Over the last six years working with more than 1,500 small business owners, I've heard a myriad of reasons about WHY people start a business but typically they boil down to one of three core reasons for embarking on one of life's riskiest journeys.
Irrespective of your motivation, I doubt you're going into business with a desire for failure and I suspect you might welcome seven tips that could enhance your chances for long term success.
Tip 1 - understand why most businesses fail to reach their full potential.
Yes, there are a multitude of reasons/excuses why business owners fail to reach their full potential--lack of capital, competition, unfair landlords and competition via the internet--but the two most common REAL reasons are that business owners are unclear about their goals (or have lost sight of their original goals as to what they want to get out of their business) OR business owners don't really know what's going on in their business.
We're no longer shocked by the blank faces of business owners when we ask them why they are in business. After talking for a while, they start to remember their original reason for starting. A balanced lifestyle is one of the most popular reasons but often hard to believe when we see them (the business owners) working incredibly long hours for little return and often feeling trapped like those hamsters on a wheel who keep running faster and faster whilst getting nowhere.
Not knowing what's going on in the business is also extremely common and relates to knowing your KPI's (key performance indicators) e.g. how many people you have to connect with to get the right percentage to walk through your door and the right percentage of those to purchase and the right percentage of those who purchase to become loyal clients and/or referrers of others to your business OR acceptable reject rates for manufacturing and managing against these.
Tip 2 - know where you are
This may sound stupid but in reality you must ALWAYS know where you are at in your business. You have to be able to identify your strengths and areas of challenge. You have to know when you require assistance (and have the courage to seek it). You have to know how much money you have and how long it will last. In other words you have to be constantly aware of your current reality rather than getting lost in the rose-colored glasses view of how you believe your world should be.
Tip 3 - know where you're going
As stated above, many small business owners (in fact I would say most from our experience) are in business as a result of habit rather than on a clearly defined journey toward a destination of their choice. Can you imagine a potential Olympic athlete who approaches his or her sport with the idea of, "If I turn up to training a few times I might win a race or get selected on the team and I could even win an Olympic gold medal one day."
As we all know, an athlete requires far greater dedication to achieve Olympic Gold and so do you if you are going to be successful in your own enterprise. Having said this, however, it's important to realize the size of obtaining your "gold" may seem overwhelming so, like the potential Olympian, you have to break down the big picture into manageable chunks so you can see how far you have come.
Tip 4 - decide your income
Yes I did say it correctly--decide YOUR income. Think about what you might look for financially when considering purchasing a business. For most, this would be the ability for the business to pay its bills, pay lifestyle wages and generate profits to grow the business.
It is interesting then to consider why many start-ups and those in small business believe they are only entitled to what's left over rather than earning a realistic income from their business?
When working with clients we help them create a predictive budget/cash flow using a tool we have developed so they can determine HOW much money the business has to generate to pay its way, provide wages for the owners AND create profits with which to grow their respective businesses. This latter point is crucial for success. After all, if you don't plan to create profit for growth, how is your growth going to be funded?
Tip 5 - tell the world
OK, so we know where we are, know where we are headed and have decided our income. All we have to do now is get customers buying our products or services. But WHO are these people and WHERE are we going to find them?
Sadly, many clients work on the "Field of Dreams" basis--build it and they will come--and while there is much truth in the belief, the reality usually requires that "they" show up a lot faster than your money will allow you to wait.
Marketing is a big topic in its own right so we are not going into any great depth here other than to highlight some of the key ingredients to be considered BEFORE launching into websites or advertising. It's important to remember an overall marketing strategy has to combine your decisions about who the people are that are most likely to buy what you have on offer, what these potential customers expect about the quality/service/price relating to your offering, how and where you can most appropriately communicate to/with your target audience and lastly, what messages are important for THEM to hear.
Tip 6 - manage for success
Everybody manages to succeed, I can hear many of you saying, but in truth, most business owners we see are too busy managing to avoid failure rather than managing for success.
So what's the difference?
Managing to avoid failure involves knee-jerk reactions to financial pressures and/or people dramas, whereas managing for success relates to constantly knowing what HAS to happen in your business, analyzing constantly and tweaking the bits that are not working effectively.
Obviously specific aspects of what applies to each business varies; however, there are some common elements of successful businesses that are worth emulating, like having clear policies and procedures, operating systems, providing right and effective training to your people and as stated earlier in this article, understanding your KPI's and managing your business around them.
Tip 7 - get a coach or mentor or both
One of the biggest differences between the Olympian who succeeds and the one who doesn't even make it to the Olympics is often the difference in quality of his/her coach or mentor. The coach/mentor is outside of the day-to-day activity and can provide a cool outsider's perspective about what needs to be done and/or can bring to the table ideas and concepts outside the athlete's awareness or current level of experience.
The same is true for business. When selecting a coach/mentor, ,it's important to be sure you choose the right one.
Remember, they are there to help YOU rather than sell you a coaching system designed to make them money. So ask questions about their specific expertise in business, ask for names of other businesses in your industry area they have helped so you can reference check them, check their availability in relation to responding to problems or issues you may encounter, and lastly, determine what is and what is not included in their fee structures.
Even as a coach/mentor myself, I regularly liaise and work with others to advise and assist me on a variety of aspects about my business and in fact owe many successes to their timely and sage advice.
So in short, if you would prefer to have the gold of a successful business rather than digging in the dirt in the lowest paid and most frustrating job of your career, I urge you to take heed of these seven tips and wish you success.
Article written by Anthony M Turner, an Australian based Coach, Mentor and skills trainer for small business who has assisted around 1,500 individual business owners from a wide variety of business disciplines to achieve their best.