|
copyright © 2004, by Karyn Greenstreet. All
rights reserved. Tammy, a skilled and
gifted horticulturist, called me to discuss what she needed to know
to start her own florist and landscaping business. She had been in
the horticulture industry for 10 years and was incredibly skilled at
working with flowers and plants – one of the best. She also had
great design skills, as well as good customer service skills. But
she had little business management experience and less
self-employment experience.
Discovering why small
businesses fail was a smart research project for her, as it helped
her uncover her own weaknesses and begin to build up some strengths
before she invested in becoming self-employed. It’s no secret that
many small businesses fail in the first five years.
The question is: Why do they fail and what can I do to prevent
problems in my own business?
As we talked, we
reviewed some of the common reasons why small businesses fail. Here
are 14 top reasons, which might help you to determine why your
business isn’t growing and thriving. Some of them are related to
learnable business skills; others relate to personal attitudes,
habits, or self-sabotaging belief, which are not so easy to change,
except through coaching or other self-development work.
1. Mistaking a
business for a hobby: Just because you love something doesn’t
mean you should convert it into a business. Too often businesses
fail because the owner feels their passion is shared by others.
Research your business idea and make sure it’s viable.
2. Poor planning:
Yes, you must have a business plan. It can be a simple three-page
plan or a huge 40-page plan. The point is that you’ve looked at all
the aspects of your business and are prepared to handle problems
when they arise. Your business plan helps you to focus on your
goals and your vision, as well as setting out plans to accomplishing
them. And don’t get mellow – revisit and revise your business plan
annually.
3. Entrepreneurial
excitement: Entrepreneurs often get excited about new ideas, but
are unable to determine if they’re “true opportunities” and/or put
them into practice. Test every new idea against your business plan
and mission statement before deciding whether to undertake it or
not, and ask yourself, Do I have the time and skill to implement
this?
4. Putting all your
eggs in one basket: Too often, small business owners will have
just one product, one service or one big client. They cling tight
to this one thing because it brings in good revenue. But what if the
one thing disappears? Variety and diversification will cushion you
against the ebb and flow of business tides.
5. Poor record
keeping and financial controls: Yes, you have to keep financial
and business records, you have to review your revenue and expense
report each month, and you have to file taxes and other
business-related filings. If you don’t know how to do these, or
don’t want to, get help from someone who does.
6. Lack of
experience in running a business or in the industry you’re entering:
There are so many hats you have to wear, from marketing and selling
in order to run a business effectively. On top of that, you have to
understand your industry, the skills required to offer your products
and services, and the trends in the industry. If you don’t know
about these basic skills, educate yourself. Talk to others who are
successfully running their own businesses, talk to industry leaders,
get a book, find a website, get a coach, do your homework. And keep
increasing your business and industry skills by attending classes or
reading new books every year.
7. Poor money
management: You need to be able to live for one to two years
without income when getting started; often businesses are very slow
to get off the ground. Also, you have to create and use a realistic
business budget, and not constantly drain the business income on
personal spending.
8. Wrong location: If your business has a "bricks and mortar" location, you need to make sure
that you are convenient to your customers, and near to your
suppliers and your employees. Even something as simple as traffic
patterns and parking can make or break your business.
9. Competition: Customers will go where they can find the best products and
services. It’s important for you to know who your competition is,
what they have to offer, and what makes your own products or
services better.
10. Procrastination
and poor time management: Putting off tasks that you don’t enjoy
will sink your business faster than anything else. You can’t afford
to waste time on unimportant tasks while critical tasks pile up.
All tasks need to be done; if you don’t like to do them (or don’t
want to spend your time doing them), hire someone to do them for
you. If your time management and prioritizing skills are rusty,
hire a small business coach or take a class to help you.
11. Ineffective
marketing: Learn the basics of marketing and make sure that you
track the success or failure of each marketing technique you use,
then dump those that aren’t working.
12. Ineffective
sales techniques: Once you have a potential client, you have to
know how to lead them down the sales path. If you don’t understand
the basics of selling, get some education on it immediately. If a
selling technique doesn’t work, try another one.
13. Poor customer
service: Once you have a customer, you have to keep them. There
are two key points here – make sure you pay attention to what the
customer wants (and how these wants can change over time), and make
sure you provide quick return of phone calls and emails, proper
billing, win-win problem solving and an overall pleasant demeanor.
14. Entrepreneurial
burnout: owning your own business requires a huge investment of
time, money, energy and emotion. It’s easy to work long days and
forget to take time off. But in the end, this only causes burnout
where your motivation and creativity will suffer, and a pessimistic
attitude prevails. You’ll find yourself unable to balance your
business and personal life, and both will suffer. Schedule
self-care time into your work week and be religious about taking
time off from your business.
Dunn and Bradstreet
did a study that showed that
"almost ninety percent of small businesses failures are directly
related to improper managerial functions, that is, lack of
managerial expertise." A small business coach or your local
Small Business Development Center may help you to learn the
managerial expertise you need. You can find a list of the SBDC in your
area here:
http://www.passionforbusiness.com/web-resources.htm
As Tammy and I
concluded our coaching session, she made a list of the areas where
she needed to grow, and created a task plan to get the help she
needed. Today she has a thriving business and is happily
self-employed. You can do it, too. It just takes a little planning
and a close look at both the reasons for your success and where you
might need to get a little help.
------------------------------------------------------------
Karyn Greenstreet is a Self Employment expert and small business coach. She
shares tips, techniques and strategies with self-employed people to boost
clarity and focus, create sustainable motivation, and increase sales and
profits.
Visit her website at
www.PassionForBusiness.com
------------------------------------------------------------
Most Popular Articles
|
|
