The statistics are alarming (and somewhat depressing). Ninety-six percent of small businesses fail with ten years of inception. Ninety-six percent! That means that for every 100 businesses started today, only four will still be standing in 2015.
Think about how much effort, time, and money that you have funneled into your business right from the time it was only a persistent thought in your head. How much time have you taken from your family, from your other pursuits? Starting a business means different things to different people, but the most common goal is to build something permanent, something to outlast you and provide security for your children and their children.
What can you do to make sure that your business outlasts you? How can you be one of the 4 and not one of the 96? There is no magic pill that you can take to arm yourself for the battle. There are only common sense (and sometimes boring) steps to build strong armor around your business. Every company that has been in existence for more than a decade has followed these guidelines and you should too:
- Don’t dabble – it may be tempting to start up a business and “just see what happens”. But success rarely falls into one’s lap. Building a business is a large commitment and you need to be focused from the moment you conceive of the business. Put your all into it and adjust as you go along.
- Plan for your capital needs – nothing can cause a slower, more painful death to a business than being under-capitalized. Not having enough money can cause dysfunctions like not paying your suppliers or the government, and borrowing on personal credit cards at a horrendous interest rate.
- Be “relentlessly persistent” – designing your business model is not simply a start-up task. As your business grows and matures, you need to be continuously monitoring and analyzing many facets of the company: its profitability, its market placement, its promotional message, its internal systems. Fine-tuning and re-analyzing is a continuous process and you need to carve out time from your operational duties to work on this strategic planning.
- Watch the pennies – this doesn’t just apply to your expenses, but also your revenues. Review your sales processes and see if you’ve left money on the table. Did you miss an opportunity to sell your customer a related item or service to the one they purchased? Could you have introduced them to one of your new products or services? Actively work on increasing the average dollar value of each sale. As McDonald’s says, “Would you like fries with that?”
- Learn new skills – as your business grows, your entrepreneurial knowledge will have to keep up. You may need to learn about hiring and retaining employees, marketing, import and export, or inventory management. Although you may hire employees and managers to ultimately work on these tasks, you will need to know enough about them to steer the ship. Take every opportunity to learn new business skills: take courses, research the internet, buy books, and talk with fellow entrepreneurs.
Building your business is a never-ending process, but taking the steps necessary to make it not only big, but strong will help you to make a permanent mark on the business landscape.
Angie Mohr is a chartered accountant and certified management accountant. She can be heard regularly on radio with Small Business Survival Tips. Mohr is also a business columnist for a large daily newspaper and has written many articles for business magazines.