This is supposed to be your dream come true. Finally, your business is up and running. You’re breathing life into your big idea. You no longer have to answer to the boss because you are the boss. You’re working your business plan. You’re finding your path to financial freedom. You know your target market and you’re finding new clients. You have positive feedback on your products and services. You’re developing new technology. You’re finding additional funding. You’ve finally found the right team to work with. You have the right workspace. You can feel the exciting energy when you walk into your business each morning.
Yes, there are bumps in the road, but you’re learning to be resourceful and to move through, over or around them. Each day is long and brings surprising new challenges, but you’re gaining momentum along with new customers and increased revenue. You learn to balance the ups and downs of the market and business challenges. You learn to pace yourself. But as time passes and you analyze your business growth, you see that the trend line isn’t moving upward, it’s declining. Your plans aren’t working out as you expected. At this rate, you’re not sure how long you can continue operating. You realize that as passionate as you are about the business, the problems are overwhelming you. Your dream is turning into a nightmare.
Why Small Businesses Fail
In spite of your best efforts, your business is succumbing to one of the top ten reasons that businesses fail. (Non-prioritized list according to Jay Goltz, The New York Times, January 5, 2011).
1. Owners who cannot get out of their own way.
2. Operational inefficiencies.
3. Dysfunctional management.
4. The lack of a succession plan.
5. The math just doesn’t work.
6. Out-of-control growth.
7. Poor accounting.
8. Lack of a cash cushion.
9. Operational mediocrity.
10. A declining market.
In particular, the first four reasons are linked to how you develop and structure your business. Small business owners who seek expert advice in running their business have a better shot at overcoming these pitfalls. To address them, here are eight tips for successful small business development that are critical components for you as a small business owner.
Tips for Success
1. Be The Leader – Be purposeful about leading and designing your company for success. If you think you know everything necessary for success, and close your mind to new and different ideas, you AND your business will stop growing. Instead, find a business mentor, seek customer feedback, attend workshops, read books, keep a bias for learning and set the example for your team to learn.
2. Manage Your Passion – Don’t let your passion manage you. Just because you love shoes, doesn’t mean you should open a shoe store. Make sure you’ve identified the void in the marketplace that your business can fill; or the need that you’re satisfying. Make sure you know your target market, and understand what they’re willing to pay and do for your product or service. Most importantly, assess your financial resources. There are too many stories of entrepreneurs who had what seemed to be a great idea, but got over their heads into debt, and tumbled into bankruptcy.
3. Increase Business Value – Your greatest business value resides in your people, processes, products/services, technology and customer relationships. It’s important to understand the right combination and how you best provide it to others. Then preserve and improve on that. For instance, the fact that you guarantee same-day service, and thorough clean up by your service technicians could be your greatest value. But to provide that, you must have a sufficient number of trained technicians on call at all times; and a reliable 24/7 contact and communication process.
4. Build Your Culture – This is the DNA of your business. Whenever a client comes in contact with your business, whether face-to-face, by phone, by email, or by social media, they gain nuances and impressions that determine whether they want to continue to engage with you again. Set the tone by treating your employees the way that you want them to treat your customers. Make customer service a priority. Create an environment that is welcoming and comfortable. Ensure that the style or décor will appeal to your target market, and effectively represent your product or service.
5. Position Your Family – Do you have a family business or a business family? Does your business exist as a place to employ your family or a place to serve your clients? The wonderful family members who helped you to get started may need to evolve to different supporting roles as the business grows, to ensure that you have the most qualified people in the positions where they can perform well.
6. Develop Your Successor – Your role in founding your business is important, but none of us are irreplaceable. Constantly develop others to learn the business, and make leadership decisions based on who and what will add value to the business. When the business has greater value to your clients, you will benefit from that.
7. Understand Business Roles – Roles and responsibilities must shift as the business grows and/or the market shifts. Be flexible, clarify responsibilities, and hold the right people accountable.
8. Document Business Processes – Continually review and update your operating processes to ensure maximum efficiencies. Involve the employees who actually perform the work, and find ways to eliminate waste, rework and scrap because they all result in lost money.
So take time now to plan for your business. Becoming a small business owner is a lot like falling in love. Once you fall madly in love with a seemingly fantastic person, it’s more difficult to recognize your areas of incompatibility. Similarly, once you have a seemingly fantastic business idea that you’re passionate about, it’s more difficult to see the potential pitfalls to your success. Plan with a clear head, and a focus on how you can serve others.