Warning to all budding entrepreneurs!! Almost 75% of small businesses fail during their first year. This number goes even higher during financial or environmental crisis. During Great Recession of 2008-2009 number of businesses, large and small, failed because they were not in the best position to manage during the time of crisis. They either did not have sufficient financial cushion or failed to generate enough sales to meet their expenses. The key to succeed in the crisis is to prepare for it ahead of time and take decisive actions once the crisis does hit. This is the time not to panic, and you will not, if you have planned ahead. If you do run into financial turbulence here are 3 important steps you can take to navigate through the crisis.
How your business is organized can have a major impact on the outcome of your business. Business organizations have morphed in many different ways from the early 1900’s when Henry Ford invented an assembly line. Even today, you are likely to find different organization structures in different parts of the world as well as industries. The way Google is organized and operates is quite different from how organization is structured at GE. A new organization structure concept based on the principle of Service Oriented Architecture (SOA) is a different way of thinking than the traditional hierarchical organization.
Franchisee and franchisor have long held love-hate relationship. They know that they both need each other to be successful, but at the same time, they are constantly disagreeing and fighting over number of issues. While healthy debate and disagreements are beneficial, constant fighting over trivial issues can sap energy out of both franchisee and the franchisor.
For this reason many franchisees feel they should just venture on their own rather than dealing with the tyranny of franchisor. This could be a mistake, however. There are number of benefits of owning a franchise as opposed to running an independent business. As a franchisee, you need to develop a symbiotic relationship with the franchisor and focus on what you want to get out of it. The key is to understand and follow the rules of the game and develop a playbook that will make you a winner. Follow these guidelines when developing the playbook.
Building and running a successful small business is a team sport. You, as an owner, will probably play the role of a coach or a quarterback; but you are going to need more players with variety of skills to build a winning team. If someone tells you he single handedly built the successful small business, he is lying.
While it is true that you are the Chief Everything Officer (CEO) of the business responsible for taking care of all aspects it doesn’t mean that you have to do all the work yourself or that you are even capable of knowing it all. The key to success is to build a solid network of people with diverse skills who complement the skills you possess. This network acts an advisory board that you can go to for advice, concerns or to simply bounce off any ideas you might have before implementing them. This board needs to be chosen carefully so that you can get the right advice even if you may not like it or agree with it. So what types of skills should you look for when building an advisory board or a network of supporters?
Many small business owners fail to understand the customer base they serve and end up not being prepared to sell to those customers. How many times have you thought about various types of customers that you are selling to? Is your business ready to serve those different types of customers? Do you have marketing programs in place to attract those customers in the first place? Important questions to think about, isn’t it?
Different customers have varying types of needs. Some are looking for bargains, while others will pay premium for the quality product. By understanding the needs of customers your business can determine which customers are right for your business. You can take this approach one step further and develop customer personas based on the customer needs and purchasing habits. Personas are helpful in not only identifying the customer types, but also tailoring your marketing and operations to serve their needs. Below we have identified 5 such customer personas. Think about which ones are usually doing business with you and whether your business is prepared to serve their needs.
What does it take to grow a company from startup to small business? Growing a business isn’t simple. Entrepreneur need to take care of many facets of the business to ensure it is ready for the next phase. One of the most critical aspects is to put together a team of people that can handle the pressure and is ready to make the transition. That is why HR plays a crucial role in this phase of the start-up. Whether the start-ups have a formal HR organization or is handled by the founder team itself here are five must-haves they identified to take your business to the next level.
Despite its lure of higher sales and profit the multi-unit operation is hard work and can be prone to failure. If you are not careful you may end up losing it all. In our previous blog we laid out the pros and cons of multi-unit operations. Here we will outline some of the steps you can take to make multi-unit operation succeed. I will say it again – operating multi-unit business is challenging. At the same time if you take care of the pitfalls that come with it you can not only succeed; but thrive.
The basic philosophy you have to adopt when moving from single unit to multi-unit operation is to take advantage of your scale; while at the same time standardize and apply the proven formula at multiple locations. These are the principles behind the concept of franchise; which is essentially multi-unit operation on steroids. If you want to learn how to succeed at multi-unit business; study how any franchise you operates.
Let’s look at the steps you need to take in more detail:
Here is an advice for all small business owners – DO NOT HIRE FRIEND OR RELATIVE TO WORK IN YOUR BUSINESS, if at all possible. I know it sounds harsh and may be even counter-intuitive. After all, in small business you need someone who you can trust with your money and who else would be better suited than a close friend or a relative who you know very well and can trust.
I am not arguing with the benefits of having a trusted friend or relative in the business who can watch for your good. However, you have to weigh this against the downsides that come with it. From what we have seen and experienced the downsides exceed the benefits; which calls for avoiding the situation, if possible.
So what are the problems and issues that come along with the hiring of a close friend or a relative in your business? Wall Street has good examples of the problems here. Here is my list based on my experience and that of some of our business colleagues:
Statistics show that more than half of partnerships usually end up in failure. This is a reason enough to discourage many would be partners from getting into business with partners. However, it doesn’t have to be this way. Given sufficient precautions the partnerships can not only avoid failure; but can thrive.
There are a number of successful partnerships at a larger scale that have worked well. For example, the triumvirate at the helm of Google – Sergey Brin, Larry Page and Eric Schmidt has grown the company’s sales to more than $23 billion in 2009. So what makes a partnership successful and how can you use it in your situation? Below we have identified several traits of successful partnership from our own experience and that of others.