Why Most Businesses Fail (And How I Designed Mine To Survive)

This time of year has a way of stripping away noise. The inbox gets a little quieter, and you’re left thinking about the bigger picture: what you’re building, how resilient it really is, and whether it can survive the next cycle (not just the last one).

With that, I wanted to share some of my personal reflections with you. If you’ve ever wondered how real businesses cross nine figures without relying on one lucky break, one perfect deal, or one heroic founder, I want to walk you through the exact philosophy I’ve used across self storage, real estate, and operating companies.

Not theory or hype. Frameworks forged through bad markets, mistakes, and hard-earned lessons.I call it The $100 Million Philosophy, and it starts with a truth most people miss: If you build something that only works when conditions are perfect, it won’t last.

Now let’s get into it.

Built to Fail Beats Built to Be Perfect

Most entrepreneurs don’t intentionally build fragile companies. They accidentally do it. They build something that only works if:

• Interest rates stay low

• Demand stays hot

• Labor stays cheap

• Marketing costs never spike

• One key person never leaves

That’s not a business. That’s a controlled environment experiment. And the data backs this up. Roughly:

• 24% of businesses fail in the first year

• Nearly 50% are gone by year five

• Around 65% don’t survive a decade

Most of those failures aren’t because the idea was bad. They fail because the business couldn’t absorb small shocks without triggering catastrophic consequences. That’s why I don’t build companies to be perfect. I build them to fail small.

A “built to fail” business is designed to absorb micro-failures:

• A marketing channel dies

• A manager quits

• Occupancy drops

• Costs rise faster than expected

And none of those events take the entire company down with them. Here’s the checklist I use when evaluating or designing a business:

• Can this survive a 20 to 30% revenue hit without panic?

• Can I shut down a failing product, location, or channel without nuking the whole operation?

• Are there multiple paths to winning, but only a few ways to lose big?

Self storage passes this test exceptionally well - which is why I continue to lean into it. But this mindset applies to any business worth building.

The 4M Framework: How I Filter Opportunities

Over time, I needed a simple way to quickly say “no” to most deals without overthinking them. That’s where the 4M Framework comes in: 

1. Market: Is the Wave Worth Riding? You can be the best operator in the world and still lose if the market is shrinking. I ask:

• Is demand growing or at least stable?

• Are there secular tailwinds?

• Is this something people have to buy, not just want to buy when times are good?

Self storage works because life creates storage demand whether the economy is booming or contracting. 

2. Moat: Can We Defend Our Position? If competitors can copy you instantly, margins disappear. Moats can look like:

• Switching costs

• Brand trust

• Operational complexity

• Data advantages

• Regulatory friction

In storage, moats often show up as location quality, zoning barriers, and operational sophistication that mom-and-pop owners never implement. 

3. Margin: Is There Room to Be Wrong? This is one most people ignore. High margins don’t just mean higher profits - they mean forgiveness. Forgiveness for:

• Bad assumptions

• Learning curves

• Execution mistakes

Thin margins mean perfection is required. I don’t like businesses that demand perfection.

4. Management: Can This Actually Be Executed? A great market with weak management still fails. Culture, systems, leadership, and accountability matter more than the idea itself. If even one of these four Ms is missing, the deal doesn’t move forward. Period.

Intrinsic Value vs. Extrinsic Value (And Why the Market Lies)

One of the most dangerous mistakes entrepreneurs and investors make is confusing price with value.

There are two kinds of value:

Extrinsic value: What the market feels like paying today.

Intrinsic value: What the asset actually produces over time.

Markets are emotional. They overshoot. They panic. They euphorically misprice things all the time. Intrinsic value, on the other hand, compounds quietly.

A storage facility throwing off reliable cash flow doesn’t suddenly become worthless because headlines get scary. But its extrinsic value might swing wildly.

That’s why I obsess over building intrinsic value:

• Real cash flow

• Pricing power

• Durable demand

• Operational efficiency

When you anchor decisions to intrinsic value, volatility stops feeling threatening and starts feeling irrelevant.

This mindset keeps you calm when others freeze - and opportunistic when others retreat.

Systems Over Outcomes: Why Redundancy Is Freedom

Here’s an uncomfortable truth: If your business stops growing when you stop working, you don’t own a business, you own a job with overhead.

There are two types of companies:

Hustle Companies

• Founder-dependent

• Growth requires constant effort

• Burnout is guaranteed

System Companies

• Process-driven

• Documented and repeatable

• Growth continues without heroic effort

Systems compound. People fatigue. Redundancy isn’t waste, it’s freedom.

When systems exist, problems get solved without escalation, decisions are made consistently, and the business becomes predictable. In self storage, this shows up through:

• Standardized pricing logic

• Automated follow-ups

• Clear KPIs

• Playbooks for leasing, delinquency, and revenue management

Ownership + systems is where work turns into a compounding asset.

Every Strategy Is a People Strategy

No matter how good the market is, no matter how strong the systems are, execution is always human. People determine whether:

• Systems are followed

• Strategy is implemented

• Standards are maintained

Markets are the wave. The business is the board. The operator is the rider. Strong teams with clear incentives outperform brilliant strategies with weak execution every time. That’s why leadership, training, and accountability are not “soft skills.” They’re leverage.

Build to Last, Not Just to Win

You don’t build real wealth by chasing wins. You build it by designing businesses that survive bad years, capitalize on volatility, and improve through stress.

The $100 Million Philosophy isn’t about hitting a number. It’s about engineering conditions where:

• Good decisions are the default

• Risk is controlled

• Upside compounds

Wealth isn’t bought. It’s built - brick by brick - through systems, discipline, and patience.

And the best part? Once you understand these principles, you can apply them to almost anything you build.

Until next time,

AJ Osborne