The Biggest Challenge You Face When Starting A Business

Let’s get right to it. The single biggest challenge you face as a new business owner is “staying in business”. That’s it.

I’m not trying to be negative here. But I do want to be upfront with you. Wrap your head around this “fact” and make sure it’s always present when you start building. Trust me, I’m doing this for your own good. Read on to learn what you can do about it.

Facts

So before I get into the more “positive” side of this article which is to give you the secret to staying in business, let’s quickly look at a few facts.

You’re probably very familiar with these stats; that 80% of all startups actually do make it past their first year. But that still leaves a significant percentage (20%) of small businesses that will in fact fail.

The scariest part I think is that half of all business only survive the first five years. That’s right; 50% of all businesses started today will no longer be in business just 5 years from now. That’s kinda sad when you think of the odds of that happening to your business – let’s hope it doesn’t.

I don’t want to give anyone false expectations or the illusion that you can be the exception to those stats. It’s worth mentioning that these stats have been very consistent over the last few decades (just saying).

There are just way too many factors that can contribute to the success or failure of any small business. For what its worth, this is the main reason I started this website and blog. To try and help as many business owners as the internet will allow us to reach, to help them increase their odds for long-term success. I hate seeing any business go down.

I will say this; I know several entrepreneurs (and have read countless stories) who have failed on their first try, only to come back stronger for a second, third and even a forth round, until they made it. Now that I think about it, wouldn’t it be nice to know that stats for these? Hmmn…

Secret to staying in business

Enough negativity. Let’s see how we can make things happen and improve our survival rate, specially in the first year. Remember, each additional year you stay in business, I believe you’re increasing your odds for long-term success. Although the stats may not support that statement, I believe there’s a way. By focusing on constant improvements and increasing customer value (thus increasing revenue), you’ll go way beyond the five years. But that’s a different subject we’ll cover in later articles. Right now let’s focus on the first year of business.

In my 20+ years of experience I’ve come across so many entrepreneurs or business owners that get caught up in minor details. They want to have everything in place and in order before actually opening the doors for business. This is a huge mistake in my opinion. Too much planning can actually take forever!

No business (or its system for that matter) will ever be perfect! You must realize and accept this fact. Improvements come with time as mentioned above. Improvements to the business and its processes are part of the growth, NOT part of the initial planning phase, when you have “zero” customers!

Therefore the secret in my opinion to surviving your first year of business is to simply “make sales“. That is the number one task for any entrepreneur. Whether you like it or not, you must become a great sales person. Believe me, there will be no one that can sell your product or service better than you – the owner.

Even if you have the budget to hire a sales person, I always suggest and prefer the owners become the top sales guy or gal in their business. Trust me, again, this will set your business up for really long-term success.

Implement now

If you have read anything about me, you know that I’m all about “speed of implementation”. Just start. It’s just how I’ve been trained and have learned from other successful leaders.

Let me share a quick story with you that is very relevant to what I’m saying here.

Last year I was hired by a friend CEO to build a new (subsidiary) business from scratch. It was to be a retail business and complementary to the parent – more established – company.

I didn’t know much about the industry or it’s technicalities. But I knew that in order for the business to be successful quickly, I needed to “start selling”. This exercise alone would force me to learn about the different products. It would help me understand exactly what customers were looking for and why. It would even help me create the right content for the website and craft the right messages from a marketing perspective.

Unfortunately the CFO did not agree with me on that. He insisted that I spend time searching for an elaborate inventory & warehouse management system that could also handle invoicing, barcoding, permission control, purchase orders and even have an accounting module! Not only that, but he also wanted me to research and find the right POS system that would tie-in to all this.

I kept saying to myself “but I don’t know anything about the products in order to conduct competent research. How will I know which questions to ask or have useful conversations with sales!”

Furthermore, I kept saying to myself “but we don’t have ANY customers”. A business is not a business until it starts making sales, period.

I actually lost five weeks trying to determine which “software” was right for the business. I sat through so many demos and calls that were honestly worthless. In the end I decided to follow my approach. I simply created my own CRM using a spreadsheet, my own invoices and packing slips and got the Square POS system. That was it. It took me 1 day to get these things in place and I used them through the entire time I was there and never had any issues.

Businesses run out of cash

So there you have it. There’s only one activity you need to be focusing on. You need to spend 90% of your time actually selling (not thinking about it, actually doing it). Business go out of business for the most part because they run out of cash. If you focus on “creating cash”, you’re going to be in a good place.

Let’s get to work and please let me know if you need my help with anything. I’m always happy to help if time allows.

Chau

 

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