With more and more businesses closing their doors, here are the three important focuses every entrepreneur needs to keep in mind when starting up, to ensure the longevity of their venture.
A recent report by Taylor Woodings, an accounting firm that specialises in company restructuring, revealed that up to the end of April this year, 9,074 companies collapsed. This is an alarming 13.6 percent on the previous year.
As per Taylor Woodings: ‘‘The fragile global financial markets and economic conditions in Europe, coupled with low consumer confidence, will mean many Australian industries will remain under pressure in the near future.’’ Their data analysis from the Australian Securities and Investments Commission (ASIC) implies that businesses struggled during April in general, especially in the retail and construction industries.
Since the European economic crisis we can expect insolvency figures in Australia to increase in the upcoming months. To make matters worse, Baby Boomers, who have been the major drivers of small business for the last three decades, are heading to retirement and looking to exit their businesses over the next five to 10 years. Many will just close the doors.
There are several items a business owner needs to focus on to keep a business profitable in the perilous waters of the entrepreneurial sea.
1. Never start your business for the wrong reason.
You should reconsider your thoughts if your reasons for starting a business are the following:
- Make a lot of money
- To instantly enjoy more time with your family
- To be your own boss
On the other hand, you have a greater chance to succeed when your reasons for starting a business are the following:
- You are passionate about the business you are planning to start up and you love what you’ll be doing, and you strongly believe that your product or service would fulfill a real need in the marketplace, based on educated study and investigation.
- You are physically fit and have the required mental stamina, determination, patience and positive attitude to win out potential challenges.
- You are a people person and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals.
2. Good business management is a must
Many business reports cite poor management as the number one reason for failure. New business owners often have insufficient levels of relevant business and management expertise in finance, purchasing, selling, production, and hiring and managing employees. Business owners should be able to recognise what they don’t do well, and be humble enough to seek help from those knowledgeable in the fields they need to improve.
Diligent care must be taken to regularly quantify, study, organise, plan and control all activities of operations. A continuous review of the market research and customer data should be included in this study, because this is an area which may be prone to be neglected once a business has been established.
Successful managers are also good leaders who create a productive working environment. They have a skill at hiring competent people and training them, and are able to confidently delegate tasks. Good leaders are also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future.
3. Lack of planning is detrimental to any business.
A good business plan is critical for all businesses. Many small businesses fail because of fundamental shortcomings in their business planning. A business plan must be realistic and based on accurate, current information and educated projections for the future.
“Due to the current marketing conditions and ageing population of business owners, many get tired and just walk away. This is a huge opportunity for the younger generation to save these businesses and make a lot of money in the process,” says Carl Taylor, author and founder of Business Builders Academy.
It’s not just at the retirement end that businesses are failing, a huge proportion of businesses don’t make it past their first three years. When starting out, most entrepreneurs jump into their business starry-eyed and completely unprepared. They have dreams of taking on the world only to find that business can be cruel!
Many entrepreneurs have an idea, but have no structured business plan, market tested strategies or support to ensure the new venture is a success. Others are simply too intimidated or daunted by the prospect of launching a business and never try.
To address this issue, Taylor and I launched a groundbreaking event in the business scene, Shortcuts to Starting a Business, last month at the Sydney Masonic Centre. As young entrepreneurs, we believe that support and education are keys to successfully launching businesses. Shortcuts to Starting a Business provides real and actionable content, and will be held regularly.
Taylor and I have identified two types of entrepreneurs in need of education and strategic advice:
1. Those with a great idea that need help with confidence, planning, support and access to funding
2. Those without an idea but a burning desire to get into business, for which Taylor has “the ultimate shortcut”.
Taylor is no stranger to business successes and failures, starting his first business at 15 and having built and sold three businesses over the last 11 years. His approach to business is to view it as a product, buying at wholesale, adding value and then selling at retail.