I am often asked what
would you tell the small business person just starting out? What path would you
guide them down? According to Investor News, 85% of small businesses
fail in the first year and of those that make it past the first 12 months 50%
of them will close their doors by year 5 and 65% will shut down by year 10.
Wow! With those kinds of statistics why on earth isn't everyone rushing out to
open their own company?!
We entrepreneurs are a
different breed. We have our own special kind of crazy. We are
fabulously optimistic, wildly delusional, often day dreamers and maybe less
often workaholics. We are the janitor and the CEO, and usually everything
else in between. That first year, we are fearless and know-it-alls.
So for those mighty souls
out there:
Know what business you
are in and your unique value.
That means that if you
are in the residential roofing business, you're probably not in the roofing
business. You're in the business of providing peace of mind, security, and
expert consulting services. There are lots of roofers out there that can
shingle a house, but what value are you providing that the other people aren't?
If you're going to be in the business where you deal with the people (and isn't
everyone?) then you need to know exactly what extra value you are bringing to
the table and why they are hiring you.
Watch the money.
I don't just mean the
cigar box method of accounting, where you put money in the cigar box when you
get paid and take money out when it's time to pay bills. Invest in and
learn a user friendly small business accounting program such as QuickBooks or
Peachtree that is designed to help you track accounts receivables and expenses.
Don't depend on anyone else to watch your money the way you watch your
money. The information those programs will provide you will prove invaluable as
your company grows.
Don't hire help too
quickly.
As an overwhelmed small
business owner you may feel that you need to hire help to get all the things
done that need to be done in a day. There are a lot of virtual assistants
out there that can assist you in the day to day administrative tasks without
the headache and expense of a full time administrative assistant.
Subcontractors are a double edged sword. They don't only work for you and
may in fact work for your competitor as well but they are responsible for their
own taxes and insurance and they are paid on a per project basis so if there's
no work, you don't pay them.
I don't know of any
business that starts out with the intent to close in the first 5 or 10 years.
Mitigating that risk starts with seeing what other companies have done
well and what they haven't. You don't have to learn all the lessons
yourself, success and failure both leave clues along the path. Watch for
them.
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