It’s true, so many small businesses fail in their first years of operation. And it’s also true that so many small business operators blame external influences on their demise. I know, I was almost one of them.
20 years ago, when in my early years of business after growing from a zero base to a great little business I was faced with the best part of $500,000 in bad debts. And of course it was someone else’s fault. How could this be, why me, what have I done to deserve this? Well, given I am still standing I figure it’s my duty to tell you WHY I deserved it and what I did to rectify it.
Five mistakes to $500k in a hole
Here’s what NOT to do in small business if you want to be a success. These are the fundamental failures.
I don’t have time!
I’m too busy to work on strategy, I have staff to hire or fire, stock to unpack sell or send back, bills to pay, argue, or delay, customers to serve, tax to pay, and struggle to the end of day.
If you can’t find the time to work on the strategy of your business then you have no business. Instead, you have a job, and a bad one at that, as it probably pays you less than if you worked for someone else. So find the time to figure it out or find the time to get out.
You’ve heard the saying ‘work on it not in it.’ Well that’s not entirely true. It’s ok to work in it, you just need to know why you are doing that, and to work that out you need to get out of it to understand what you and your business look like when you are done – which leads me to my next rule…
Know what you want to be when you grow up.
Too often in small business we get up each day and do the same thing we did yesterday in the hope that it will all get better – all the time not really knowing where we are going and why. If you don’t have a vision for your life and your business then you have no chance to work out what you are doing each day and why you are doing it.
There are a few levels to consider here in order for you to work out where you are going.
- What is your personal plan – what’s the one thing you want to leave behind you as your legacy, the thing you want to be able to say, ‘I did that, and that’s what I wanted to be when I grew up.’
- What is your life plan – how are you going to interact with your family, your partner, and your friends and how will this affect your personal plan and fit in with what you want to be when you grow up?
- What is your business plan – what is the economic driver you can put in place to help you achieve your life and personal plan and how is it going to drive them?
- What are your strategies and tactics – the things that will drive your business plan to fund your life plan to fulfill your personal plan?
With all of these things in place you will be able to achieve a clear vision as to what you want to be when you grow up and in turn be able to develop vision for your business.
Can I ask you?
It’s a fact, small business people are in general too proud to ask questions of their peers. There is a fine line between confidence and arrogance. Confidence is when you feel good enough about yourself to be humble and ask the questions you need in order to get you to the next level in business. Arrogance is when you feel you already know it. What do you want to be known for?
You know, I hear you, but it’s different for me?
Small business people all over the world think that ‘it’s different for me in my area / business / category / city / position in life / system in business etc., etc.’ I’m here to tell you… it’s not different for you. Your customers, all customers around the plane, all want the same thing:
- Quality – give them a good quality product
- Service – this is not a USP any more, it’s a given.
- Relationship – they want to trust you and know you.
- Ease- don’t make it hard for them, they do not have time.
- Value – if you have the other attributes in your transaction, they will have the perception of value. It’s not about money, it’s about positioning.
Master, mentor, manager or mate.
Small business people are typically bad leaders, I know because I was for so many years. I just stood up in front of the team and said, ‘come on we’re going this way, get on the bus or get off I don’t care.’ In the real world to be a good leader you need to be a mix of a number of personality traits.
The master – the person that everyone looks up to as the true visionary, and not just your vision, but a vision for all.
The mentor – in order for them to follow you need to train them and encourage them on how they can follow.
The manager – once inspired they will still need to be an element of management of process and system that you’ll need to execute the vision.
Last but not least, you need to have compassion and show that you can be a mate when asked, or when you feel it’s appropriate.
Without all of these traits you’re not leading your people, you are threatening them to follow you.
So, if you know these are the things that stop you from being a solid small businessperson then what are the drivers you can follow?
The 5 strategies to success
So, you’ve worked out and identified the things that will stop you from being great, so what are the things that will drive your business into the next level?
As business people we know that there are some key things that drive your business.
- Human relations
But how do you apply these things to your business with purpose and avoid the usual rhetoric paragraphs of words that attach themselves to these terms? Well, here’s a start. Simply follow these rules in relation to the 5 key drivers
1. Deep and Deliberate
Too often a small business’s strategy is scattered and unfocussed, largely because the principal is also scattered and unfocussed. And if you are scattered and unfocussed, you can be sure that your customers will be feeling the same way about what it is you are offering them, and that’s bound to get in the road of them making an easy purchasing decision.
Look at what you do well. Is there something in your business that you can highlight as being the one thing that your business is the best in your category at doing? If there is, then be deep and deliberate in your message to your customers in relation to that one thing.
This way your customers have at least half a chance of recognizing your strength and associating your brand with being a leading provider of that product or service.
2. Right people on the bus
Small business owners often forget that one of the greatest assets they have is their staff. These days it’s not good enough just to pay your staff to turn up to work each day. They need understanding and clarity of your vision, and incentive to give them motivation to help you drive the business towards that vision, and a reason to go the extra mile for you and your business.
Take the time to find out if you have the right people on your bus and that they are all clear on the direction the bus is heading. Be clear on your vision for the business and ensure that each and every one of them have bought into this vision.
When you are convinced they know which way you are heading, spend time working out what their hot buttons are and how you are going to press them to assist you with achieving your vision.
Some of the best business models today are where staff at all levels are part of an incentive program. This could be a detailed profit share program, or a simplistic rewards program.
3. First what then how
You’ve heard the saying cash is king in business. And that’s true in part. But what is more important is planning for what you need the cash for.
Small business owners are often too disorganized when they seek funding in their business. They go to financiers or bankers with cap in hand with the expectations they will need to beg, when the real answer lies in being organized.
First, what do you want the money for, then how are you going to get it?
A solid business plan and financial model is often the key to ensuring you can get access to the cash.
4. Perception is reality
I can recall a story from my first business, some 25 years ago. I had just left a radio station where I was working and decided to go into business with a mate of mine. We built a recording studio. We built it on the basis that, ‘if we build it they will come’….and of course they did not. A few months after we opened I was having a beer with an early business mentor if mine (and great family friend) Graham Hogg.
I walked into his house one afternoon after work, and his comment to me was, ‘did you have the day off today’. ‘No’, I replied, ‘I’ve been at the studio since 5am.’ He said, ‘so how’s business?’ My reply, ‘not so great, it’s hard work.’ And he said, ‘then why don’t you get serious about it’… Now I had been working about 100 hours a week for the last 6 months and I thought to myself, ‘how much more serious do I need to get?’
He continued, ‘you’re dressed in jeans and a t shirt, and I don’t care that you’re supposed to be in rock and roll, you don’t LOOK like you want my business. Get dressed, get serious, perception is reality. Give me the perception you are going to take my money off me, and that I can trust you when you’ve done that, and that you WILL deliver on the business promise you are making me.’
So the next week, I went out, bought an expensive suit, shirt, cufflinks, new shoes and a new car…..it worked. The perception now was, that I was in business, and that I was good at it!
What does YOUR business look like in the eyes of your customer? How would they perceive it because if that’s how they perceive it, then that’s what they think is real!
5. Change or die
So now you’ve worked out the things that can stop you from being in business for the long haul, and you’ve worked on putting some things in place to prevent you from being long gone and you’ve written yourself countless notes to reflect all of that.
Now all you need to do is change.
As small business people we’re pretty good at reading books, going to seminars, talking to others and to learning from our mistakes. Where we fail is that we don’t spend enough time actually facilitating change in our businesses.
Take a look at how you operate your business EVERYDAY, and what you can do to improve the business and the way you deal with the day to day operations.
This is the last piece in a puzzle and the most important thing you can learn from this chapter. If there is nothing else surer in business it’s that business changes every day of the year, and if we as small business people fail to change with it, then our business will surely die.
Surviving in business is tough, it takes diligence, courage, enthusiasm, confidence and most of all vision and focus. Good luck with the long haul!