Will your small business beat the odds against failure?
Get a head start on making your business a success.
Take the necessary steps for long-term business survival. The Cheshire cat remarked to Alice (In Wonderland), “If you don’t know where you are going, any road will get you there.” Clearly two thirds of businesses are on the road to failure. While starting correctly is no guarantee of success, heading in the right direction can’t hurt.
Christopher Hann, writing in the October 2014 issue of Entrepreneur Magazine, interviewed business owners and others to better understand the necessities of starting a business. He recommends that knowing to expect the unexpected is vital along with how to respond to this challenge. “Knowing how the business will run is a form of making decisions before you have to make decisions,” says Hann.
When doing international service in India, I was surprised to continually hear the term “scheme” in place of “plan.” After a few days, it became a direct translation without suspicion. Words are only symbols to match reality. I became cognizant of the true meaning of scheme – to plan, but also be aware of contingencies to overcome barriers in the original plan.
Hann recommends knowing not only the business legal structure (LLC, sole proprietorship, S corporation), but to also build the right team. “Entrepreneurs are by nature connectors of people, so they have strong networks; this trait puts them at an immediate advantage”
“Your teammates need to share your ideas about how the business should be run. The crucial element here is that entrepreneurship is a team sport.” There is no “I” in team.
Jason Baptiste writes a post on startups that the CEO is the “I” in the team. The CEO needs to “take on for the team and be the keeper of the company vision. A good startup CEO will absorb the stress, be able to mask this pain and stress.”
He does agree with Hann that an owner needs, “a great knack for finding talent (that is) smarter … on specific topics.” Additionally: “The real key to hiring … comes after the hire and in being able to trust the hires … (will) make (decisions in their) areas of domain expertise.” Moreover they “will surround themselves with smart mentors to be a sounding board along the way.”
Baptiste also lists that a good startup CEO should, “Be able to learn on the job (and have) an ability to learn along the way and embrace their failures to become a better leader.” Being able to say when to say when and no are also traits (and drawback) for a good leader.
Sharon Epperson of National Business Report lists “maintain a singular focus” is starting up because, “small businesses often lose focus, even successful ones.”
Baptiste agrees, “Leadership at moments of public despair and keep the company focused to debunk … rumors or even approach them head on by keeping the members of the company focused on the bigger mission at hand.” The need to be a great communicator, as witnessed by being “able to portray the energy and passion daily basis (and) to communicate the vision and hope for the future” is vitally important for sustainability. He also emphasizes that a company leader needs to focus on results, not individual fame.
The good news is that survival rates for businesses improve over time. Visions become better focused and jointly shared. Products better match the needs of the customer. Processes become more refined. Technology is embraced. Methods for reducing overhead are continually sought.
According to a 2012 SBA report, several estimates show the U.S. lost more than 170,000 small businesses during the Great Recession. One of the most important lessons entrepreneurs have learned from the financial crisis: Streamline the business.
Epperson reported thatbusinesses need tocut from their budgets probably right away. “One company, Crivellos retooled their business to operate virtually hiring designers from all over the country on a project-only basis. They also cut down on overhead cost and expensive, unnecessary workspace – resulting in a leaner, more efficient business.”
She concludes; “The smart entrepreneur, whether they’re very successful or just starting out, knows that they should keep overhead as low as possible. The digital age has really created incredible opportunities for people to manage virtually and keep their overhead quite low.”