The Signs of Business

Guest post by Rick Franz. Rick Franz is the owner of Optimal Business Solutions, a business consulting firm based in Evansville, Indiana, serving customers all over North America.

So you have a great new idea that will revolutionize the market, make you loads of money and your friends / trusted advisors are all pushing you to open up your own business.

Is this a good idea? Is this the right time?

Well, it depends. Many entrepreneurs open their doors with nothing more than an idea, some cash (usually their life savings), a positive can do attitude – and succeed! However, an equal number (50% according to Small Business Administration) will fail within the first five years. Other industry experts put the failure rate as high as 67% within the first three years. So, do you open your own business or not? Before taking the plunge, learn from those who have gone before you – both those who have succeeded and those who have not.

I have worked with a number of very successful small businesses in my Coaching practice and have found that those who succeed share some common characteristics:

1. Plan. Successful business owners plan first and take action second. They develop a clear vision of what they want their business to look like in the future which helps them deploy their resources in the most effective manner possible and to anticipate obstacles to success.
2. Organize. Successful business owners recognize that they have limited resources – their key to success is in how they utilize those resources. They organize around their plan to achieve their vision!
3. Actuate. Successful business owners are brave. Waiting until the “time is right” is what daydreamers do, and then later on go through the “if only” exercise. Successful business owners know the odds against success, but have the faith and confidence in themselves and their plan to succeed. Actuating takes dreams and makes them real by taking the small steps that lead to large rewards.
4. Control. Successful business owners are focused and vigilant. Defining success includes critical metrics that tell the owner that they have either succeeded or that corrective action is needed. Business, just like real life, is full of unexpected twists and turns – stuff happens! Consistently monitoring results against plan benchmarks (success criteria) will help the vigilant business owner react quickly to changes and stay the course to success.

Those who have not survived the first three to five years are, in many ways, not that different from those who survived. They both had some excellent ideas, products, or value propositions. They were brave, had strong positive attitudes and lofty dreams about what could be. The primary difference is that of being properly prepared with a vision, a plan and discipline.

According to the Small Business Administration, the top three reasons for new business failures are:

1. Lack of Experience/Knowledge
2. Insufficient Capital
3. Poor Location

All three reasons could have been addressed before launch if more time was spent up front planning the new venture. It is truly a mystery why we spend more time planning a vacation than we do the biggest decision in our lives. Plan for success – plan first and then work the plan.

To summarize – the cost of failure is HIGH – but the attraction of being your own boss, and plotting your own future, is STRONG. The keys to Small Business Success are to properly Plan, Organize, Actuate and Control. These keys are sequential – you must Plan to effectively Organize before you Actuate or exercise Control in how the new enterprise works.

OK, so now you have done your homework and avoided being a new business startup casualty – what’s next? Maintaining a viable business, managing growth and planning for the future present a new set of challenges which we will address in our next installment of Keys to Small Business Success.

What do you see as the most common reason why businesses fail? Let us know in the comments below:

Be Sociable, Share!

•