6 Steps to Surviving 3 Years Nine out of 10 businesses fail within three years. Don't be one of them.

By Ray Zinn

Opinions expressed by Entrepreneur contributors are their own.

Shannon Fagan | Getty Images

The odds of your startup being around three years from now are not good.

Statistics show that about nine of every 10 new businesses fail that quickly. Often, it isn't from a lack of hard work or a great idea. The real downfall is a lack of discipline where it counts. Too often the basics -- knowing your market, having enough cash, establishing a healthy corporate culture -- are dumped into the "hope and pray" bucket.

Related: This Founder Shares Why In Order To Learn Fast, You Need to Fail Fast

This is the folly of failure. A marketing strategist I know likes to put the concept in mathematical format: P(s) = 1 – P(f)

This reads that the probability of success equals one minus the probability of failure. The smaller you make the right side of the equation, the more you reduce the probability of failure and the more likely you are to succeed. CarMax -- and their now deceased parent Circuit City -- were built on this concept. Both these retailers analyzed what people hated about buying used cars and household appliances and removed these barriers from their operations. They reduced the probability of failing to sell their products.

Most startups fail by failing to do a few Tough Things First.

Legs.

Your product or business idea must have legs. It must have enough broad market appeal to last longer than the third year. Why? Markets change, and all products eventually lose favor. While your first product is hot, you need to be designing your next product. But if your second invention isn't ready before your market changes, your cash flow will fall and take your R&D budget with it.

Related: The Many Ways You're Marketing Even When You Don't Even Know You Are

Market knowledge.

Knowledge is power, and markets make you money. So not knowing your market as well as it can be known is unprofitable. Since R&D, marketing and sales are expensive, every extra bit of market knowledge reduces the amount of money you waste in these activities.

Plan your defense.

Your business plan is both offense -- marching into market territory, attacking competitors -- and defense. Most startups only look to offense. You must defend your ground against business cycles, market changes, inevitable law suits and more. One factor in reducing the probability of failure is to watch for attackers and prepare your defenses.

Be confident.

The better you prepare, the more confident you can be, and confidence is key to leadership. Nobody follows a cowardly general into battle, and employees will not strive to succeed when the CEO lacks courage. Your preparation will also lead to better business practices and a wisely run outfit, which emboldens employees.

Get help.

Even the largest corporations recruit experts. You need mentors to help make smart choices for where your expertise has limits. Never be afraid to ask for help. Most mentors are generous with their time and their guidance. They can save you from mistakes, both minor and critical.

Related: How Entrepreneurs and Small Business Owners Can Prepare for the Worst

Do whatever it takes.

Tenacity and optimism are closely linked. Both lead to the constant, energetic striving that underlies successful businesses. You will encounter speed bumps and roadblocks, but you must persevere and overcome them. Many businesses fail because the founders simply quit when they could have punched through.

The reason why Micrel, the semiconductor company I founded and led for 37 profitable years (36 on a GAAP basis), thrived in the horrendously cyclic chip business is that we did the tough things first. And that is why Tough Things First is the title of my book covering the management and leadership that went into Micrel. Doing things that seem hard or boring is exactly what builds the foundation that so many businesses fail to lay.

Be the one in ten that does the Tough Things First.

Ray Zinn

Longest serving CEO in Silicon Valley and author of Tough Things First

Raymond “Ray” Zinn is an inventor, entrepreneur and the longest serving CEO of a publicly traded company in Silicon Valley. He is best known for creating and selling the first Wafer Stepper and for co-founding semiconductor company, Micrel (acquired by Microchip in 2015). Zinn also holds over 20 patents for semiconductor design. A proud great-grandfather, he is actively-retired and mentoring entrepreneurs. His new book, Tough Things First (McGraw Hill), is available at ToughThingsFirst.comAmazon and other booksellers.

Editor's Pick

Related Topics

Business Ideas

This Teacher Sells Digital Downloads for $10. Her Side Hustle Now Makes Six Figures a Month: 'It Seems Too Good to Be True, But It's Not.'

When one middle school teacher needed to make some extra income, she started a remote side hustle with no physical products and incredibly low overhead. Now she brings in six figures each month, and offers courses teaching others how to do the same.

Business News

An Ivy League University Is Teaching the Secret of Taylor Swift's Success

Several major universities have added courses dedicated to studying Swift's star power.

Marketing

Google Is About to Delete Inactive Accounts. Here's How to Avoid A Massive Gmail Bounce Rate.

Google will start deleting inactive accounts soon. For businesses like yours, that means many Gmail contacts will probably bounce. Here's how you can avoid that – and keep your business emails landing in the inbox.

Living

'I Haven't Ticked All the Boxes Yet.' Hilary Duff Reveals Her Next Venture After More Than 2 Decades in the Spotlight — and the Surprisingly Relatable Key to Her Enduring Success

The actor talks entrepreneurship, secrets to success and her latest role as chief brand director for Below 60°, a product line of air fragrances.

Business News

Red Lobster Lost Nearly $11 Million Because People Love Endless Shrimp: 'We Need to Be Much More Careful'

The restaurant chain, which is owned by Thai Union Group, made the promotion a menu mainstay in June.