When people launch new ventures, the first thing they ask is, “How will this make money?”That’s the wrong question. That’s the default script. It’s why most ventures are made of papier-mâché—they look fine until the first gust of reality hits.The first question should be: “How will this fail?”And no, this isn’t some checkbox exercise where you write “risks” on a slide because you saw someone else do it. You look at every single way this thing can fail. Every dumb decision. Every boring operational oversight. Every catastrophic edge case. Because failure isn’t rare—it’s the baseline. Roughly 90% of startups fail, with 10% dead within the first year and 70% gone by year five. Venture-backed companies aren’t immune either: 75% never return capital and about 40% go completely bust.The top causes aren’t mysterious, either. 38% run out of cash, 35% never find a real market, 20% get outcompeted, and 19% build on a flawed model (CB Insights, 2023). So when you ask “How will this fail?”, you’re not being paranoid—you’re being statistically literate.Once you’ve mapped out all those scenarios, you don’t stop there. You build a structure where failure isn’t just unlikely—it’s nearly impossible. Not even an idiot at the wheel should be able to tank it. It should take a professional failure artist—someone with a real gift for self-destruction—to bring it down. That’s how resilient the base model has to be.The second question is: “How can this survive?”Notice I didn’t say profit. Profit is a pretty number on a spreadsheet that can vanish the moment cash stops moving. 82% of business failures happen because of poor cash flow management, not lack of profit. Nearly half of small business owners—47%—say cash flow problems threatened their survival. Even profitable companies die of cash starvation. On the other hand, companies that stay cash flow positive through downturns survive at much higher rates.Survival is about oxygen. Can the venture keep breathing long enough to adapt? If it can stay cash flow positive—even at a trickle—it buys time. And time is the real luxury.Only after you’ve answered those two questions should you dare ask, “How will it make money?”Because the truth is, profitability takes time. For startups, the average runway to profitability is 2 to 3 years, and for many venture-backed firms it’s 5 to 7 years—if they ever get there. At any given moment, only 40% of small businesses are profitable, 30% break even, and 30% are losing money. So asking “how will this make money?” before you’ve idiot-proofed the structure and secured survival is like planning your retirement before you’ve learned how to breathe.Failure first. Survival second. Only then comes profit. That’s the order that actually works.
