To say the United States has many small businesses would be an understatement — according to JP Morgan Chase & Co., more than 99% of America’s businesses are included in this category. Collectively, they contribute $5.9 trillion dollars to the economy every year.
Small business appeals to a lot of people, but it takes hard work and drive to succeed. During more than 37 years in small business and franchise environments, I have seen more successes than failures, but near all of those failures could have been easily avoided if the business owners had conducted the extensive planning and preparation required to thrive.
Make Sure You’re Ready
To prepare themselves for the unexpected, startups should secure sufficient working capital and have a reserve source ready should things not go as planned. Creating multiple growth scenarios that each consider differing expense, revenue and growth capital levels can help prepare for the future no matter what growth trajectory the business takes
Be prepared for the unexpected. Here are three common mistakes that catch most small business owners by surprise:
1. Not Knowing Your Partners
Most small business failure stems from disagreements in leadership. Make sure you trust the people you’re starting the business with and have a written buyout formula that you both agree on. The biggest mistake small business owners can make is assuming issues won’t occur as the business grows.
2. Not Having a Business Plan
Your business needs a plan to most effectively manage your revenue, expense and working capital projections that doesn’t exhaust your funding or your staff. Don’t try to wing it, because this rarely works. Instead, develop a plan to effectively manage the resources of your business and your working capital and know exactly where it goes.
Many business owners also rush to hire employees without considering their qualifications, which can lead to management issues. Surrounding yourself with quality employees, especially early on, can make a huge difference in your long-term success.
3. Expecting Instant Success
Despite the image we get from shows like Shark Tank, success won’t come easily to most small business owners, and it will be hard-won. Many small businesses struggle to become profitable, or deliver the kind of wealth their owners expect in the first few months. But being in business for yourself has the potential to be extremely rewarding as long as you have a plan. Stick with it and see it through. Manage for long term success and expect short term wins as you go.
Don’t Sweat the Small Stuff
Small business owners should be prepared to work harder than they’ve ever worked for anyone else, because there’s often nobody else to do the work for them. Mistakes will happen, but they don’t have to be the failure of your company. When you do make a mistake, remember to take the time to think through what happened, and thoroughly review the mistake so you can avoid it in the future. Don’t beat yourself up over your mistakes, and know that you will learn from them if you keep trying and pushing forward.