Business, Growth, Startups, Strategy

Introduction to Small Business Mistakes Blog Series

These days it seems everyone wants to be an entrepreneur, launch a startup, buy a franchise or sell something online. Entrepreneurs, startups, venture capitalists and Silicon Valley are in the news daily. Startups, small businesses and entrepreneurship are very often the topic of news stories and television shows and new blogs and websites spring up daily dedicated to helping you make your fortune with that next great innovative idea.  But what’s the difference between a small business and a startup and who the heck qualifies as an entrepreneur by today’s standards?  Steve Blank, (the Silicon Valley entrepreneur considered to be the father of the Lean Start-Up methodology[1]), has said that entrepreneurs start businesses that will fit into one of 6 categories: “lifestyle business, small business, scalable startup, buyable startup, large company, and social entrepreneur”.[2]

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When people talk about startups, they’re usually referring to what Blank calls the “scalable startup”.  These startups usually pop up in places like Silicon Valley and New York.  Think Google and Facebook or more recently Uber and Airbnb.  The entrepreneurs that start these businesses are not thinking locally, they’re thinking globally.  They’re not just hoping to send their kids to private school, live in a gated community and take nice vacations.  These guys are making big pitches to venture capitalists and launching scalable companies with their sites on making piles of money through an IPO or a huge exit. [3]

Even though the Silicon Valley types get most of the press, most entrepreneurs’ start new businesses that easily fit into the small business startup category.  But the word “small” doesn’t do many of these organizations justice. The United States Small Business Administration (SBA) defines small businesses as those employing fewer than 500 people[4]. I don’t know about you but a business with 499 employees doesn’t sound so small to me.  The impact of small business on the U.S. economy is certainly not small; they make up a full 99.7% of all businesses with paid employees in the US and employ 48% of the private workforce.[5]  In South Carolina the numbers are almost identical with small businesses employing 47% of the private workforce.[6]  Impressive numbers, right?  If we looked no further, you’d probably think small businesses in general must be pretty successful.  But, if you’ve ever taken a college statistics class you know numbers don’t always tell the whole story.  The SBA reports a less-than-rosy picture for individual businesses, which shouldn’t be overlooked by would-be entrepreneurs.  Approximately 20% of small businesses in this country fail within the first year of business and by the fifth year approximately 50% will throw in the towel.[7]  But because there are always new businesses opening to take the place of those closing, the overall economic impact isn’t as great as the financial impact on individual owners.

So it seems the trick is to remain standing through that first year, follow with at least 4 successful years after that and keep on rollin’.  Simple, right?  You might think so if you’ve never tried it. There’s no formula to guarantee your business’ success, but if you avoid the mistakes I’ll discuss in this blog series you’ll certainly decrease your odds of failing.

Success is Tricky Despite Help Available

Successful business leaders write books and blogs, hold seminars, record podcasts and volunteer to be mentors.  Academics research, study and report small business data to give us the big picture.  Numerous national and local associations and organizations are dedicated to helping small businesses succeed.  So why is it, with so much information and assistance available (much of it completely free) to help small businesses succeed, the chances for survival remain grim?  The reasons are probably as numerous as the businesses that fail, but common themes do persist. According to Michael Gerber, in his best-selling business book, The E Myth Revisited, most people who go into business for themselves assume because they know how to perform the “technical work”[8] of a business (e.g.: accounting, baking cakes, designing buildings), they will intuitively be able run a business that offers that product or service.  However, as Mr. Gerber points out, nothing could be further from the truth and it becomes evident to these folks pretty soon out of the gate.  People quickly learn there’s much more to know about running a business than making the product or performing the service.  Functions like marketing, accounting, human resources, customer service, sales, purchasing, logistics, etc. cannot be overlooked but often are as people get caught up in their dream of business-ownership.  Even the smallest businesses must understand and plan for these functions in a way that will lead to success.  And while there’s no way to prevent all possible mistakes, educating yourself by taking advantage of the vast number of resources available (See Resources below) will give you a much better shot at success than if you don’t.  So, in no particular order, in the coming weeks, I will write about 10 of the most common business mistakes and how you can avoid making them.

SMALL BUSINESS RESOURCES I RECOMMEND:

Government Resources

SCORE (Service Corp of Retired Executives – one of THE best online resources available; find a mentor, sign up for free webinars, watch recorded webinars, sign up for live events and courses on demand, etc.)

The Small Business Administration (a wealth of free information, statistics and advice)

The SC Department of Commerce Publication Directory (publications on everything from Aviation to Workforce Training)

SC DOC Focus on Small Business (the SC DOC’s latest publication – filled with good information)

SC DOC Resource Finder (tell them what you need and they will find the resource for you)

SBA Profile on SC (statistics regarding ownership, income, jobs, etc. for SC small businesses)

SBA Office of Advocacy-Research and Statistics (all other statistics of interest)

US Patent and Trademark Office (trademarks page)

US Patent and Trademark Office (patents page)

Learning

Udemy (learn anything from Java to Body Language for Entrepreneurs, free or very reasonable)

The Best Blogs, Online Magazines, etc.:

Harvard Business Review

Wall Street Journal

Inc.

Entrepreneur

Fast Company

Wired

Forbes

Fundera Ledger (great list of additional resources and great articles on the site as a whole)

Note – I just found this article today on Fundera; The 37 Best Resources for Small Business News – a great list of resources!

Podcasts:

How to Start a Startup (amazing podcast from the people at Y Combinator)

Unemployable (I know, they could have worked on the title but this show has great advice for freelancers, coaches, consultants and entrepreneurs)

The $100 MBA (good, practical business advice in all areas from different types of businesses)

Startup (lessons learned from other startups)

Smart Passive Income (really informative – as the title says it’s all about building passive income products and marketing those products)

Mixergy (stories from entrepreneurs about successes and failures)

The Tim Ferriss Show (the guy who wrote “The 4-Hour Workweek” – examines what it takes to be a top performer in all different professions)

Great Apps for Staying Informed:

FlipBoard (follow all sorts of topics and magazines – a wonderful resource)

Feedly (read your blog feeds)

Audible (I can’t sit still long enough to read a book these days so I LOVE this app – use on your commute, workout or chore time to your advantage and listen to a business book!)

Books I Personally Recommend (all available on Amazon and Audible and probably the library):

The Art of the Start 2.0 by Guy Kawasaki

How to Win Friends & Influence People by Dale Carnegie (should be mandatory reading in high school!)

The Lean Startup by Eric Ries

The E-Myth Revisited by Michael E. Gerber

The Innovator’s Dilemma

Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne

Rich Dad Poor Dad by Robert Kiyosaki

The 7 Habits of Highly Effective People by Stephen Covey

Best Business Books of All Time (according to almost everyone and all on my “to read” list):

Purple Cow by Seth Godin

The 4-Hour Workweek by Tim Ferriss

Think and Grow Rich by Napoleon Hill

Good to Great by Jim Collins

The Tipping Point by Malcolm Gladwell

The Hard Thing About Hard Things by Ben Horowitz

Guerilla Marketing by Jay Conrad Levinson

ENDNOTES:

[1]Steve Blank Entrepreneurship and Innovation.” Steve Blank. N.p., n.d. Web. 25 Apr. 2017.

[2]Why Governments Don’t Get Startups–Or, Why There’s Only One Silicon Valley.” Xconomy. N.p., 01 Sept. 2011. Web. 25 Apr. 2017.

[3] Ibid.

[4] Frequently Asked Questions. N.p.: U.S. Small Business Administration Office of Advocacy, June 2016. PDF. (However, for purposes of government programs, and contracting, there are specific industry-level definitions here: Table of Small Business Size Standards | The U.S. Small Business Administration)

[5] Frequently Asked Questions. N.p.: U.S. Small Business Administration Office of Advocacy, June 2016. PDF.

[6] Small Business Profile, South Carolina, 2016. N.p.: U.S. Small Business Administration Office of Advocacy, n.d. PDF.

[7] Survival Rates and Firm Age. N.p.: U.S. Small Business Administration Office of Advocacy, n.d. PDF.

[8] The E-myth Revisited Why Most Small Businesses Don’t Work and What to Do About It. N.p.: Bloomsbury Qatar Fndtn Pub, 2014. Print.

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