Guest Quarters: How to be in the 5% of Small Business Owners Who Succeed - November 5, 2009A lot of people throw in the towel at hearing that 95% of small businesses fail within the first 5 years. They think, “Why bother?” Those determined to be in control of the own lives, and those with an unstoppable entrepreneurial drive think “I’ll beat the odds.” I’m in the unstoppable crowd, but when I started my first business years ago, I had no clue what I was doing. I had a full time job and I was a part-time entrepreneur doing Life Coaching on the side. If I had remained clueless, I would not be in the 5% of businesses that make it. Here are some key reasons why 95% of businesses fail within the first 5 years and how you can be in the 5% that make it. It’s Not What You’re Good At Most small business owners start out focusing on what they’re good at and creating a business with it. That’s OK, but it’s risky to keep thinking that if you get better at your chosen field, you will make money and you will be hugely successful. That couldn’t be further from the truth. Yes, you must continue to grow and get better at your skill, but that’s not what brings you increased business. Many new entrepreneurs struggle with grasping this reality. More on what matters most below. You Can’t Wear All The Hats To achieve success as a small business owner, you simply cannot be the engineer, the salesman, the accountant, the administrative assistant all in one. Not for very long anyway. Sure, you may start out doing everything yourself, but as your business grows, you soon begin to feel burned out by having to do it all. The myth is that if you delegate then you have to pay someone and if you pay someone, you get less money. Wrong. You can pay someone a couple hours a week and delegate so that you can spend your precious time only on things that bring you more sales. Delegation increases your income. Every 6&7 figure entrepreneur I know has people to whom they delegate things. Your business simply cannot grow without some help at some point. Embrace that reality and plan for it. You Must Have the #1 Skill – Marketing I have been connected to countless small business owners over the years and the one thing most entrepreneurs miss in their business is learning how to market and sell what they have. Sure, many entrepreneurs hear that they need to learn marketing, but much like me in the early days, it doesn’t quite sink in. We remain baffled as to why the business is not coming in and it’s because there’s no marketing going out. Part of the challenge is that no one is telling small business owners that marketing is an absolute must-have skill and you must seek out resources to get really good at it. You must figure out who your target market is, what your message is to them and what media (ads, direct mail, press releases etc) you will use to reach them. Marketing Money is Required As you may have guessed, if you have no money to invest in marketing, you have no business. It’s really that simple. For example, it costs some amount of money to send out direct mail, purchase ads, get the tools to produce a regular Ezine like this one to connect with your clients, establish a web site that speaks directly to your target market, join groups to further publicize what you do. If you want $100K in sales per year, then you would want to invest around 5-10% of sales into your marketing efforts to see business growth. But you don’t need all the marketing money up front of course. Most small business owners invest a little in marketing, and as sales come in, they are able to invest additional amounts. Isolation Will Not Work I attribute a great deal of my success to groups that I have joined and to the coaches that I have had each step of the way. I’m a strong believer in always having a coach or mentor in business. And being a part of a group is essential. The accountability alone makes you achieve far more than you would on your own. And if you achieve far more, you have more success. And with more success, you are definitely headed for that 5% of small businesses that succeed. ACTION What’s your own “5% plan?” When and how will you master the skill of marketing? How much money have you set aside for marketing? Who will be your coach or mentor? What groups will you join? What parts of your business will you delegate—typically it is what you are not good at. Oh, and don’t delegate the marketing—that’s the one part you do want to keep or manage very closely. Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. Allison publishes the “Small Business Success” weekly Ezine on how to create a steady stream of clients for your small business at: GreatSmallBusinessAdvice.
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