With more than 600,000 small businesses set up in the UK each year, it’s almost expected that many will fail – with some sources quoting up to 80% of small businesses failing within the first year. But prepare yourself for some road bumps and your business could stay the course.
Whatever the precise failure rate is, it is not insignificant. It’s tough work keeping a business afloat and it takes a special kind of person to weather the storm. Someone who is not put off by the failure stats (or they feel safe in the knowledge that their venture will be different). But it also takes someone who knows that there will be many bumps along the way and is prepared for them.
Whatever your reason for setting up your small business, you need to be aware of the risks. Whether you want to be free from the shackles of a corporation, or feel you have a specialist skill or you feel highly motivated to sell a particular product or service, perhaps you are a woman returning to work and looking for a new opportunity to be self-employed – you will need to be the type of person who can overcome hurdles and obstacles and push through when things get tough.
On a recent interview for our podcast we asked Matt Watson from Stakify how he overcame hurdles in business. “Well, it’s always a struggle when you’re trying to start a business … The reason I keep going more than anything is that I’m passionate about what I do, I’m passionate about the problem I want to solve, and I don’t want to fail – failure is not an option so we ask how can we keep moving forward. Whatever the hurdle is we’ve got to figure it out, keep going.”
But how do you ensure that your business will be a rip-roaring success rather than simply a means of throwing away your savings and spending long hours at tasks you are tragically unprepared for? There are some obstacles that most businesses will face at some point, and it’s your passion to see the business survive that will help you over them.
In another interview with Gina GeoGhegan, of Wild Fizz Kombucha, we asked her what it takes to get through the tough times. “If the sole reason is cash, you know ‘I wanna be a millionaire’, then don’t do it – you need to have passion. It’s the passion that takes you through, that makes you, on a Saturday night at 3am, with a newborn child, to try to figure out how you’re gonna pay for the next production line. That’s what keeps you going. You have to really love it. You have to believe in what you’re doing, and you have to love it.”
Just like in life, it is these roadblocks that can either make your business stronger and more resilient, or it can break you, and you end up as one of the business failure stats. But you can take steps to avoid the latter. The first of which is to recognise that setbacks are inevitable and to see them as opportunities to grow.
“…you will discover, time and time again, that what matters most is not what these obstacles are but how we see them, how we react to them, and whether we keep our composure. You will learn that this reaction determines how successful we will be in overcoming—or possibly thriving because of—them. Where one person sees a crisis, another can see opportunity. Where one is blinded by success, another sees reality with ruthless objectivity…” Ryan Holiday, The Obstacle is the Way: The Ancient Art of Turning Adversity to Advantage
When you experience a setback, you can get bogged down or you can grow. What distinguishes a successful business from a failure is whether you get discouraged and contemplate giving up or you embrace the setback, learn from it and move on.
One crucial step in helping your business succeed is to be aware of the main problems that will tip the balance between a successful business and a failure. These could be…
Finding customers – A tricky one for new businesses. If you don’t know where your customers are likely to hang out, then you can’t tempt them with your product or service. There are multiple ways to place your offer in front of your ideal customer, find the one that works for your business. Read this excellent tutorial on how to use Facebook to find clients.
Lack of capital – While some small business owners assume they need access to a considerable sum in the beginning, others think that this can lead to uncontrolled spending and poor decisions. Staying as debt-free as possible helps you to avoid tying the company up and allows your business to grow at a manageable rate. Keep overhead and operating expenses to a minimum in the first couple of years.
Getting paid – When you’re running a small business, your primary focus is going to be on acquiring new customers and clients, but this can be to the detriment of your accounts receivable. Be organised and invest in accounting and invoicing software to ensure your customers are being invoiced and are paying you on time. Stay in control and maintain cash reserves if you can.
Employees – Your employees are the face of your business so make sure you choose wisely. Just one great member can be the making of your business and adversely one harmful team member can be the downfall of it. When you have the best team possible, make sure they know that they are important to the business by offering regular praise and acknowledgement. They will need constant motivation to perform at peak level.
Marketing – There’s little point dipping your toe into numerous marketing ponds and hoping something will bite, this just wastes your time and money. You’re much better off with only one or two channels that you feel most comfortable with, and mastering these.
Also, once you have customers, you must do what is necessary to keep them. So create long-term customers and keep them happy with regular contact such as email marketing so that you spend less on attracting more customers.
Burn out – As a business owner, you probably spend way too many hours at work, which can become exhausting. Study after study has shown that too long hours at work can adversely affect productivity and can lead to burn out very quickly. Schedule in plenty of time out and then you can face adversity with a fresh perspective. Start with a sustainable working week – aim for 40 hours.
Scaling revenue – In such a competitive marketplace you must find ways to scale your revenue by creating upsells, raising your prices and marketing your product or service as a premium brand. Focus on constant growth to move forward and upward.
Learn the lessons – With every failure or setback there is a lesson, make sure you understand what it is. There are also many others who have experienced setbacks in their business who are willing to share this with others. Socialise with people who’ve been there, done that, and learned the key lessons. But also read, listen to audio books and podcasts to see how others have overcome their hurdles.
Everyone who has successfully run a business, from the multi-millionaire author to the successful small business entrepreneur – has experienced obstacles. There will always be one lurking around the corner. Know that it will happen at some point, have a strategy for dealing with it and you’ll be better equipped to keep your business on solid ground.
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