According to US Bureau of Labor Statistics 25% of Small Businesses fail in the first 24 months, less than 50% survive past five years, and only 35% are still in business after ten years. There are many reasons given as to why small businesses fail. Some blame the economic conditions, changing competition, or government policies.
I get fired up when discussing business success. The real reason businesses fail isn’t economic conditions, competition, government policies or most any other excuse. The real reason is that business owners make mistakes in several key areas.
There are always challenges in running a business. I believe that if you want to be a successful entrepreneur, find out what successful businesses do and follow their example.
In the past 35 years, I have made mistakes and learned crucial lessons about business and how to grow profits. You too can improve your success and have the numbers up and to the right.
Increase Your Success
1)Passion, Profitability, Proficiency
The first key to a successful business is having all three P’s. If you run a business and don’t have passion for what you do, boredom will set in. With boredom, the quality of your work will decrease and so will profits.
Malcolm Gladwell’s research shows that it takes 10,000 hours to become proficient at anything we do. If you aren’t willing to put in the time to be great at what you do, you are limiting your business.
If you have passion and proficiency but have a limited market, you don’t have a business. You have a hobby. Your idea has to be scalable.
2) Become Debt Free
One of my favorite business books is “Common Sense in Business Matters” published in 1892. The cost for this book was $1.00 and included shipping to any address in the United States. The first paragraph has the following advice: “Be self-reliant, punctual and strict in keeping engagements. Do not “Put Things Off”…. Prefer cash to credit at all times, either in buying or selling.
If you borrow to grow your business it greatly increases the risk of failure. Borrowing can amplify mistakes to the point of being fatal to the business. To build a great business, be patient, and let it grow organically over time.
Personal debt is just as destructive. If you are making payments to the bank, you aren’t building wealth for yourself. My personal rule is not to borrow for anything that is consumable or depreciates. This includes equipment and vehicles.
3) Have a Clear Vision About Your Business
As a business leader, you have to ask the hard questions. What is your business strategy? What will your business be like next year? What will your business be like in 5 years? What are you doing today to reach your vision of your business?
A great leader will be able to communicate their vision to build their company. A leader that has great vision will attract motivated people to help achieve that vision.
4) Marketing Strategy
What is your marketing strategy? Marketing has changed dramatically in the last 30 years. Seth Godin in his book We Are All Weird
Mass media advertising is no longer effective, so new methods have to be employed. Content is the new marketing.
5) Know Your Numbers
Accounting is the language of business. Paradoxically many small business entrepreneurs hate the details of doing accounting. Many enjoy analyzing the numbers but not the number crunching. Nevertheless if you are just getting started take the time to develop the discipline of accounting because knowing where and why you are making profits it critical for success.
After you achieve a level of success and grow, then you can outsource the bookkeeping. This will free you up to continue improving your business.
6) Have Trusted Advisors
The ability to surround yourself with trusted advisors is an absolute if you plan to scale your business. If you have advisors that will tell you that your ideas are terrible, when they are, and not just tell you how great you are, will be invaluable.
The people you choose to spend time with will greatly influence what you are. Jim Rohn made the observation that you are the average of the five people you choose to spend the most time with.
As a leader you will make difficult decisions about your business. When you implement these six areas those decisions become easier. So grow your business and enjoy your success.
Quote of the Week: “Success is not to be pursued; it is to be attracted by the person you become.” – Jim Rohn
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