Small business and the pioneering spirit built nations
Today small business is commonly called Small Medium Enterprises (SMEs), or not-for-profits (non-profits in some countries) (NFPs). They face a wide range of issues on a daily basis, both from and internal and external perspective. If the owner/manager of the business stops, their business often stops. Only the best will survive and the marginal players will struggle and eventually collapse. This is a very disconcerting thought.
- They were self-sufficient. To the extent that they couldn’t rely on an all-powerful government to pick up the pieces if things didn’t work out.
- Farms were developed, deserts explored, schools built, businesses were created and cities grew. Often at great personal or financial risk to the individuals.
- When they failed, they would pick themselves up, dust themselves off and start working towards their goals again. They had no welfare to fall back on.
- It would do some people well to remember that most corporations and government departments started out small.
- Unfortunately somewhere along the way many lost this way and their approach to life.
There is no room for those who provide products and services of marginal value. Accept that your business and your life associated with it are your responsibility. You need to seek to rekindle the pioneering spirit and help you move forward.
Are you happy with the way your small business is progressing?
Becoming agile enough and being able to adapt to the disruptive and destructive forces and prevailing circumstances is critical. Agility is something a small business has as a clear competitive advantage.
- Some businesses are winning, while others continue to fail.
- As market conditions change so do roles and responsibilities. The need to have the right objectives, strategies and actions are critical to sorting the issues.
- Maintaining the status quo is a dangerous strategy and doomed to eventual failure.
- There are always mistakes to be made and lessons learned. Problems and frustrations continue to haunt many, impeding their progress.
- A modern business can do it tough, with disruptions coming from the global marketplace driven by technology. The weaker businesses disappear.
- Successful businesses demand very different sorts of knowledge and technologies to drive them.
- Businesses not willing to learn, generally don’t survive.
- It’s a much more confused marketplace and it’s not easy to get agreement on many key fundamentals driving various businesses.
- People will hate you, rate you, shake you, berate you and try to break you. How strong you stand, is what will make you successful.
- You are who you are today because of the many choices you made in the past.
- If you don’t know what you want, start eliminating what you don’t want.
Your face will tell others whether you are happy or not. And your family will know, happiness is hard to hide.
It’s important to understand the big picture of small business
- In Australia alone, there are over 2 million small businesses and some 600,000 not-for-profit organisations.
- There are over 200,000 new businesses starting up each year in Australia.
- It is estimated that there are approximately 200 million businesses in the world.
- Small business makes up 97% of all businesses.
- The vast majority of small businesses generate less than $500,000 in revenue.
- Small organisations generally have between 1 person part-time and 5 employees.
- Small businesses are the biggest generators of jobs.
- Many business people are only an expert in one of two of the basic business functions. But they are expected to take care of all aspects of the business.
- Many earn less than most wage earners whilst carrying a huge workload. Often laced with more risk than they can comfortably handle.
Small business and small organisations need to address specific issues
When your revenue is unlikely to deliver more than survival wages, it can make your life one hell of a struggle. This is where stress can seriously impact your health and well-being, which can quickly lead to financial ruin and family breakdowns. Over-thinking the problems without some external help can make things worse.
Procrastination is a huge problem with many small businesses. They become overwhelmed with the amount of work to do. Making many mistakes including freezing up. Large businesses and governments have resources to cover their mistakes. While small businesses are quickly exposed without proper care of the basics. The life of a business owner can be isolating and lonely while struggling to make money and balancing everything with their personal life.
Small business issues that cause frustration
- Small businesses do great work and customers love them. But, they still struggle to grow the small business to a more sustainable and comfortable level.
- If you don’t know how to progress your ideas and opportunities, start asking people, inside and outside your business.
- There is more to running a business than being technically competent. Start with the basics and enjoy what you’re doing, http://goo.gl/T2TM4G
- No matter how far you go in the wrong direction, there’s always a chance to turn your business around and head it in the right direction.
- Most start-ups face a series of unknowns. This doesn’t have to be the case with practical help and support.
- Most fail to ask for practical help that could easily solve their problem. Someone somewhere has experienced your problems before.
- Great things never come from comfort zones. If you are feeling uneasy about your situation, seek help from someone with practical experience.
- Small business people are always super optimists. Winter turns into spring, just like their ideas turn into money?
- Every dollar must count. There is a need to be vigilant in making your assets work well, all day, every day.
- Work / life balance is arguably one of the biggest issues with small businesses.
Often a new business is like a kid in a chocolate shop.
- Time is what you use to put between projects, prioritising is critical.
- Capital raising is hard and very time consuming for small business. Settle down and make sure your business is working well before taking on debt.
- No one’s going to give a new business any type of credit without some sort of history or it looks like being successful.
- The challenge of finding time for creating a product and then marketing it is very real.
- You know everything happens for a reason, but sometimes you wish you knew what the reason was.
- Too many people employed in small business are able to fill an urgent gap. Not enough time is spent on the interview and induction processes.
- As my father-in-law used to say, “it’s better to have an empty house than a bad tenant”. The skill of relationship building is critical.
- Marketing techniques that focus on product and pricing are not sufficient to differentiate a small business in today’s marketplace.
- You need to focus on storytelling techniques that describe your company’s positioning as well as explaining its unique purpose.
- Content marketing which can be difficult when starting out is an important key to marketing success.
- The only people who can truly know your story are the ones who helped to write it.
Small business size creates its own problems
A small business can be started at a very low cost and even on a part-time basis. It can be very manageable to serve a niche requirement. Not being tied to any bureaucratic inertia, it is easier to respond quickly to a want or need in the community. Or with customers. The small business tends to be intimate with their employees and other stakeholders resulting in greater accountability and responsiveness.
However, you must be conscious of the effects of small size on the operation of the business. Besides being small in the size of their operation there are other implications:
- It is this lack of size that causes many of the small business problems.
- Relative operating simplicity and informality can lead to sloppiness.
- There is much scope for owner/manager domination of decision-making.
- Limited resources such as finance, employees and management.
There are many issues that must be faced despite the small size
- Little or no planning, with little real interest in planning too far ahead.
- Being aware of changes in the marketplace is difficult.
- Poor financial controls, people think they know the numbers because they are small.
- Low management capacity.
- Management tends to be technically orientated, not management oriented.
- Limited or unbalanced skills amongst the people involved.
- Multi-functional work roles for managers and employees is common.
- Lack of specialist staff with many jobs overlapping.
- Little or no training with skills and job analysis.
- Shortage of promotable employees.
- Inability to operate extended opening hours to compete.
- Limited ability to scan, monitor or influence the business environment effectively.
- A narrow product and service range is the norm in a small business.
- Difficulties in competing with the large players in their community.
- Close interpersonal relationships amongst employees.
- Much need for external help with many management and operational tasks.
- Limited capacity and leverage in obtaining funding.
- Employees can be very creative and innovative, which can lead to dissatisfaction with available resources.
- Limited ability to grow or make big (costly) changes.
- Short of informal communication and information channels.
- Insufficient interest or investment in information technology.
- Mobility and employee working conditions can be very limited.
- Lack of formal control processes with potential for errors.
- Products and services are often underpriced for profitable growth and sustainability.
- Concern for future versus the `tyranny of the urgent’, leading to problem continuation.
- With sparse backup resources, mistakes can be fatal.
- Management and business succession difficulties.
- Too much emotional pressure leading to stress, along with poor health and well-being.
- May be seen as secretive, elitist or exclusive by outsiders.
Effects of the owner/manager on the small business
There is a close and intense relationship between the owner/manager and their small business team. Personalities, attitudes, perceptions and aspirations are the source of many of the inherent features of the smaller business. It permeates the whole organisation and affects its management, operations and overall performance. There are many issues that must be faced despite the small size.
Which of the following owner/manager issues applies or describes your business
- Risk appetite is generally low in a small business.
- Strong adversity to change. Reactive rather than proactive or innovative.
- Decision-making more subjective and emotive than analytical. Usually based on personal experience.
- Lack of broad managerial experience and training.
- Strong product/operations orientation and dedication.
- Narrow technical training/experience – learn by doing. Apathetic about and often even opposed to formal training.
- Effects of ego and motivation. Obsessive independence versus need of external help. Owner domination. Suspicion and rejection of outsiders.
- Leadership style can be personal but task/work oriented, inflexible and autocratic.
- Influence of family shareholding, succession; conflicts of interest where nepotism versus lack of promotion opportunities.
- Effects of owners age and health.
- Centralised control and poor delegation of authority.
- High levels of pragmatism; short-term time perspective. Concern for immediate and specific issues and results.
- Concern for activity (i.e. ‘busyness’) rather than planning for results. There is a lack of focus and direction.
- Concern for financial results, especially profit and cash-in-the-hand, rather than other success measures.
- Strong esprit de corp., loyalty, morale and commitment. This can lead to over-familiarity and mistakes being made.
- The business can often be a means to other ends for the owner(s) e.g. to achieve social aspirations; status symbol.
Overcoming problems and frustrations make a difference
A wise small business person knows that there is something to be learned from everyone, while the unwise struggle on regardless. Surround yourself with those who bring out the best in you, not the stress in you, remember that nobody makes it alone. Look for people who can help you in practical ways and look at ways you can excite them to keep helping you.
- If you want to make a big difference to your small business. It is better to make a 1% improvement to 100 things, than a 100% improvement on just one.
- Periods of change can be unsettling, they can also present valuable new opportunities. However, keep in mind there are no ‘silver bullets’.
- Change and growth take place when you take calculated risks and dare to experiment with your business and its assets.
- You’re playing for high stakes, as you only have one life. That’s why it’s in your best interest to get serious and focus on improving your current outcomes.
- No matter what happens, no matter how far you seem to be away from where you want to be. Never stop believing that you will make it somehow.
- Success does not come from a secret formula. But from doing the right things more efficiently and by using smart tools that will automate routine tasks.
- Your words mean nothing when your actions are the complete opposite.
Some important areas that provide immediate improvements
Finance – Finding cash and managing the cash flow is critical to small business, it’s hard to get and there is never enough. If you are a fast-growth company you can rapidly outgrow your available resources so understand working capital and become financially savvy. Most businesses experience some problems getting paid on time but, good credit control helps to prevent this becoming a serious problem. A surprisingly large proportion of businesses has a bad credit rating. Having a good credit score is not only important to enable you to borrow funds, but it will also affect your ability to secure good terms on trade credit.
Business Plan – Most small businesses don’t know how to plan. Lack of a plan worsens the problems by wasting resources and chasing tempting diversions. Equally important is revising your plan according to changing economic and business conditions. Look at completing a One-Page- Business Plan to help get you started, http://goo.gl/ZgmXfQ.
Sales and marketing effectiveness – This goes back to planning and leadership. Many businesses do not take enough time to decide what their unique selling proposition (USP) is. They try to compete with lowest prices, which puts them on a race to the bottom. Take time to understand social media and the concept of content marketing. Small business can really take advantage of both things with minimal outlays.
Action orientated – Nothing happens until someone takes some action. This may be the biggest problem of all when a small business has to face the time constraints.
“Experience is a hard teacher because she gives the test first, the lesson afterwards”. – Vernon Law
“A long habit of not thinking a thing wrong gives it a superficial appearance of being right”. Thomas Paine