Statistically very few small businesses survive beyond five years. So how did we get to make it to 25 years?
For me running a small business is like going on a long journey into the great unknown. You’re excited, apprehensive and your energy is buzzing at the very prospect of starting this journey, you can’t wait to jump into the car and get going.
You know you should do a comprehensive mechanical check of the car, make sure you have air in the tyres, a good spare, plenty of fuel, water, oil and so on but these become bothersome details in your excitement to get going and live out the dream.
As you set off on this journey you start to hit obstacles, the road wasn’t as good as you expected and you suddenly realise you don’t have a decent map to follow. You need to take detours and change direction which means you use much more fuel than anticipated and your cash is starting to rapidly dwindle.
As you go deep into the business jungle you realise that you’re very much alone and having to deal with all aspects of keeping the car going, many of which you have no training on, nor were you prepared for.
It’s not all bad, at times you hit an oasis and get to replenish yourself, things go well and you’re making money. As you continue on your journey, the road takes you away from the oasis to the edge of a mountain. As you wind your way around the mountain the road takes you perilously close to the edge.
Unfortunately, too many small businesses skim the edge and fall out of the game, becoming yet another casualty or statistic. Those that don’t, continue along on the journey experiencing the good and the bad, building their survival skills, broadening their knowledge and making an important contribution to the economy.
So coming back to the original question how did we manage to survive the journey thus far? The are many layers to this answer, such as family support and help from many along the way, but the simple explanation is dogged determination and the desire to never ever give up.
I don’t advocate this as the “silver bullet” to survive in small business, and on the contrary, advise against it. Instead, I believe there are three key elements to build a successful small business; planning, capital and people.
The journey should begin with good planning, starting with a plan to make a profit in the first year not a loss as so many do, get your mindset right. Write down your goals and aspirations and create a personal plan. Undertake market research, make sure there is a need for your product and or service. Do a comprehensive business plan starting with your goals then look at your; resourcing, systems and processes, the market, and most importantly the finances.
Spend time and money on developing your brand, it’s an asset that will appreciate over time (like a fine wine). Put a detailed marketing plan together that includes; an action plan, budgets and measurable indicators or KPI’s.
The next step is to look at your capital, how much money will you need? Set your budgets and targets, and more importantly your cashflow. Have you allowed for contingencies or “pot holes”? Understanding your cash flow is critical as many businesses (profitable or not), fail as they simply run out of money. Cashflow is king, it’s the greatest challenge you will face no matter how big or small your business is.
The final piece in the puzzle is people. To grow your business, you need the right people, and importantly you need to invest in your people, they are an asset to your business. The culture you create will have an impact on your brand. If like me, you never set out to be an HR manager, enlist the help of those who know. We spend a lot of time and money on our IT systems making sure everything is connected and working, but do you do the same with your people?
There are no guarantees and the statistics are stacked against you however, if you; plan, have sufficient capital, and find the right people you will give yourself every chance to not only survive but enjoy and prosper on the road we travel as small business owners.