- Posted by Sue
- On 11th November 2019
There are three types of business owner…
…those who watch it happen, those who wonder what happened and those that make things happen, which one are you?
I am going to be presumptuous here and assume that nobody ever goes into business with the intention of being anything other than successful. So that begs the question, why do so many businesses fail? First let’s look at some of the facts:
- 8 out of 10 businesses fail in the first 5 years.
- Less than 4 out of every 100 businesses survive to see their 10th birthday.
- Only 4% of businesses will hit £1 million turnover.
- 80% of businesses remain below £1/2 million turnover and a large number of those sit between £200 – £300 thousand mark.
Why does this happen? Well it all boils down to three different kinds of business owner:
As you read through the rest of this newsletter ask yourself the question “Which one of these descriptions fits me best?”
As employees, we learn a trade and (for some) we become very good at it. One day we have a realisation that we are working really hard to make money for somebody else or, it could be, we are fed up working for an idiot and if they (the idiot) can do it, may be it is time we opened our own business.
So, with a great deal of excitement, and maybe a little naively we start our own company. For some, the thinking is that customers will just show up as though a giant Golden M (McDonalds) has been placed in the car park and of course this is very rarely is the case.
The challenge with our new business adventure in the early stage is that we need an income; we need to put food on the table, we need to get to an earnings level at least similar to the one we had when we were in employment. The longer this takes, the more panic starts to set in and, for some, so do the fundamental mistakes that prove so costly in the end. These mistakes include things like allowing anybody to become a customer, allowing customers to extend the payment terms to suit themselves, discounting (giving away the profit to make the sale), employing anybody that is available, the list goes on. The reasons for doing these things are normally justified by the promise that someday, when the business has settled down the necessary systems will be put in place and everything will be okay. In a great many cases though, people learn to live with the problems they have created and ‘someday’ never arrives.
It’s at this stage that a really dangerous little four letter word starts to creep into the business owner’s language: you will often hear them saying things are ‘FINE!’ They are waking up in the middle of the night in a cold sweat because of cash flow problems but they are FINE! They spend their valuable money training their employees who then leave to work for the competition and they are FINE! They are working ridiculous hours at the expense of their family and are FINE! They are unable to take their family on holiday and they are FINE! In other words, they are in denial and it will only take a slight shift in the economy and their business is history and they might well even say to themselves, “I never saw that coming!”
For others, it may be that as soon as they reach the level of wage they were achieving as an employee, they are happy. So long as they keep their heads above water, life’s good. Problem with this thinking is that the business will always be dependent on them in actual fact it isn’t a business it is a job! They might watch others grow successful, profitable businesses and will give a whole host of excuses as to why they couldn’t achieve the same.
Finally, there are those that make things happen. They realise that their business is an asset and, therefore, is meant to provide a return and to get a return like any other asset it needs to grow. To achieve this, they build their business as if they mean to sell it, they begin with the end in mind and once they have a clear vision they put together a plan to achieve that vision.
Does the act of planning ensure success? Not necessarily. Things will happen that are outside our sphere of influence but because we have understood how to and have gone through a solid proven planning process, we can re-plan and get back on course whilst the other two types of business owner are wondering what has happened or are just watching what’s happening.
In business you can either have excuses or results, but not both!
So what type of business owner are you?
If you are somebody who makes things happen then no doubt we will be seeing each other at our ‘Take Control of Your Future’ 2020 Vision Planning day…
If you are someone who wonders what happened or watches what happens, then the New Year is a great time to draw a line in the sand, your past does not determine your future. Would you like to make 2020 your best year yet?