5 Things You Need To Remember Before Starting a Small Business
Everyone knows someone who has decided to go into small business but did you know that 70% of all small businesses fail within the first 12 months of operation. In some countries that failure rate is as high as 85 to 90%. Small Business is one of the toughest 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 over the last 10 years and every single one of them has been started from scratch and survived into a thriving business. Just recently I have decided to sell one of the businesses off cause it had done what I expected it to do which is the first issue you need to think about.
Issue 1. Have a Clear Understanding of What You Want To Achieve In Your Business
The majority of people, who actually go into business, go into it for the wrong reasons. Even I have been guilty of that. So what is this wrong reason, most people start a small business because they believe they can do a better job then their current boss. Maybe this is true, maybe it is 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 suggest you stay away from small business.
One of the key issues you must remember before evening thinking about starting a small business is this. Do you know what your business will look like? If you were walking down the street, how would you want to be found? What impression do you want to give to your clients? What clearly do you what to achieve in this business?
The second clear understanding you must have of your business is, when will you know when it is finished? When 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 that is one of the worst things you can do. Before you ever start a business, the first thing you must work out is how you are going to get out of the business.
Two years ago, I started a small car cleaning business. My wife and I both started it because she wanted to see if she could build a business. Our exit strategy was to sell the business once it was done. How we would sell it was something we were not sure of?
See we could have taken a number of approaches to this. Our exit strategy could have been to franchise the business, sell it to a single owner or to float it on the stock market. We chose that we only wanted to sell it to another owner, but we still built the business in such a way that there was still plenty of growth and opportunity in the business for the new owner, but we had removed the risk for them on how to run the business by clearly documenting everything they needed to do to run that business.
Before ever starting a business, always think about how you will exit the business, when you have achieved your objective for that business. If you do not have an exit strategy in mind, then you will never get out of the business.
Issue 2. Keep a Strict Schedule
Small business is consuming. Unlike in large corporations where you can hire many people to do a range of tasks, small business requires the small business owner to do many of the tasks themselves. Some of the tasks include doing your books, lodging trademarks, doing the ordering etc. Often when you start in small business, you can not afford to hire people to do these tasks.
What I have personally found is that if you do not keep a tight schedule and document your meetings and tasks you have to do then it will not take very long before you will be swamped by all the things you have to do in the business every day. It is this phenomenon that often leads small business owners to quit and fail in the first twelve months. Let me tell you this, the warning signs that this is starting is when you say to your wife on a Saturday or Sunday afternoon that you are going down to the office to catch up on paperwork for a few hours. Once you get into this habit, you will never stop doing it and the business will consume you really quickly.
I strongly recommend all small business owners keep a diary. My preference is to use Microsoft Outlook, simply because it includes a calendar and you can make sure that each day you schedule your work plus your appointments to make sure you do not forget anything. If you do this, then you will find over time you can get through this plus you will learn how long it should take to do the various jobs that make up your business and whether it is worthwhile in getting someone to actually do those tasks for you.
Issue 3. Build Your Own Mastermind Group
I read a book a little while ago called Think and Grow Rich and is written by a gentleman called Napoleon Hill and he talks about the thirteen secrets to success and obscene wealth. One of the things that I learned both from this book and being a small business owner was that I needed a Mastermind Group.
The Mastermind Group is simply a group of professionals who can help me achieve my objectives for my business. Literally anyone can be part of your mastermind group and some of those would be people like a lawyer, an accountant and other people like your peers who can help you in building your business but it may also include people who are not in business as well to help you keep that balance. The Mastermind Group are really those people you turn to for advice and direction. You do not necessarily have to take their advice but a good mastermind group will allow you run through scenarios on what is happening and the potential outcomes.
Issue 4. Have one night when you do something on your own for you!
One of the big issues that I have had over the last ten years is that I have not been doing every single week is something on my own but I say that I am in the process of changing that. Often when you start in business, with the excitement of building your own business you get so consumed that you forget about a life outside of your business and your business becomes your life.
This is really not a good thing nor is it healthy. Even multi-billionaires do things for themselves outside of business. Look do not get me wrong, business is fantastic and fun and can be both enjoyable and a nightmare however there are other things out there outside of business.
When you start a small business, do not neglect your sports, do not neglect doing something social, if you do, in the long run you will find that you business suffers. Plus, in small business it is very easy to become bitter and twisted but by maintaining those none business activities it will help you to balance your life.
Issue 5. Don't neglect Your Partner or your Family
I would love to see the divorce statistics for small business owner’s because I am quite sure that the divorce rate in small business would have to be about 70 or 80%. The majority of married couples (and I am talking about 90% of the small business people I Know) that I know who have gone into small business in their 30’s have actually been divorced within 18 months of them starting the business.
Look there are lots of reasons why this happens, but in a lot of the cases, the partner who has gone into business neglects their family and money gets tight. In the partners case it is not their fault it is simply because the person gets consumed into the business and they forget they have a life outside of the business.
If you have a family, make sure that you do at least one activity a week as a family. Whether it is having a family night at home such as a video night or games night, or even just going to the park to play once a week, make sure that you do it. PLUS, you must ensure that at least one night a week must be for just you and your partner. If you do not do that your marriage or relationship will suffer.
One thing I share with all the people who come through our training business is that if you want to go into business that is cool but you must be prepared to accept two things -
1. You must be prepared to start from scratch if your business does not work that is you must be prepared to start with just the shirt on your back.
2. You must have 100% support of your partner and family
If you cannot accept these two things, then do not go into business because too many people who I see that start on this journey fail and end up miserable and have such a downward spiral which leads them to doing something silly, like take up drinking, drugs or try to commit suicide. Remember, 70% of all small businesses fail within the first 12 months. If you were a betting man would you back something that only had a 30% chance of winning, not likely, yet people still go into small business.
The bottom line is this, small business can be the most awesome ride of your life, but it can be also the most difficult and when you choose to go into small business, take your time and plan what you want to achieve. Remember the old saying if your Fail to Plan, you Plan to Fail.