Small Business preparedness

According to the Small Business Administration (SBA), “planning is critical to successfully starting and building a business”.  Intellectually we know this, but making the time to do so can be our downfall. 

Businesses start and fail in the United States at an increasingly staggering rate.   For example, every year over 500,000 people start a business of some sort.  By the end of the first year, at least 40% of them will be out of business.  Within 5 years, more than 80% of them—400,000 people—will have failed!  And, if your business has managed to survive for 5 years or more, don’t breathe a sigh of relief yet.  More than 80% of the enterprises that survive the first 5 years will fail in the second 5 years.

 Lack of planning is primarily responsible for this high percentage of failure.  Michael Gerber raised these startling questions in his book “The E-Myth Revisited”

  • Why is it that so many small business fail?

  • What lessons are they not learning?

  • Why is it that with all the information on how to be successful in business, so few people really survive?

What is the answer?  The solution lies in several things, but foremost it is having a needed product or service and a solid business plan for future growth and success.  Unfortunately, most business’ owners choose to ignore this critical step because time is a factor.  If failing is not an option, then we must take time to develop one or have a business plan expert develop your business plan. 

The business plan is the roadmap to take you on the journey of entrepreneurship.  Even before you open the business, have a business plan.  It will tell you whether or not your business idea is sound and if there is a need for your product or service.  You will make these discoveries by doing a needs analysis and market research.

Other things to consider are:

  1. Your competition – what are they doing differently and how can you craft out a niche to capture your market share

  2. A market plan – What are your strategies to brand and market your product or service. It helps you to determine where to spend your marketing dollars.

  3. Goals and objectives – This is a basic necessity for any business. Set effective goals and write them down. This keeps you on course so you are meandering and chasing after the wind.

  4. Financial projections – This helps you to see the big financial picture; market prices versus your prices, cost of goods or services, how much revenue you intend to generate, and how does your financial picture look for the next 3-5 years.