I absolutely love Small Business and the entrepreneurial spirit! I myself am a product of it, a career Entrepreneur. Naturally, I have been traditionally employed before, but even then it was always to serve my entrepreneurial endeavors; either by adding comprehensive experience, or by simply providing a paycheck. The best employment positions were those that afforded me both!
Small Business ventures fail at an alarming rate, but they don't have to. There are just a very few consistent reasons for the failure rate and I'm stating them in brief below, in no particular order.
Lack of Access to Capital
Most likely the most consistent contributor to the death of Business venture. Entrepreneurs and even existing Business Owners largely lack the access to the capital they need to launch, expand, upgrade, or sustain their Business. Every Business needs capital but the Business Owner's realization in this regard must be more comprehensive than that simple statement. You must understand the type of capital your Business needs, not just in general, but in any given moment/circumstance.
Understanding the measure, and type of capital your Business requires in the moment will have a positive impact on your ability to access said capital. So, lack of access in my opinion begins with a lack of understanding; improve your understanding, and increase your access.
The E-Myth
I am an Author, but I am an avid reader. I easily read 10 times more than I write! One of my favorite books of all time is The E-Myth by Michael E. Gerber. In no small measure, my absolute favorite ideology, or philosophical principle in the E-Myth is summed up in one simple passage from the book, and I paraphrase:
"Just because you are a wonderfully talented pie maker, does not mean that you can successfully run a Business that sells pies."
Business Owners must understand the difference between working "in" your Business, and working "on" your Business. In his book The Millionaire Real Estate Agent, Gary Keller perfectly and eloquently refers to it as leverage; human resource. Many Small Business Owners have a "DIY" mentality; Do It Yourself. They believe that if it is to be done right, they alone must do it. They are not so quick to entrust their "baby" to anyone. Business Owners must be receptive to the power of leverage, the power of delegating tasks, and authority to qualified employees and strategic Partners.
Business Development Short-Comings
Marketing and Business Development are not merely aspects of your Small Business, they are your Small Business! Your ability to generate revenue and sustain your Business is predicated on your ability to acquire market-share / market-capture. Many Business Owners will make the mistake of heavily promoting their opening or launch, but fail to apply a consistent, systematic campaign subsequently. Rome was not built in a day, your Business will not be either.
Irrespective of what business you're in.... no matter what widget you are selling, brokering, manufacturing, or representing, understand that you are in the Lead Generation / Business Development business. Understand this, or you surely will not be in business for very long.
Lack of Business Acumen
As a Commercial Finance lender I see first-hand, a serious lack of business savvy in far too many Business Owners. It's that principle ideology from Gerber's, The E-Myth. Being a great practitioner, builder, artisan, whatever, does not an efficient operator make. You must take the time to educate yourself on the facets of operating your specific Business. In today's society with information and expertise on literally anything and everything available to you with ease and at the speed of the internet..... you have no excuse for a lack of insight or education. Read, increase your knowledge, elevate your acumen, be the expert in your Business. I lecture, coach, and train Sales Professionals and I am consistent in my mantra, "Be the Expert". Be the expert your Clients & customers expect you to be; there's no excuse not to be.
Lack of a Real PlanThere's that saying.... "failing to plan, is planning to fail." Truer words were never spoken. It's not just about having a Business Plan, an Executive Summary. It's about everything! You must plan everything, leave nothing to chance. Do your S.W.O.T. analysis diligently and be truthful to yourself; it is not an exercise to impress Investors or Lenders, it is a comprehensive inward look at how external factors may impact you. Have a Business Continuation plan. Presume, and plan for growth in an intelligent and sustainable way. Study your market sector, understand it. Does it have a cyclical economic nature? Do you have a plan to absorb the cyclical upticks and downturns? Be the expert your Business needs you to be. Stick to the Plan, trust it, but be ready to adapt when and where necessary.
Like I said, I love the Entrepreneurial spirit and hate to see it thwarted in any capacity. Failure is a necessary evil because the lessons we Entrepreneurs learn from our failures are immeasurable. We must recognize that some the grandest successes are the product of prior failures but that does not mean we should simply accept the inevitability of failure by not planning to succeed.
Good luck to you! Learn a little something about Commercial Finance from the video below:
