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Make Money. Be Amish

Half of all new businesses fail in five years.

Unless they’re Amish. Amish businesses have a 95% success rate. The Amish economic engine — in places like Ohio, Indiana, and Pennsylvania, where the recession has hit especially hard — is roaring.

Jason Zasky, in FailureBlog, asks Erik Wesner, author of Success Made Simple: An Inside Look at Why Amish Businesses Survive why this is so.

He offers a brace of interesting answers. One, they don’t sue:

In the business realm, it can be a bit of an Achilles heel…I ran into a number of Amish businesses that had not been paid by dealers, resulting in thousands of dollars in losses. They typically have limited means to recoup money. An Amish person may hire a lawyer to draft a letter, but that is usually where legal involvement ends. So unscrupulous outsiders may take advantage of Amish this way, and some have.

Amish, on the other hand, tend to get the word out to others in the community quickly if there is an individual passing bad checks, for instance. Word gets around and if you treat people well, others will learn about it quickly in Amish communities. The opposite is true as well.

Another reason — they keep costs down:

Amish tend to run lower-overhead businesses. One reason is that there is less of a cultural expectation to deck a business out in frills such as air conditioning and plush offices. Amish businesses are typically operated at home, often in a shed or old building converted for the purpose. Amish tend to be efficient in how they use resources. An aversion to waste is built-in to the Amish mentality.

Also, they try to build lasting businesses:

The idea of humble leadership is another good example. Amish frequently express the idea that “I’d never ask an employee to do something that I wouldn’t be willing to do.” Amish bosses are often involved in the work in a hands-on way, rather than simply delivering orders from a remote office. This orientation has something to do with the productivity and longevity Amish bosses get out of their employees.

A third idea would be the approach to growth. Viewing employees as family, rather than a disposable input, tends to make you approach decisions more cautiously. A side benefit has been a very low rate of failure among Amish businesses. In light of the numerous high-profile business failures, not to mention recent “bubbles” driven by greed, a measured approach to growth may be wise.

There’s a lot going on, apparently, besides barn raisings and pie baking.