(CNNMoney.com) -- Want to find America's most successful entrepreneurs? Skip Silicon Valley and Manhattan; head to the rural Amish enclaves.
Amish businesses have an eye-popping 95% success rate at staying open at least five years, according to author Erik Wesner's new book, Success Made Simple: An Inside Look at Why Amish Businesses Don't Fail.
It's a statistic he backs up with a variety of academic surveys, drawing particularly on a 2009 report by Elizabethtown College sociology professor Donald Kraybill. Studying several Amish settlements, Kraybill found failure rates ranging from 2.6% and 4.2%; interviews with loan officers, accountants and industry professions in other Amish regions yielded additional anecdotal evidence of closure rates significantly south of 10%.
Compare that to the average five-year survival rate for new businesses across the United States, which hovers just under 50%. So what's the secret?
Wesner, who worked in business management and sales before immersing himself in all things Amish, thinks it lies in the culture, which emphasizes "qualities like hard work and cooperation." Networking through Facebook doesn't exactly have the same community-building pull as teaming up with neighbors to build a barn, and few Americans these days can point to a childhood where they awoke regularly at dawn to milk the cows.
Another key advantage is that Amish business owners tend to stick with what they know.
"Everything about the Amish says things like 'rustic,' 'traditional,' 'handmade,' so they tend to play to those strengths," Wesner says. "Would consumers trust an Amish cell-phone dealer or an Amish computer repair guy to know what he's doing? It'd be a pretty big mental and marketing hurdle to get over."
If you ask an Amish entrepreneur why they're successful, don't expect a lot of soul-searching or reflection on what they do right. A group known for being unfailingly polite and modest, the Amish will likely pin the praise on anyone else but themselves.
Certainly, Myron Miller, an Amish businessman in Millersburg, Ohio, near Akron, would be a good role model for other entrepreneurs, although he would never tell you that. "I run my business according to God's way and plan," Miller says.
The Almighty has been a good business coach for Miller, a 40-year-old father of six. He started his company 15 years ago and now has two separate entities: Four Corners Furniture, a retail furniture-making operation open to the public, and Miller Bedroom Wholesale, which sells directly to distributors. Miller employs 12 full-time workers and two part-timers.
Not bad for someone with an eighth grade education, which is where the Amish routinely end their formal schooling.
Miller thought about starting a farm when he was just beginning his career, but farmland was scarce and expensive. "They were all being used," he says. "So my thing is, I saw all the tourism coming in -- we're blessed to be the number one-tourism attraction in Ohio -- and so I thought I'd try to go into that, selling furniture to the tourists. Then I realized that was just the tip of the iceberg. I thought I'd spread my wings and market the furniture elsewhere."
Miller now works with 75 dealers, who sell his wares across the country. He banded together with other Amish owners to create a hardwood furniture guild, which helps market their products -- an important publicity channel since Miller's businesses have no website. He uses terms like "out of the box," routinely reads business books (especially those with a religious business bent), and has attended seminars by motivational and performance training guru Zig Ziglar.
Even if most people's idea of an Amish businessman is someone selling homemade cheese transported by horse and buggy, Miller isn't an anomaly, according to Kraybill, who has become one of the nation's leading academic experts on the Amish. He estimates that there are at least 9,000 Amish business owners across the U.S, which he divides into two groups: "caretakers" and "entrepreneurs."
"Caretakers generally have smaller, at-home or near-home businesses with five or fewer employees, and they don't want to grow, but simply sustain income for themselves and a small number of employees," Kraybill says. "The entrepreneurs are a different breed. They have larger businesses and somewhat want to grow, and they are more aggressive in marketing, trying new ideas, and are willing to take risks."
Risks like buying a failing business and trying to turn it around. Two years ago, in Glen Rock, Penn., Ben Riehl purchased a flagging food stand at Markets at Shrewsbury, a gathering spot for Amish vendors. He turned to entrepreneurship as a way out of what he calls "somewhat of a dead-end job," working in the metalworking and machine shop at a plastics company.
Riehl renamed the shop the Country Style Deli and enlisted his wife, Mary, and their two sons to help him work the stand, which sells local and imported cheeses, homemade breads, and subs and sandwiches. They also employ four other people part-time.
But Riehl launched just as the Great Recession went into full swing. Customers that once spent $25 on a visit to the stand cut their purchases in half. Country Style Deli is managing to turn a small profit, Riehl says, but it's not enough yet to allow him to leave his full-time job.
But he sounds like any other entrepreneur with a plan and dream when he talks about his startup. "We work hard to give customers quality product at a reasonable price, and we strive to give courteous and competent service," says Riehl. "We want the customers to have an experience that is different than pulling things out of a self-serve case and using the self checkout. We try to make it interactive and personal."
Clinging to values
Amish business owners face more restrictions than your typical entrepreneur.
Wesner says that while the Amish have made allowances and will, for instance, make products that they don't use themselves -- like designer-label leather clothing or high-priced toys -- they won't touch any business "that may be seen as morally questionable." Don't hold your breath waiting for an Amish-owned casino, liquor store or debt collection service.
But modern touches are creeping into the business scene. Some Amish retailers use electricity in their shops, more as a nod to customers who expect air-conditioning and credit-card machines. They're often fueled with alternative energy sources, like solar and wind power.
In his field research, Wesner found some Amish entrepreneurs conducting business using cell phones, fax machines and even e-mail. It's still a sensitive topic -- not because the Amish believe it's unethical to use these devices, but because they can have a subtle, adverse impact on the entrepreneur. Miller struggles with it himself, in ways that will sound familiar to any CrackBerry addict battling for a word-life balance.
"The smarter you get, and the more technology you use for your business, the more impact it has on families," he says. "For instance, there was a time the farmer would be in the parlor milking cows, and everyone was there, singing songs, and it was work, but it was also family time. Now, an Amish farmer is likely to be milking forty cows, and the children are at school. That's practical living, and you've got to keep up. But at the same time, it takes away from that balance, and you have to ask yourself, 'How far do you let technology affect your business?'"
Miller answers his own question in the next breath: "I guess you just have to stay true to your convictions and draw your own lines and not overdo it where you lose the values and your way of life."
In Good to Great, Collins uses Walgreens as an example of a company that finely honed its focus and outperformed the stock market by more than 15 times from 1975 to 2000. The changes there were insider driven.
Charles “Cork” Walgreen III transformed the lackluster company by getting rid of more than 500 restaurants and refocusing the business on becoming the most convenient drug store. It was an emotional decision because Walgreens invented the malted milk shake, his grandfather started in food service, and the restaurants Walgreen dumped included those named after him, Corky’s.
But Walgreen was determined. He gave his team five years to accomplish the task. When after six months, no progress had been made, he told his team they now had four and half years. Then, they got busy. With that narrowed focus, there’s more Walgreens than the ubiquitous Starbucks and they offer drive-through and 24-hour pharmacies even in dodgy neighborhoods, flu shots on demand, passport photos, reasonably priced milk and bread, all designed for customer convenience.
Collins calls this the “Hedgehog” concept, doing one thing and doing it well. In his book Good to Great, he uses the parable of the clever, devious fox and the simple hedgehog. The fox keeps coming up with new ideas to eat the hedgehog, but the hedgehog handily defeats him by doing his one trick: rolling into a thorny ball.
The concept requires the intersection of three answers: What are you passionate about? What can you be the best at? What can actually make you a living? And the answer must meet all three criteria.
This exercise can also be used by young people trying to sort their way in life, their personal hedgehog, as much as a business trying to figure out what purpose they serve.
At his website, www.JimCollins.com, he offers various assessment tools and writings for free.