08 Feb

The Problem With Small Business

There are 8.1 Million Small Businesses in America today.  They employ over half of all private-sector workers and almost 40% of those in High Tech jobs (approximately 130 million workers).  They provide between 60% and 80% of all net new jobs annually.  They produce more than half of all non-farm private gross domestic profit in the US (roughly $6 Trillion).    Small Business is important.

Unfortunately, within five years of opening, according to the SBA, almost 90% of all these businesses fail. These business owners are usually very good at what they do, manufacturing something, providing a service, etc.  What many of them lack is the know-how to manage all aspects of the day to day operations of that business.  The high failure rate is due to the very real fact that they do not have the training, education, knowledge, or experience to do it all.  To be successful, they must do it all and do it well.  How do we accomplish that?

How many small business owners truly understand how to “do all things well” when it comes to running a business?   Most don’t, and whether they take advantage of a program offered free, a program offered through an educational organization, or self-study, they still don’t get beyond the basics.  They have to find a means to put it all together.  Some hire business coaches. Learning how to run a business, what tools are available, and how to use them, are important.  A Certified Coach can help with that.

Many buy into the age-old “you have to sell more to make more” line.  True partially but destructive if not done properly.  Business owners buy advertising that gets them a lot of attention, but unfortunately not the attention of their buyers.  Some Business Owners believe that having their website pop up first through SEO is an effort worth their limited advertising dollars without considering just how valuable or not valuable that service is.

Running any business, even a small business, is more than simply having a Business Plan that even your bank may not read, a lot of advertising without a plan, and a product or service to sell.  It is about having a strategy to obtain a steady flow of customers from multiple sources to ensure seasonal and economic downturns don’t harm your business.  It is about a strategy to upsell to new customers and retain existing customers.  It is about a financial management strategy that is more than Profit & Loss Statements or balance sheets.

So what should you do?  Your financial documents can tell you much about your business, yet they will not always tell you everything, even if you know how to read them.  Most often, they are a report of what has happened; they are not a report of what will happen.  Begin by understanding what is happening in your business, understand not only what is and is not happening, but why; then understand how that affects the other areas of your business.   Be prepared to answer these questions:

  • How well are you attracting qualified good and new 1st time customers for eventual sale?
  • How effective are your sales?
  • How much error and waste does your business have?
  • How good is your customer service at upselling?
  • How well does your customer retention get customers to buy again?
  • What is happening with your Cost of Goods Sold, and does your pricing truly create a profit?

And a few more

Focus on ALL aspects of your business, production or service, marketing, and sales, customer service, waste and error elimination, strong, effective financial practices; all of those are what matter, and through all of them, you are successful.  You don’t need to be an expert, but you need to have good user knowledge of how those work.  Find someone, someplace, a school, an adviser, a Certified Coach, to give you the tools, give you the training and education on how to use them, and THEN coach you toward success with these tools and processes.  That is what a successfully engaged business owner does.