While it’s true that operating a small business is hard work, it’s also true that small business a very lucrative and satisfying, not-to-mention, “likely to succeed” career path.
Perhaps you’ve been scared away from running your own small business by myths such as “nine out of ten businesses fail in the first two years.”
I see this statement a lot full it is published over and over again as though it were a fact. I have even heard professionals, who should have known better, quoting this baseless little factoid.
In contrast to this claim is the actual research that has been published by a number of individuals including, Headd, B. Redefining (Business Success: Distinguishing Between Closure and Failure, 2002), Shane, S. (Startup Failure Rates – The Real Numbers, 2008) and Phillips & Kirchhoff. (Small Business: Critical Perspectives 1989)
Each of these studies, conducted by different organizations at different times in the last twenty years, all reveal a similar, and far more positive, pattern. Namely, that the success rate after about four years is actually at around 50%.
As far as economic health goes, statistics from the 2016 US Small Business Administration release suggest that Small Business is in fact big business.
-Small businesses make up 99.9% of all companies and 99.7% of companies who have employees.
-They make up a huge 97.7% of all US exporting firms (est, 297,000 small exporters) and contribute $471 billion dollars to a $930 billion dollar economy.
-With a 57 million strong workforce, they make up 48.0% of employees.
Nevertheless, many businesses do fail, and part of that failure comes down to a few key principles that were either ignored or not properly understood.
Lack of purpose
Start up a small business that does not have a clear vision and cannot articulate its mission is already too close to failure.
The most successful small businesses all have a very refined brand message. They know why they are in business, they know who their clients are, and they know how they’re going to reach them.
Action step: Sit down with a pencil and paper and see if you can articulate your business vision in one sentence.
Take Google’s mission for example. Their mission is to gather and collate the world’s information. It’s that simple and it defines the reason and planning behind everything they do.
Lack of planning
Connected to lack of purpose is the lack of planning. Many businesses do have a purpose, but they failed to write their purpose down.
They are clear on what they want to achieve, but they have not distilled their strategies into a written form. What tends to follow is an ad hoc attempt to reach the destination, rather than a carefully crafted strategy.
Everybody knows the saying, “if you fail to plan, you plan to fail.”
Yes, it’s a cliche. But it’s a cliche for a reason – and the reason is, it’s true.
It is not enough to know where you want to go; you have to map out the journey. As a startup entrepreneur or small business operator, you must be able to plot the steps that are going to help you reach your business goal.
Action step: Find an easy-to-use marketing or business planning template and actually fill it out.
You’ll be amazed at how much clarity you get just by writing out your business plan.
Lack of budgeting
You may be astonished to learn that many businesses operate successfully without a budget. That doesn’t mean a budget is not necessary. It just means that some people get lucky.
It also means a lot of people wind up bankrupt. Planning without a budget is simply foolish.
You need to be able to state:
- Where you’re going
- How you going to get there and,
- What resources that is going to take
And those resources are dependent on you having a budget.
Action step: Develop a written budget for a full year.
Before you even think of open the doors of your business you should be able to lay out a complete and your budget. You should be able to also demonstrate where you got your figures from.
This may seem like a laborious task, but it is critical. Failing to develop a complete budget is common among those who are full of vision, but not so steady on their feet.
Building a rock solid small business or startup is more than just having a great idea. We need our visionaries, but we also need managers. We need managers who can do the maths and calculate the risks and advantages.
Lack of market knowledge
A lack of market knowledge is a result of not doing your homework. Market knowledge has to do with understanding your customer persona, understanding the trends in your industry as well as the seasons.
Market knowledge is also about understanding the competition, pricing margins and logistics of your industry.
Action step: Write down a biography of your ideal customer. Ask questions about their age, location, interests, etc.
How well do you know your customers? Is your business seasonal? These are all important issues that you should be asking. In order to own and monopolize your market, you need to know it back-to-front.
I need to know how their clients and customers think they need to be able to compare Logistics and trends and how to keep one step ahead of their competitors.
Lack of interpersonal skills
As a small business owner, you need to be able to manage two kinds of people. Actually, three.
We need to be the person or find the person who knows how to talk to your customer, your collaborators and your staff.
Not all of this have these kinds of skills. If you don’t have these skills, then you need to hire someone who does.
Action step: Take a step back and consider those three entities I mentioned above. Make an honest assessment of your relationship with each.
It could be that your company is now a size where you seriously need to consider employing someone to look after those three people groups.
Don’t wait until you or your staff and Collins burnout before you do something.
Take action now, and your business is more likely to succeed.
Running your own small business can bring great satisfaction. But history has proven time and time again that without these basics you are unlikely to survive.
This is particularly true when it comes to small business online. Almost anyone can start up tomorrow with an online business. Without the proper planning and purpose, it is likely that they will either fail or give up.
However, for those who put their mind to it and are patient in planning their business vision and mission – and understand their market, there is an every reason to expect that they will succeed.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
Could Global Blockchain Technologies change the way we invest in cryptocurrency?
This hemp market player’s growth is about to go into overdrive
One of America’s oldest gold mines enters the crypto-century
MLB team payroll: Is Eric Hosmer a steal for $144M?
Iran and India reach new agreement on oil trade
This fast-growing organic products stock already has space on Whole Foods’ shelves
The CBD industry is enjoying a boost from the lifestyle sector
Why Vapor Group Inc. might be the breakout penny stock you’ve been looking for in 2018
When you should consult your financial advisor
How startup accelerators are changing the industry
Promoting women’s football in Malta by UEFA projects
Euro NCAP marks its 20th anniversary with two crash tests
European Parliament’s International Trade Committee backs CETA
The American Heart Association has released four new PSAs
PwC presents 20th global CEO survey results in Switzerland
Featured4 days ago
When you should consult your financial advisor
Featured5 days ago
Lessons from Robert Rubinstein on impact investing
Business5 days ago
Why you should quit your job and start investing in real estate
Featured1 day ago
CBD stocks emerge strong in the growing cannabis industry, marijuana legalization
Entrepreneurship4 days ago
Woman to Watch: Hudson’s Bay CEO Helena Foulkes
Featured4 days ago
5 ways investing in STEM programs could benefit city education
Commodities3 days ago
Cellulosic ethanol production needs to step up to meet expectations
Agriculture5 days ago
Ukraine’s rapeseed exports may hit a 4-year high