By Dr. Garnett Newcombe and Kay Woods, Founders of CEO Real Talk
According to the U.S. Small Business Administration (SBA), only about 50 percent of new businesses last five years or more, and only 33 percent last 10 years or more.
There are many reasons that small businesses fail,ranging from inadequate cash flow, to high overhead costs, bad management, expanding too quickly and poor credit. However, over the years we have identified five “hidden nuances” that can, and will, quickly destroy a small business before it even gets off the ground.
1. Getting a Second Job
When business owners feel stretched financially, it is common to seek another source of income contingent back-up plan. However, straddling the fence will only set you up with the option to fail. Energy put toward maintaining a back-up plan keeps you from making a full commitment to your businesses. Instead, in difficult times scale back on the “big bold sell” and focus on the “low hanging revenue generating services” that are in high demand and have the capability of generating immediate income.
2. Not Understanding Your Financials
Operating in the blind puts your business at high risk for failure. Know what you’re spending on what and where you can cut back. There needs to be systems and processes in place to control purchasing and inventory and budgets need to be followed. It’s important that you not only generate financial reports but that you understand them. It is your responsibility to watch over business finances not the accountant, the bookkeeper or the division managers.
3. Your Dream vs. Business Opportunity
The “I” mindset will keep a business from succeeding. It’s not about your dream or fulfilling your interest, but about whether there is a need for your product or service. The number one focus for any business owner should be to fulfill a need in the marketplace.
4. Not Being Prepared for Economic Downturns
During difficult economic times, when the cash flow slows substantially, the lack of savings and lack of a solid plan can be devastating. Stay abreast of your customers buying trends, identify those customers that may be entering the “slow pay” zone (70 to 90 day payments), restructure staff duties in an effort to increase productivity, and cut back on unnecessary spending.
5. No Follow-Up May Mean No Repeat Business
Not taking the time to recognize customers, by asking them for feedback as well as how you can do better to serve them, positions businesses to lose out on repeat business.
About Dr. Garnett Newcombe and Kay Woods:
Dr. Garnett Newcombe and Kay Woods are business expertsand award winning CEOs who have joined forces to start the speaking platform CEO Real Talk. Through CEO Real Talk they share a realistic foundation for long-term profitability as businesses continue to grow and diversify.
Newcombe is the Co-Founder and CEO of Human Potential Consultants, LLC, an award-winning employment solutions company. Established in 1997, Human Potential Consultants was founded on the belief that assisting individuals to improve their self-worth, work readiness and employability skills regardless of their background, will increase job opportunities.
Woods is the Founder & CEO of Precious Treasures Childcare, an award-winning 24 hour 7 day a week Child Care Center. Established in 2002, the vision of her child care center is to strengthen family unity at the root through integrating early childhood education and parenting resources.