Want to hear something scary? Only 50% of small businesses make it to the 5 year mark.* Yes, that’s right. Statistics show that only half of the small business start-ups created this year will be around in 2023.
Certainly, some will see steady growth and become big businesses. But the data suggests that 67% of those exits are due to failure. These are numbers that have been pretty constant for the past few decades, regardless of the economy.
Okay, we’re done being scary.
The truth is that there are more small businesses starting now than are closing down, and small business makes up 99.9% of the private sector firms out there. In fact, since 2000, small business has created an estimated 8.4 million net new jobs, compared to big business accounting for just 4.4 million. The workforce is changing.
EtterOps is a small business. We service and assist successful sole proprietors, entrepreneurs, and micropreneurs (5 or fewer). Seeing what they do daily allows us a unique perspective in what it takes to remain successful.
In that light, we offer some advice on how to be on the right half of the pie chart.
1. Know your perfect client
There has to be a market for what you offer. Build a fictional perfect client for what you do. You certainly want to find your niche, but make sure it’s one with buying power. Also, if you have one client who accounts for most of your business, you need to work on diversifying your clientele. Find more clients, and quickly.
Quick Tip: After you create your perfect client, there are plenty of free demographic resources to review: the US Small Business Administration, Bureau of Labor Statistics, the US Census Bureau, and even Google Analytics. These will help you target where your marketing resources should go.
2. Ease the fatigue
You hear so much talk nowadays about work-life balance. As a small business owner you know how many different aspects of your business you have to attend to. It’s exhausting. But you must attend to the life portion to attain that balance. Schedule time for yourself and keep that appointment.
When you are the face of the business, it has the potential to suffer when you aren’t around. Thus, you’re less likely to take time off, or to even make time for yourself in small ways. Heaven forbid any extended illness issues arise. You can’t afford to burn yourself out. Take that time.
Quick tip: If circumstances have you just too busy to take your personal time in one large chunk, set a timer for every 45 minutes. When it goes off, walk around for 60 seconds or stand and listen to a favorite song. This will help you to reset yourself.
3. Create a well-rounded team
You need to have the right team in place to help with all aspects of your business. Many small businesses are passionate endeavors that arise from your unique strengths. Your team needs to fill in the other areas, often managerial or administrative, so that your business runs smoothly.
For the solopreneurs out there, you can go it alone, but you don’t need to. Whether they are apps, services, or administrative assistance, look seriously at what options are available. Melissa Horton in her Investopedia article, The 4 Most Common Reasons a Small Business Fails, states, “Smart business owners outsource the activities they do not perform well or have little time to successfully carry through.”
Quick Tip: If you work from home, outsourcing might not only apply to your business. For our household, yard work and deep cleaning are essential tasks that we hire someone to do once a month – just enough to help out and keep us sane, but not so great an expense that we have buyers’ remorse.
4. Track your money
There’s no way around this one. Running a business takes money, but you need to make sure you know where it all goes. With a strong balance sheet, you can see where you are spending the most, as well as how much you can put towards reinvesting in your business.
When a small business closes, it is making too little money. However, at the root of that result are other failures, whether that’s overspending on marketing, unrealistic sales expectations, lack of organization and business acumen, etc. The owner should be able to see the financial projections a long way out, and adjust along the way. With a thorough balance sheet there should be plenty of time to make corrections and right the ship.
Quick Tip: If you do outsource, set a strict limit with your contractor on what you can spend, and tell them it is inviolate.
Your small business is special. It feeds your passions, pays your bills, and gives you autonomy. Give it the same consideration and we’ll see you in 2023.
**Statistics recorded by U.S. Small Business Administration. All data is current as of August 2018 and is viewable on their FAQ page, https://www.sba.gov/advocacy/frequently-asked-questions-about-small-business.