“The secret to getting ahead is getting started.” There are hundreds, if not thousands, of quotes and affirmations that tell us the hardest part of a new endeavour is simply starting. When it comes to starting a new business, I agree that getting started is certainly a challenge to overcome, however, seeing through a business idea is where most people fail.
In Canada, 95,000 small businesses (with 1-99 employees) are started each year, but only 47.8 percent of goods-producing small businesses and 42.9 percent in the service sector, survive over 10 years (Small Business Tourism, 2019). It’s often said that just 50 percent of small businesses survive, and there is some truth to that. However, it’s typically not the simple act of ‘getting started’ that determines the success or failure of a new business. As complex and challenging as starting may seem, keeping your business running year after year is the real challenge.
After 23+ years in business, Tenato Strategy is a testimony to its own recipe and continues to pass on those insights to help other businesses stand the test of time. There may not be a ‘secret’ to success but there are certain priorities that can help businesses start – and stick around too.
1. Know Your True North
Know why your business exists – what you stand for, and what you do not stand for. Knowing what you’re not can be as important as knowing what you are. It can help guide you through the good times and the bad. It can also help you pivot if business conditions change. For example, the online shoe retailer Zappos calls itself a “customer service business that happens to sell shoes.” If for some reason online shoe sales plummeted, they could pivot to offer other products or services that require excellent customer service since customer service is at the core of their business.
2. Know Your Numbers
If you’re just starting out, it’s often recommended you AVOID getting a bookkeeper. It’s important for business owners to know their numbers, understand them, and dig into them if something looks askew. You should have 3 – 5 critical numbers that you know religiously – what they are will vary depending on your business model. For example, a few numbers to highlight are revenue, inventory, gross margin, and contribution income. The better you understand your financial numbers, the easier it will be to react strategically. There is some great software out there to help you do financial modelling – I like Budgeto, but there are others like Prophix, Scoro, and Float that do a great job as well.
3. Invest in Good People
Your people are your business. It’s crucial to hire the right people and make certain that those people are aligned with the “true north” values of your company. Spend time and effort on recruiting, making sure you find the right person for the job. If it’s not a good fit for you, chances are it might not be a good fit for them or for your customers. For small businesses and new start-ups, consider how roles will evolve as the company grows. You’re not hiring to fill a job; you are building a company – make sure you have the right people for today but also the right people to reach your goals in the future. This Forbes article outlines the “7 C’s” that you should consider when hiring new employees.
4. Cash is King
Cashflow is critical for any business. Getting your initial funding in place can be trying in itself, but you also need to think about longer-term access to funds. Have these conversations with your investors, bank, or lenders beforehand. You need a strategy for unforeseen circumstances, but also for growth opportunities. Make sure you are doing everything to manage your cashflow to the best of your ability:
- Invoice right away (try online invoicing if it’s right for your business);
- Set clear payment terms and make sure customers pay on time;
- Charge enough for your goods or services;
- Don’t hold on to dead or excess inventory;
- Monitor each month how you’re spending and receiving money.
5. Nothing Replaces Face Time
You need to perfect your elevator pitch – you will need it now and for the lifetime of your business. Word of mouth is always going to be one of the best forms of marketing. Take the opportunity to go to various events and network with other business owners and the general population, making sure you are bridging your offline and online contacts. You should take the time to make sure everyone who knows you also knows exactly what you do. Connect with former prospects and customers if you have an offering that makes sense to them. Partnerships can be very valuable for small businesses and it’s your responsibility to know what is going on in your local business networks and industry. Don’t think about what partners can do for you but go into relationships and conversations thinking about what you could do for them.
6. Have Fun
Owning your own business is ultimately supposed to be fun! You get to control who you hire, who your clients are (to some degree), and the culture and norms that create the day-to-day work environment in your organization. There will be ups and downs but to survive and thrive you need to enjoy the work you do and the people you work with.
While starting a business is challenging for anyone, the hardest part is not stopping. It’s important to keep relentlessly pursuing the dream that led you to start your business in the beginning. The entrepreneurial spirit of small business is all about individuals and teams focusing their talents, passions, and dreams to create thriving companies.
Small Business Tourism. (2019, January 31). Key Small Business Statistics – January 2019. Retrieved from https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#toc-02.