Most small businesses fail because they do not start well
Having a great skill or being very passionate about something is often the reason why you start a business – but you must know how to ‘work on it’ & run it too! In research presented by the Business Journal in 2012 on the failure of business start-ups the most common observation made by small business owners that have failed, is that they would have started differently i.e. with a different frame of mind, with a different perspective, with a different plan. And all of them say they would have used their ‘budget’ differently. Most of them alluded to a lack of knowledge and understanding with regard to the marketing process i.e. believing that marketing and advertising are the same thing. It is now common knowledge that most small businesses stagnate or die within the first year of trading. So what does it take to stay the course before funds and time run out?
So, what are the 5 most important things they found, should be done differently?
- Attitude: An overwhelming observation is that they would approach their new business with a more “humble” attitude. This would make them more careful and introspective. Every one of them had passion, enthusiasm, optimism and energy. However, their eagerness and sense of invulnerability made them think that they could take shortcuts and just follow their instincts. They forged ahead with minimal forward planning and little structure.
- Procedure: As a result of this, they claimed they would seek more help and information on business management and procedure. Business is more than just making and distributing a product or having a great idea or production skill. It requires tight management and structured systems.
- Planning: They would spend more time to identify their market more accurately and identify more efficient ways to reach and impress them. They would plan their financial projections more accurately i.e. focus on cash flow more than income. Create a roll-out plan that allows for growth and for emergencies.
- Marketing: They would spend a significantly higher percentage of their time and budget on marketing. Why? Because Marketing is an investment, not a cost. When done properly marketing results in incremental return. Marketing is in essence ‘planning’ your product/service for success. The marketing discipline encompasses the whole picture of your business from product to service to price to promotion to referral to relationship-building to return-customers.
- Collaboration: They would have much more respect for their clients, staff and suppliers. They would treat their customers much better and not just as a source of money. And they would not treat their suppliers as servants, but rather as business partners. All parties in business are in it together and to profit from it together. The one hand shakes the other.
There are many more reasons but these are the ones that people starting new businesses seldom take seriously.
Were you forced into your own business? Or did you one day just ‘happen into business’?
Many people in have been ‘forced’ into starting their own businesses due to a wide range of factors and circumstances. Many were employed all their lives and went confidently into a business of their own believing that their skill and technical ability will see them through. But, being a good plumber, or mechanic, or estate agent, or sales manager does not qualify you to be a good businessperson. Becoming a business owner requires a very different discipline, approach and focus. And this reality lies at the heart of small business failure, not only in South Africa, but worldwide.
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‘Business Fitness’ is brought to you by The Business Gym, an organisation that facilitates affordable, interactive group coaching and training courses for serious business owners. The MyBusinessWorkout™ is a mentorship program, founded and managed by Chris van Rooyen and Sylvia Malinowski, and designed to shape up and maximise your business growth – it’s like having a personal trainer for your business. For more information phone 083 701 2008.