As of May 2012, the White House claims that:

“28 million small firms employ 60 million Americans, half of the private sector workforce.”

Yet thousands of those businesses will fail in the next five years.

I have learned that there is a difference between surviving and thriving. So many small business can hang on to that one more year by taking on more and more bad debt.

Do not misunderstand me – I am not against debt. Debt can be a powerful tool of leverage. However debt can be manageable, or can swallow you whole.

I have made six business commandments, which I call the Six Core Focuses. By balancing these, I believe that any enterprise can thrive. On the opposite end, this post is about six things that you can fail to do that will ensure your company’s demise

1. Plan Ahead

It is redundantly advised in the business world to write a business plan. I have met hundreds of small business owners this year and NONE of them had worked on a business plan. The business plan is not easy. Some information that you dig up may lead you to the conclusion that your business is a bad idea, and that is crushing. I think that it is better to know, that to find out the hard way. By researching your market, and planning your actions as a result- you can save yourself from great failure in the future. A business plan is a good start, and should be revised as you go along in your journey. You should use it as a door opener for financing, and as a road map for growth. The research should be continuous. The factors in play when you launch your business will surely change as you go forward.

More than your business plan, you should plan ahead in other ways. What will you personally do if you loose your business? Do you have a back-up plan to cover your day to day living expenses? Are you building a savings, paying into insurance, and keeping your promises? Are you doing everything to protect yourself?

Just as big – what would you do if your business is VERY profitable? So many people win the lottery, and are  broke in two years. Have you set the discipline to handle if you become very wealthy – to sustain that wealth?

Another plan – Who to meet. Networking is a powerful part of business that is often ignored by self-starters that want to “”go at their own way”. Build key relationships: in your industry, in related industries, in certain government positions, in your local bank, in your family and in your circles of friends. Plan what you will do when you meet them and how you will be of value. Surround yourself with those that are more successful to you, by being of value. To gain friends, show yourself friendly and interesting. Most people are kind, open, and hospitable. Those that take the hostile route, often eradicate themselves from the scene.

Plan Ahead – for yourself, and your business.

2. Market and Sell All the time

I have heard that 60% of the time spent on your business should be spent on selling and marketing. I separate those to mean that selling is going to your potential customers and marketing is enticing your potential customers to come to you. I am not sure if 60% is too much time, or not enough. I am leading toward the latter. As a general rule, I spend every day marketing, selling or both.

Are you missing out on referrals? Find a way that is not offensive to request referrals from your current clients, and everyone else that you know. If possible, provide incentives, and rigorously track results. Word-of-mouth can make or break your business – so though it is obvious, I will remind you to keep you customers happy. Your customers are your future, your life and a great measure of the worth of your company. The purpose of business is to solve a problem or fulfill a need for a customer. If your company is not doing this, it will be rendered obsolete.

3. Study Your Money

Frequently ask yourself, “Where does my money come from?” and invest in those sources. Study how your money is spent, and where spending is frivolous – cut! If you can help it, do not spend more than you make. Borrowing should be manageable and strategic and taken with very great care. Find people to help with your money that will not gouge you. Accountants, tax advisers,bankers, investors are all important – but can also be a threat to your money. It is important to work with people that deal with money that are not overly flashy. Sometimes the most boring can be the most knowledgeable, experienced and valuable. But if you can not basically manage your own finances, if you give in to being flashy or dreadfully wasteful – you might be your own worst enemy. You might then be the worst enemy of your business. If you have this problem, make it a top priority to get it under control. Make financial education a huge part of your study time. Managing resources responsibly is a top skill toward success.

4. Ask a TON of Questions

I want you to never loose your curiosity, and if you have lost it – I want you to fight with all you have to get it back. I want you to be curious about all the people around you, and what motivates them. I want you to find out what their troubles are, and fix those troubles when you can do so honorably. Be curious about your industry. Read its trade publications, blogs, magazines, and talk with its people. Be curious about your local, state and federal government. If government offends you, overcome that so that you can understand all the forces that are deciding your success. Be very curious about your employees, vendors, partners, and colleagues. Remember names, and build very tight relationships whenever possible. Finally, be curious about other consequences your business might have on people that are not your customers. This could lead you to why they are not your customers, or unintended consequences of certain choices.

5. Constantly Improve

Each person is motivated in different ways. When you learn the different ways that you are motivated, you can master yourself. You can overcome procrastination. You can watch out for ways that people can manipulate you with things that you want. When you discover what motivates you, use it to do the difficult things that will make you better. I am extremely hard on myself. I have a history of motivating myself toward unrealistic goals, and then tearing myself down when those goals are not met. Then it would harder to motivate myself to improve because I felt that I was just worthless for failing the last goal.  I recognized this cycle, and keep it in check. I work towards more realistic goals. I reward myself in healthy ways when I accomplish my goals. This system worked for me and my problems. I do not know what your problems are, but if you continue to work toward improving them, you may be shocked by your results after some time.

This truth about improvement applies to your business. If all your customers are happy, how can you make them more happy? If you are making great money, how can you make more? If you are fast in your delivery, can you get any faster? There is a limit to how far you can improve, and when you reach that limit – maintain that strength and work on something else.  Share your success stories with the world.

6. Know When to say NO

No, I will not serve a certain kind of customer. That kind of customer will tax my resources to heavily. That kind of customer will make me hate the work that I am doing. That kind of customer will bring shame to my employees. SAY NO to that kind of customer, whatever kind of customer that is for you. Set hard limits, and do not cross them. Do not take on more work than you can handle. The saying is true – “Under promise and over deliver” Because the opposite can ruin you.

You can only do so much work. Do not exhaust yourself beyond what you can recover from.

Say no to deals that make you very uneasy. Say no to potential employees, vendors, or anyone else you might work with if it feels really wrong. It probably will be.

I hope you take all this advice that applies to you and actually apply it. I do not think that doing these things will make you a success, but I do think that failing to do these things will surely make you fail.

Advertisements