Nobody starts a business with failure in mind. Yet small business owners by themselves rarely do what needs to be done to avoid failure. Small business failure statistics are all you need to look at to realize most small business owners don’t do the right things when it comes to starting and running their business. Many fail in the first 5 years and even those that are able to survive the first 5 years are likely to fail before they reach 10 years.
With each small business failure, there are devastating consequences for the small business owner and his/her family. Most small business owners put every penny they have and can get their hands on into their business not to mention the time, energy, and personal sacrifices they make. The devastation caused by their business failure goes far beyond just them. It extends to their community, their state, and the country. A staggering amount of resources and opportunities are lost due to the vast number of small business failures. Sadly, business failure can be avoided by understanding why it happens and doing the things necessary to elude it.
Why It Happens
Michael Geber author of The E-Myth Revisited states in the forward of his book what he believes to be the primary reason:
“The problem with most failing businesses I’ve encountered is not that their owners don’t know enough about finance, marketing, management, and operations – they don’t, but those things are easy enough to learn – but that they spend their time and energy defending what they think they know.”
In other words, Mr. Geber believes small business failure happens because the small business owner thinks they know more than they do about business.
During my professional career as a business executive and consultant covering 30+ years and more than 120 consulting engagements with small business owners, I have seen this be true time and time again – the owner is 100% the reason for the struggle and failure of his/her small business. Small business owners like to practice insanity which is defined as continuing to do the same things over and over expecting a different result. There are three bad traits common to small business owners causing their habitual “insanity”:
Bad Trait #1 – Think they know what they don’t know.
Here’s an example of this from one of my past consulting clients James who is the owner of a residential and commercial contract painting company. James made the following statement when I asked him about his method for pricing work: “My father started this business back in 1956 and taught me everything I needed to know about it. I was 15 years old when I began working here. The way I price is the way my dad taught me. It has always worked and it is the only way it can be done for this business!”
At least 5 years before this conversation James’s company began losing profitability and every year the losses had increased. James believed his dad had taught him everything he needed to know and he would never need to know or do anything different. He was wrong yet he practiced insanity by continuing to do things just like his dad taught him somehow thinking he would get a better result. He only got a better result once he changed and learned that there was a different and more effective method.
Bad Trait #2 – Suffers from the Field of Dreams Syndrome:
The Field of Dreams syndrome is based on the movie by the same name. It is the belief that customers will come just because you have a business.Mike, the owner of a limousine service company, made this statement when I asked about how he marketed and advertised his company’s services: “I am listed in the yellow pages and I rely upon word-of-mouth from past customers. I’ve never had to do anything else to get business. The phone use to ring all of the time. I don’t understand why the phone isn’t ringing like it did. I have the nicest, newest, and cleanest vehicles out there.”
Mike believed people would call his company just because it existed and had (in his opinion) superior equipment. Not the case as he was experiencing with a continual decline in sales every month.
Bad Trait #3 – Belief that outside forces cause most if not all of their business problems.
George owns a residential roofing company. Here is what George said to me during our initial discussion concerning the problems experienced by his business: “I don’t know how you can help me, Carroll. My company does roofs and nobody is getting their roof done. And those that are getting their roof done are hiring the jack-leg running around in his pickup truck charging less than what my material and labor cost. I can’t compete against that guy. I’ll be glad when the economy picks back up so things will be back to normal.”
George believed there was nothing he could do to improve the condition of his business. It was all the jack-leg’s fault and what the outside world was doing it to him and his company. George didn’t think there was anything he could do to gain control over any of it. Not true! George in time learned that he was the only one who had the power to change his company’s condition and make it better.
There are other “bad traits” held by small business owners but they all are due to the small business owner and his/her erroneous beliefs.
How It Can Be Avoided
The reality of being a small business owner is you are the sole reason for your business’s failure or success! To correct the most common problem of small business you must be willing to do what Michael Jackson’s “Man in the Mirror” song says – stand in front of the mirror and commit to the person you see there to do what is necessary for your business’s success. If you don’t, you, you family, community, state, and country will certainly experience the devastation of your business failure.
It does not matter where your small business is in its life cycle you must do the following to ensure your business’s success.
1. Bury Your Ego and Be Open Minded.
Ego makes you close minded and erects a brick wall that keeps you from receiving and using available and valuable assistance such as advice, knowledge, information, and help. No one is perfect and knows everything there is to know. If you allow your ego to make you believe you “know it all ” and are right when in fact you are not, you will miss out on important opportunities to improve. Removing your ego will allow you to learn and discover what you lack and need for improvement to take place. You will also find people more willing to help and provide you with things that will be of benefit to you.
2. Create a Passionate Vision.
The majority of small business owners I have worked with have a business which provides them with nothing more than a job. They have from the beginning structured their business to do nothing more than that. Now, they hate their business and are extremely unhappy. Their business is boring, takes all of their time, and provides them with little satisfaction, sense of accomplishment or fulfillment. If you want to be successful and happy you must do something you can be passionate about. This passion needs to be focused on accomplishing something specific not just for you but for others as well. Think about people who have been wildly successful such Steve Jobs, Bill Gates, Oprah, and Dr. Phil. The one thing they have in common is their overpowering drive (i.e. passion) to change the world in a positive way. You can do the same once you create a passionate vision for your business.
3. Learn to Learn.
Never have I worked with a business owner who had a business without competitors. The typical business owner I work with has problems and their competition is doing better than they are. When asked why they think they aren’t performing as well as their competition they say something like “the competition is much bigger and can afford things I can’t such as newer equipment, more advertising, or better location”. These are all superficial reasons and represent nothing more than excuses by the business owner. The reality is their competition is succeeding because they have figured out how to be more successful. You must learn to do the same. If you don’t believe you can do it on your own then get help and get it now before it is too late.
The business world is a highly competitive place. Changes are taking place in all fields and industries worldwide at an increasing the rate of change. To survive and succeed as a business owner you must continue to learn, do things in new and innovative ways, and be passionate about what and how your business serves its customers. If you overcome the bad traits of most small business owners you will be not only have a successful business you will also be happy and enjoy your business more than you ever thought possible.
One of the easiest and fastest ways to overcome any bad traits you might have as a small business owner is to get help from a professional who trains small business owners to be successful. You can receive such help in a unique, fun, fast, easy and affordable way by taking my 12 session practical “Master of Business” owner training program.