Each of us has our own unique set of goals. Right now, high on my priority list is getting my motorcycle gear shop open. I can already smell the leather. That’s one of the things that I miss most about working in a motorcycle dealership. My goal is to get my shop open, and just as importantly, to keep it open. This is my first time out on my own. That being said, I am not alone. I couldn’t get this done alone. Each of us has to realize where are strengths and weaknesses are and how to work within those confines. No one person is going to know how to do everything or have the time to get it all done. I am fortunate to have the support of my wife and our families. I have a few industry contacts that are helping to map my route and Dale Carnegie on standby for the things I have to work out on my own.
Fear is healthy. It’s natural to be afraid of the unknown. I have great faith in my business plan. I am still scared as hell that I am going to run into something that I haven’t thought of yet and in a year I’ll be left trying to sort out what went wrong.
It is said that those that do not study history are destined to repeat it. It makes sense. We all learn from our mistakes. Makes sense that we could also learn from the mistakes of others. Governments do it. Sports teams do it. They review past performance of themselves as well as their adversaries in order to form a plan. The same logic should apply to writing a business plan and starting a business. Popular culture focuses on what is new. New trumps old eight days a week. The unfortunate part of that is that all the things that people have figured out are sort of pushed to the side and forgotten about.
As an entrepreneur, you owe it to yourself to turn that into an opportunity. Take some time to learn about why businesses fail. Take advantage of what has been learned by those that have come before you to give your business the upper hand in an increasingly more competitive marketplace.
Making the same mistakes that everyone else has is a waste of your time and resources. I can find plenty of new and creative ways to screw things up and come out the other side unscathed as long as I can avoid the common blunders.
Key Reasons Small Businesses Fail
Underdeveloped Demographic Model – You have to know who your target customer base is if you expect to be able to offer products they will want to buy.
Lack of Financial Backing – Starting a small business is not cheap. You have to know where your Startup Capital is coming from as well as where your line of credit is coming from.
Focusing on the Business at the Sacrifice of Personal Life – Take time for your family and friends. It’s great to want your family in your shop and helping out, but before you know it, running the family business is all the family does. Plan ahead and take time off to spend with your family as a family instead of as cheap labor.
Overestimating Personal Network Support – You have to get some word of mouth advertising out there. That’s going to start with your friends and family. Everyone wants you to succeed; but not everyone is going to be comfortable being your spokesperson. Appreciate that. Do you promote every one of your friends business at every opportunity you see? Me either. Don’t count on your family and friends for your sales. Know who your customers are; and how to get in front of them. Develop a solid marketing plan and be ready to spend on advertising.
Underdeveloped Cash Flow Management Plan – Before the doors are even open, the bills are going to start rolling in, and you have to be ready to pay them. Understand when your customers are going to pay you, when your suppliers expect you to pay them. You have to be prepared to bridge that gap.
Failure to understand your competition – Watch them. Something they are doing must be working or they wouldn’t be in business. I’m not suggesting that you copycat. That’s lame. Look at their marketing, go into their shop, look at how they are doing it and apply what works for you to your business plan.
Don’t Hire Too Early – Employees come at a high price. Exposure to rules and regulations and Taxes. The longer you can avoid hiring, the longer you can avoid Worker’s Compensation, and Unemployment Insurance and Payroll Taxes, and Healthcare costs, and benefits packages and soldiering on when they call off. You are only one person. You can’t be expected to do every single detail of the operation. Learn to prioritize and apply time management. The longer you go without hiring, the easier it will be to afford to when you do.
Pay Your Taxes on Time – Period. Know when Federal, State and Local tax payments are due and get the money in come hell or high water. It is a big deal, the fines will be larger than the taxes due and they can lock you up for not paying.
Lack of Understanding of Industry – Entrepreneurs tend to see optimization opportunities. You don’t have to understand everything that needs to happen in order to manage a business; as long as you can attract employees that do. In business, you make it or you don’t. There’s no excuse for a lack of knowledge and expertise.
Pride – Every entrepreneur wants their startup to be successful. On some level, it’s about recognition of the success the business represents to our friends and family. That pride can cloud your judgment and lead to quietly fighting it out instead of doing the right thing and asking for help when you need it.
Passion – If you weren’t passionate about your business idea, you wouldn’t be reading this. Passion is necessary to a business startup. Passion can lead to a need to prove yourself as right. Sometimes, your assumptions are dead wrong. Get passed needing to be right and focus on your goal. Take the advice you are resistant to and stew on it. I’m not saying you have to take the advice, but you do owe it to yourself to consider someone else’s perspective and look at whether it may help your business grow.
Underdeveloped Business Plan – Know what you need to do to reach your goals. It’s easy to say I want to open a business. Some of us even have the capital to dig ourselves in over our heads before we realize it. Make a plan. Know what to expect; and how you are going to react to it before it happens.