On average, about two thirds of small businesses survive the first two years, half survive five years, and one in three 10 years, according to the National Federation of Independent Business (NFIB). After the most difficult (and most volatile) first few years, survival rates flatten out. Keep in mind that not surviving doesn’t necessarily mean failure, either, because a business could be sold or merged with another, according to NFIB.
Many Woodland Park small business owners are excellent examples of how America is built.
If you live here long enough and we have, since 2002, we have seen entrepreneurs make our mountain community a favorite to live, work and have fun in.
Business owners who choose to start in our town can put their heart and soul (and financial savings) into a new business only to have the following predictable mistakes derail their “dreams” for success.
Here are five key mistakes that each new business owner should be aware of. Plus, we have provided recommendations based on our 11 years in business assisting small business clients.
First, being cheap. For each dollar you save you might increase that smile on your face. However, if you get too carried away with saving money, you might end up losing opportunities and customers as competitors make changes to meet demands. Set aside 10%-15% of your operations budget to respond to changes in consumer demands. Also don’t forget to explore every possible avenue for free (or nearly free) funding.
Second, refusing to hire those who might be smarter than you. Yes, an employee might know more than you about a particular aspect of your business. Great! Let them do what they do best. I can tell you that skills listed on a resume don’t always create productive teams. So, be sure and build teams that work well together. Collaborative teams are much more effective than individual stars.
Third, can’t make priorities. This is where you need to become a gold medalist. There is always so much to do and little time to do it. I was once told when the list of things to do was so overwhelming “eating and sleeping was a sign of weakness”. I don’t agree. You need to stay physically fit. So, pick one priority and focus on it and rank order the remaining.
Fourth, your ego. Yes, it can get in the way. You can’t control everything or be the best at all critical business components. We find business owners who believe, for example they can do their own PR and marketing. Statistics show otherwise with many unsure how to integrate PR into their business or grasp how to keep their reputation intact during a crisis. So, yes, it is important to know when you’re stretched and need help.
Fifth, the signs. You either didn’t see them or chose to avoid them. Common signs for failing include small levels or lack of cash, inability to pay back loans on time, inability to pay suppliers on time, customers that pay late, loss of clientele, ill prepared for a crisis and an unclear business strategy.
Finally, much can go wrong when starting a business. It might shock you, but failure is a part of business. Learn from the missteps and structure your business to make the most of it for future success.
(Source: Initial printing in Woodland Park Living, July 2022)
Michael B Perini, ABC, is president of Perini & Associates, a full-service public relations and marketing firm based in Woodland Park. Best of Teller Award 2022, 2021 and 2020. FAA Certified Drone Pilot. Military veteran. Reach Mike at firstname.lastname@example.org.