Everyone knows someone who has decided to start a small business, but did you know that 70% of all small businesses fail within the first 12 months of starting? In some countries, this failure rate is between 85 and 90%. Small business is one of the strongest industries you can ever decide to take on and most people who go into small business go into it for the wrong reason.
I have started 4 small businesses in the last 10 years and each one of them has been rebuilt from scratch and has survived to become a thriving business. Just recently I decided to sell one of the companies because it did what I expected it to do, which is the first topic to think about.
Do you have a clear understanding of what you want to achieve in your business?
The majority of people who actually go into business go into business for the wrong reasons. Even I am guilty of this. So what is this wrong reason, most people start a small business because they think they can do a better job than their current boss. Maybe that’s true, maybe not, but what most people really want is better working conditions and better pay. No one can blame you for wanting that. If that is all you want, then I strongly recommend that you stay away from small businesses.
One of the key questions to remember before thinking about starting a small business in the evening is this. Do you know what your business will look like? If you walked down the street, how would you want to be found? What impression do you want to give your customers? What exactly do you know what you want to achieve in this area?
The second clear understanding you need of your business is when you will know when it is ready? If you have built what you want to achieve, and more importantly, how will you get out?
See most people when they go into business have no exit strategy and this is one of the worst things you can do. Before you even start a business, the first thing you need to work out is how you will get out of the business.
Two years ago I started a small car wash. My wife and I both started because she wanted to see if she could build a business. Our exit strategy was to sell the business after completion. How we would sell it was something we weren’t sure about?
You see, we could have found a number of approaches to that. Our exit strategy could have been to franchise the company, sell it to a single owner or take it public. We chose to only sell it to another owner, but we still built the business so that there was much growth and opportunity in the business for the new owner, but we had eliminated the risk for them of running the business by clearly documenting everything they needed to do to run that business.
Before you start a business, always remember how you will leave the business when you have achieved your goal for that business. If you don’t have an exit strategy in mind, you will never leave the business.
Keep to a strict schedule.
Small businesses consume. Unlike large businesses, where you can hire many people to perform a number of tasks, small businesses require the owner of a small business to perform many of the tasks themselves. Tasks include, but are not limited to, creating your books, placing trademarks, placing orders, and so on. Often, when you start out in small businesses, you can’t afford to hire people to perform these tasks.
What I have personally found is that if you don’t keep to a tight schedule and document the meetings and tasks you need to do, it won’t be very long before you are flooded with all the things you need to do every day in business. It is this phenomenon that often causes small business owners to stop and fail in the first twelve months. Let me tell you, the warning signs that this begins are when you tell your wife on a Saturday or Sunday afternoon that you are going to the office to do some paperwork for a few hours.