In this two-part blog series, we’re looking at the reasons why some small businesses don’t survive long term. The Independent Business Alliance (IBA) cites seven common problem areas that can lead to business failure if not properly addressed:
- Lack of Planning
- Inadequate Funding
- Ineffective Marketing
- Ineffective Sales Efforts
- Lack of Employee Management
- Lack of Business Experience
- Lack of Outside Expert Advice
Any business can suffer from one or more of these problem areas, and they’re the root of pain and sleepless nights for many small business owners. In Part 1 of this post, I talked in detail about the first four. Now, let’s explore the final three problem areas.
Lack of Employee Management
Bringing on employees as a small business owner can be a scary yet exciting milestone. It allows you to be more organized and efficient and expand what you offer. But it also requires that you manage workload and expectations for people besides just yourself.
Employee management includes understanding what your staffing needs are, ensuring you have the right people in the right jobs, developing robust hiring and firing processes, and creating effective job descriptions, processes and employee controls. You must be clear on what your needs are and how that translates into specific job roles. You should develop standard processes for hiring and have written job descriptions. You also need to have controls in place to ensure employee accountability. On top of all this, you also want to create a working environment that employees will appreciate (wages, physical space, benefits, etc.) to avoid high turnover.
If you’re not clear upfront about job roles and processes, it can lead to employee confusion around responsibilities and inconsistencies that can affect product or service quality. Failure to create strong hiring and firing processes can leave you vulnerable to a host of legal issues (discrimination, wrongful termination, etc.). What does all of this require? PLANNING!! As I stated in Part 1, planning is essential to navigating many of these problem areas.
Lack of Business Experience
Most people that start a business don’t have a MBA from Harvard or Wharton Business School, and you don’t need that to succeed. But you do need to be willing to learn what you need to learn to effectively run a business. Ignorance is not bliss in this situation.
Classic signs of business inexperience include poor use of time and resources, inability to delegate, and extreme control tactics—either overly controlling (dictator style) or no control at all. As a business owner, you’ll have to learn how to manage your time and resources wisely. You may be able to do everything on your own in the very beginning, but as you grow, you’ll have to delegate internally and/or outsource to get everything done (or risk completely burning yourself out).
You’re not hindered from starting and growing a successful business just because you didn’t go to B-school or grow up in a family business. The problem arises if you refuse to learn and grow to nurture your business. Just as a first-time parent learns to care for their child, you need to learn to care for your business.
Lack of Outside Expert Advice
You can’t build a business alone. Whether it’s vendors, employees, consultants, advisers, family, or friends, someone besides you is involved. As mentioned above, you don’t have to come in knowing everything but you do need to be willing to learn. That said, there are many people out there that already have the knowledge you seek or who possess skills that your business can use.
Outside expert advice comes in the form of consultants, coaches, and advisers. Many times, small business owners forego these services believing that they can’t afford them. What they fail to realize is that the services from these experts often pay for themselves multiple times over via increased revenue, decreased expenses, or more efficient and effective internal operations (which can impact the bottom line as well as employee morale and retention).
I’ve engaged a business coach in both of my businesses, and it’s always been worth the investment. It’s extremely valuable to have an objective eye reviewing your business and keeping you focused on developing/growing the business. The outside perspective and support is invaluable, and I’ve never regretted making the investment.
As discussed in Part 1, all of these problem areas can be overcome. For these three areas in particular, the common theme is to be open to learning new things and accepting help and support from others. Being closed to learning and growing and trying to do everything alone could be the death sentence for your business.
Have you had problems in these areas? Leave a comment to tell us about it. Community sharing lets us help each other!