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.