet boom. Successful entrepreneurs often create their own luck by positioning themselves to benefit from 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 failed. However, those that survived, like Amazon and eBay, emerged stronger by learning from the crisis and adapting their business models. Entrepreneurs who can pivot and learn from bad luck often find themselves better positioned for future success.
Conclusion
Luck undeniably influences entrepreneurial outcomes, playing a significant role alongside skill, effort, and strategy. Recognizing its importance doesn’t 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 fortune. They stay flexible, alert to opportunities, and resilient in the face of setbacks. By acknowledging luck’s role, business owners can better appreciate their successes, learn from their failures, and navigate the complex journey of entrepreneurship with greater wisdom.
In the end, 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 bad luck, always adapting and moving forward.
As one who’s started 5 companies and sold three of them, it’s being able to adapt and innovate that’s helped me.
Image: Envato
This article, “6 Ways Luck Shapes An Entrepreneur’s Success” was first published on Small Business Trends