According to a study by the U.S. Small Business Association, only 2/3 of all small business startups survive the first two years and less than half make it to four years. I'm sure you have heard similar statistics and wondered - why? Why do so many people fail at small business?
After wondering about this for many years, I have determined the following characteristics to be prevalent in a failing small business owner. Most people tackle small business failure by starting with "the typical failing small business is under-capitalized, has a poor concept, a poor location."
I believe, however, that there is a profile of a person that is more prone to find success in small business ownership, and a profile of a person who is more likely to fail in small business ownership. Below is a list of what I see as the characteristics of someone more likely to fail in small business.
• Not a risk taker
• Prefers a 9a-5p schedule, with paid vacations and maternity leave
• Did not think through their concept thoroughly
• Hasn't fully bought into the concept of their business
• Doesn't follow a system
• Does not manage time well
• Doesn't have a "whatever it takes" attitude
• Is not good at delegating
As you can see from my list, I believe that the failure of a small business usually lies more in the hands of the owner than the concept or business itself. Of the 8 characteristics I mention, 7 of them pertain to the business owner themselves, while only one of them points directly at the business concept.
We can all agree that not every idea for a small business is a good one. Plain and simply, there are some pretty bad concepts that actually come to fruition today. Luckily, there are also a lot of safeguards against these kind of ideas every becoming reality: Business Consultants, Bank Loan Officers, the Small Business Administration.
These entities can usually coach a potential small business owner from making a big mistake in their concept. Unfortunately, sometimes the wrong concept slips through the cracks. If one is passionate enough about their concept, and have enough money, they can usually make it come to fruition, one way or another.
Before beginning a business, there is a lot of work to be done. Especially if the concept of the business is "new" - something that doesn't exist in the marketplace today, or a new twist on an "old" concept. This biggest mistake one can make is picking a concept simply because they like it themselves.
When presented with a concept I have heard defending entrepreneurs say "I would shop there", and "I would use this service" and "I wish I had access to a company like that 10 years ago!!!" I, I, I......what about them, them, them, them?
A business cannot survive on only one customer - you! And - okay, here's some shocking news - not everyone agrees with you, thinks like you do, has the same likes and dislikes that you do, nor has the same needs as you do. In order for a concept to work, it must be widely acceptable and usable by a large number of potential clients.
So first thing first. How many customers does your business concept need to survive, grow, make money? And, are there that many potential customers "out there" just waiting for you to begin business? Is there a need, a demand for your business, your product, your services?
Enough of a need and demand that your business can last? How often will customers need your products and/or services? Many great ideas are just too "specialized" to work alone. Perhaps your idea could be combined with another idea or ideas to make a whole business. Is your idea solid, or simply trendy?
Sometimes it's just the wrong time for a concept. Take Krispy Kreme for example. They started their US expansion during the Atkins Diet craze! While the country is forgoing the consumption of carbohydrates in an effort to lose weight,
Krispy Kreme was serving up 22 to 47 grams of carbs per doughnut!!! No doubt today's society is more health conscious than they were 10 -15 years ago, but even the least health conscious consumer recognizes that consuming 6-11 grams of saturated fat per doughnut is not going to make your waist any thinner, or lower you on the waiting list for a heart attack! Thus, several Kripsy Kreme locations have closed their doors in recent years - because of bad timing, among other reasons.
Many phenomenal concepts also fail! No concept is impervious to the effects an owner, manager, or employees can have on it's success. Even some of the best concepts - with multiple prosperous locations, fail under the guidance of the wrong person. Take Starbucks for instance. Most people will say that this concept is a no-brainer. Yet early in 2008, Founder Schultz announced that they would be closing around 100 US "underperforming" locations. Yes, even Starbucks can fail!!!!!
No matter how great the concept - the small business owner can make or break their business. No one goes into business ownership to fail. We don't sacrifice our family time, borrow against our homes, gamble with our "nest eggs" just to fail. Certainly every small business owner wakes up daily with a commitment to succeed. Yet, so many struggle.
There is no magic potion for success, no perfect location, no concept impervious of failure. But there is the small business owner with better chances of success - the entrepreneur that is a risk taker, yet careful in judgment; a delegator, yet not afraid to do it himself; a driven owner, yet careful enough not to sacrifice personal relationships for business success.
Before you start your own business, ask yourself, do you have what it takes to succeed????
After wondering about this for many years, I have determined the following characteristics to be prevalent in a failing small business owner. Most people tackle small business failure by starting with "the typical failing small business is under-capitalized, has a poor concept, a poor location."
I believe, however, that there is a profile of a person that is more prone to find success in small business ownership, and a profile of a person who is more likely to fail in small business ownership. Below is a list of what I see as the characteristics of someone more likely to fail in small business.
• Not a risk taker
• Prefers a 9a-5p schedule, with paid vacations and maternity leave
• Did not think through their concept thoroughly
• Hasn't fully bought into the concept of their business
• Doesn't follow a system
• Does not manage time well
• Doesn't have a "whatever it takes" attitude
• Is not good at delegating
As you can see from my list, I believe that the failure of a small business usually lies more in the hands of the owner than the concept or business itself. Of the 8 characteristics I mention, 7 of them pertain to the business owner themselves, while only one of them points directly at the business concept.
We can all agree that not every idea for a small business is a good one. Plain and simply, there are some pretty bad concepts that actually come to fruition today. Luckily, there are also a lot of safeguards against these kind of ideas every becoming reality: Business Consultants, Bank Loan Officers, the Small Business Administration.
These entities can usually coach a potential small business owner from making a big mistake in their concept. Unfortunately, sometimes the wrong concept slips through the cracks. If one is passionate enough about their concept, and have enough money, they can usually make it come to fruition, one way or another.
Before beginning a business, there is a lot of work to be done. Especially if the concept of the business is "new" - something that doesn't exist in the marketplace today, or a new twist on an "old" concept. This biggest mistake one can make is picking a concept simply because they like it themselves.
When presented with a concept I have heard defending entrepreneurs say "I would shop there", and "I would use this service" and "I wish I had access to a company like that 10 years ago!!!" I, I, I......what about them, them, them, them?
A business cannot survive on only one customer - you! And - okay, here's some shocking news - not everyone agrees with you, thinks like you do, has the same likes and dislikes that you do, nor has the same needs as you do. In order for a concept to work, it must be widely acceptable and usable by a large number of potential clients.
So first thing first. How many customers does your business concept need to survive, grow, make money? And, are there that many potential customers "out there" just waiting for you to begin business? Is there a need, a demand for your business, your product, your services?
Enough of a need and demand that your business can last? How often will customers need your products and/or services? Many great ideas are just too "specialized" to work alone. Perhaps your idea could be combined with another idea or ideas to make a whole business. Is your idea solid, or simply trendy?
Sometimes it's just the wrong time for a concept. Take Krispy Kreme for example. They started their US expansion during the Atkins Diet craze! While the country is forgoing the consumption of carbohydrates in an effort to lose weight,
Krispy Kreme was serving up 22 to 47 grams of carbs per doughnut!!! No doubt today's society is more health conscious than they were 10 -15 years ago, but even the least health conscious consumer recognizes that consuming 6-11 grams of saturated fat per doughnut is not going to make your waist any thinner, or lower you on the waiting list for a heart attack! Thus, several Kripsy Kreme locations have closed their doors in recent years - because of bad timing, among other reasons.
Many phenomenal concepts also fail! No concept is impervious to the effects an owner, manager, or employees can have on it's success. Even some of the best concepts - with multiple prosperous locations, fail under the guidance of the wrong person. Take Starbucks for instance. Most people will say that this concept is a no-brainer. Yet early in 2008, Founder Schultz announced that they would be closing around 100 US "underperforming" locations. Yes, even Starbucks can fail!!!!!
No matter how great the concept - the small business owner can make or break their business. No one goes into business ownership to fail. We don't sacrifice our family time, borrow against our homes, gamble with our "nest eggs" just to fail. Certainly every small business owner wakes up daily with a commitment to succeed. Yet, so many struggle.
There is no magic potion for success, no perfect location, no concept impervious of failure. But there is the small business owner with better chances of success - the entrepreneur that is a risk taker, yet careful in judgment; a delegator, yet not afraid to do it himself; a driven owner, yet careful enough not to sacrifice personal relationships for business success.
Before you start your own business, ask yourself, do you have what it takes to succeed????
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