According to the Bureau of Labor Statistics’ Business Employment Dynamics,
studies show that about 20% of small businesses fail in their first year with 50% of small businesses failing in their fifth. These rates hold true in both times of economic prosperity and during periods of recession suggesting that economic factors, surprisingly, don’t have that much of an impact on whether or not a small business survives.
If the economy’s not to blame, what is? Over my twenty years tenure working with small businesses, the most common I’ve seen include:
Improper planning. You might make the best fried chicken in the whole wide world, crisp and crunchy on the outside and tender and juicy on the inside, but that doesn’t necessarily mean you’ll be vying for Colonel Sanders job any time soon. Many entrepreneurs are so focused on achieving their dream of financial independence through self-employment that they fail to properly plan for what capital will be required. Someone once told me, “If it doesn’t work with a pencil, it won’t work with a plow.” For the life of me, I can’t remember who said those words but my goodness, were they ever right. You can have a phenomenal business idea conceptually but if you can’t make the numbers work, you are doomed from the get go.
Poor Leadership Skills. Having the ability to fry chicken that is to die for isn’t an indicator that you have the leadership skills needed to run a successful business. According to Entrepreneur Magazine, 23% of small businesses fail because they haven’t established the right team. Effective management and leadership skills are essential in creating a cohesive team and setting a company culture that produces results. If leadership isn’t your strong suit, recognize that and make it a priority to develop skills to strengthen the areas in which you are weak.
Unclear Identity. Figure out the true value that you bring to the table which is unique and different to others in the marketplace. What makes your business special? What do you do better than anyone else in your market? How does that make you stand out from the rest? Maybe you serve your fried chicken family style at communal tables. Maybe you top your chicken with a secret sauce. Maybe you serve the most mouth watering buttermilk biscuits alongside every order of chicken. Whatever it is that separates you from the competition, when you figure it, communicate that to not only your staff but to your customers, too.
Can y’all tell I’m craving fried chicken? Even if you don’t aspire to own a chain of fried chicken franchises, take steps to overcome these three common mistakes made by small businesses to increase your chances of success.
Coco Chanel said “I like my money where I can see it…hanging in my closet” and from the looks of my jammed packed walk-in closet, I do, too. Even though I’m good, and I mean like really good, at helping you all stick to your budgets, I confess. I have trouble sticking to my own. I get one email from Nordstrom’s alerting me of their big sale and I forget all about the clothing line item on my budget. A few too many thick cut filets and something flambeed at trendy downtown eateries and my dining out budget for the month is done. With that said, I’ve decided 2018 is going to be different. I’m going to stick to a budget. Lord willing.
Oftentimes, we take an all or nothing approach to budgeting. Whether it’s to pay off a looming credit card balance, buy a new car, or just save for a family vacation, commonly, budgets are done with short term goals in mind. This can lead to a “diet” approach to budgeting. Many go on diets to fit into a swimsuit for a summer vacation, count calories to make a wedding dress fit, or meticulously track fat and cholesterol in anticipation of an upcoming physical only to switch back to old eating habits once the short term health and fitness goals are met. Similarly, once the credit card debt is paid, the new car purchased or the family vacation is over, people often revert back to their pre-budget spending habits.
Budgeting should be used as more of a long range strategy to boost your overall financial goals instead of a diet type quick fix solution. Changing your view of budgeting from one that focuses on short term objectives to one of long term financial goals can help you achieve financial stability. Don’t expect change overnight. Set reasonable attainable goals that will help build confidence when tackling bigger financial issues in the future. Your overall financial health will improve when you view budgeting as more of a lifestyle change and less of an all or nothing diet. Below are some tips to help start the process.
Write it down. It’s boring and tedious but creating a budget and tracking your expenses is the single most important thing you can do to save money and increase your overall financial position. Go old school and write it out long hand on a spiral notebook or kick it up a notch and go high tech automating it with online software.
Lose the sense of entitlement. Having an entitled mindset of I “deserve” a new car or a bigger house can lead to uncontrolled spending on luxuries not necessarily in your budget. Accept that you want things, budget in small amounts every month for those splurges. Budgets are not just for necessities in life. The splurges need to be budgeted for, too. Can someone please show me where the designer high heel line item on my budget is? Seriously, splurge but don’t got overboard.
Be reasonable. Don’t plan a budget you will never be able to keep. Just like a diet or exercise program, it’s important to be realistic. Don’t worry Ashland Nails. There’s just some things a girl can’t live without.