It’s no secret that most new businesses fail before they manage to turn a profit. Recent numbers from the Bureau of Labor Statistics show about 20% of startups failing in the first year, about 50% by year five, and over 65% by year 10.

Many entrepreneurs take the first failure as a sign that they should do something else with their lives. Others dust themselves off and get to work on a new and hopefully more successful idea.

Veteran investment banker Joseph Rallo has worked with countless entrepreneurs and startup teams in a variety of high-growth industries over the years. He’s seen plenty of examples of both outcomes. Here’s what he tells first-time entrepreneurs to do to create and scale successful enterprises.

1. Finish Your Undergraduate Education, If Possible

Joseph Rallo backs this bit of advice with a significant investment of his own: a $10,000 scholarship for undergraduates with entrepreneurial ambitions.

“No matter how good you think your idea is, launching a business carries big risks,” Rallo says. “Completing your undergraduate degree ensures you have a backup plan if it doesn’t go well.”

A degree in a field related to your business can also position you as a subject matter expert and establish credibility with potential customers and early employees, Rallo adds.

2. After Graduating, Level Up Your Credentials As Time Allows

Why stop at your undergraduate degree? Many of the world’s top entrepreneurs — and most members of their executive teams — have graduate MBA degrees, too.

Talk about a credibility boost. And the “bear” case for graduate business degrees, that about 40% of all MBA programs show negative return on investment, isn’t directly applicable to your circumstances as an entrepreneur. You’re doing this for yourself and for your credibility as a leader, rather than to bulk up your resume.

3. Refine Your Idea and Build a Detailed Business Plan Around It

A great business idea is nothing without a great business plan. Although it’s understandable to act urgently when an opportunity presents itself, your startup will fare better in the long run if you take the time to refine your idea and develop a thorough business plan to make it happen.

“Some growth companies manage to build the plane while it’s in the air, but they are the exception rather than the rule,” Rallo says.

If you plan to seek external funding sources, a detailed business plan reassures future lenders and equity investors, as well.

4. Figure Out How You’ll Fund Early Growth

Economists and traders now expect short-term interest rates to fall only slightly in 2025, down to 4% to 4.25%. The longer-term outlook remains hazy, with some analysts predicting rates will actually increase again in 2026 as inflation returns.

This news is unwelcoming for businesses planning to fund their growth using private loans, which can carry interest rates double or triple the federal benchmark (or more). It reinforces the need for entrepreneurs to think carefully, and with a long-time horizon, about their funding sources and timing.

“If you can afford to self-fund your business now, you’ll insulate yourself from interest rate risk,” Rallo says.

5. Seek Out Mentors (And Possible Partners)

You can’t do it alone. Well, you can, but the results might not be to your liking.

“Enduring businesses are built by talented teams, not individual egos,” Rallo says.

He tells aspiring entrepreneurs to seek out more experienced mentors for guidance in the early stages of their business journey and like-minded entrepreneurs willing to partner to advance shared goals. If you’re in business school or plan to enroll soon, look at it as an opportunity to forge lasting professional relationships.

Final Thoughts

Building a successful business is difficult under any circumstances. Experts like Joseph Rallo know that while life offers no guarantees of financial success, entrepreneurs who take a careful, thoughtful approach tend to do better than those that don’t.

If you harbor entrepreneurial dreams, take their advice seriously, even if it seems not to apply to your personal situation right now. It may end up serving you well in the long run.