Business Has Good News and Bad News

If you're thinking of starting your small business... if you've just started... if you've been in business for a year or two... there's news you need to hear.

And you need to hear the bad news as much as the good news. News that'll make the difference between your small business surviving... or going under. I'm talking about what really goes on... not what many people would like you to think goes on.

Much of the vital information does not get talked about or written up. It would upset the folks out there, all hyping their different flavors o Small Business Snake Oil to all those wet-behind-the-ears business newcomers. In this real world, some 70 percent of new business don't make it. They fold early and painfully. I don't want that to happen to you.

The Good News: There's never been a better time to start and run your own small business. The Old News: It's always been pretty tough to start a business, and it's no different today.

The New News: this modern world is spinning at a crazy pace. You've got to keep tuned to what's going on today.

The Bad News: Corporate and professional America is hyping every small business product and service you can imagine, plus some you can't. You need all the news, all the time, to call you shots right. What you don't know can kill you. Small business newcomers would naturally like to believe that business is easy and that there are quick short-cuts to success. There are a whole bunch of predators out there, who make a living fostering such illusions. There's no way around it.

Small business is tough. Long hours. Problems. Responsibilities, self-discipline. Self-criticism. Worry. Sacrifices. It's tough, hard and lonely.

Qualifications? Only two (apart from essential personality and character traits). One is common sense and another is a substantial dose of smarts, street smarts, not academic smarts.

So what's the big problem for newcomers to the entrepreneurial game? It's that the majority of new small business do not survive -- they close down in their first year or two. Go belly-up. That's the problem.

Why? First because they do all the unimportant, unnecessary, unwise and time consuming things they are told trendy managers must do instead of the basic, boring, critical essential tasks that might save their entrepreneurial hides.

As a result, they make too many mistakes, too early and fail. New small business are babies. They're frail and fragile in their first years. A couple of bad mistakes is all it takes to wipe them out.

So is it worth the pain and suffering? Yes, most certainly. But only if you're prepared to face reality instead of believing all the Success Silliness they're hyping.

Realism Beats Optimism or Pessimism
You’re far more vulnerable when you start. The average failure rate for new businesses (remember, there are about one million of these every year) is around 70 percent, in their first years. Don’t add to this risk, by trying to fly before you can even walk.

Realism is everything. If you’re too much of a pessimist, you’ll never pluck up courage to take the initial plunge or to run the risks you need to run. If you’re too much of an optimist, your rosy assumptions will trip you up. To survive, you must be a commonsense realist about the problems you will face.

Start slow, accelerate later. Most of the entrepreneurs at this meeting were talking fast growth. That’s fine and dandy, once you have a stable, efficient, workable business platform in place. But that can take years to build.

Success can be a fatal distraction. If all you’re dreaming of is how great the view will be, once you’ve reached the top of the mountain, you’ll probably overlook something vital in preparing for the climb and never make it to the top. Or maybe fall off the mountain.

There’s no instant gratification. The media message to newcomers is: instant success is yours for the grabbing. Forget about it. The real world doesn’t work that way. At first, focus only on beating those starting 70 percent odds against you. Success, if and when it comes, comes naturally, only after you have got through the survival stage; that’s the hard part.

Operate within your means. Out in the trenches of small business, there are no angel investors, venture capitalists, IPOs, and fat bank lines of business credit. You must survive on whatever personal funds, loans and credit cards you can scrape together, and on that alone, until your business starts producing its own cash flow.

So when can you breath easier? You’ll know you’re a survivor when your small business starts bringing in enough regular monthly revenue to pay all the bills, meet the payroll (including your own) and, if you’re lucky, even have a little left over for building reserves. You’ll certainly not be rich but you’ll finally have the key to future success: a small but self-sustaining business.

But what about the success stories? Uh-oh, so you’ve been reading those up-beat, motivational, self-congratulatory hero entrepreneur books again. Don’t. The most valuable lessons are to be learnt from the folks who failed. They don’t usually get to write books, at least not ones that get published.