The top reason small businesses fail is lack of experience in two areas – being an expert in actual industry and running a small business. These are two different things. Why gain industry experience? Because without it, you’ll make very expensive mistakes. Everyone has a learning curve. If you get the experience first as an employee instead of an owner, someone else paid for learning curve, not you.
Why do you need to learn how to run a small business? Because it’s not your accountant’s job to make day to day decisions. Being a great subject matter expert doesn’t mean you’ll be terrific at finding customers and managing cash. These are learned skills. These skills are crucial to your survival as a small business owner.
Enjoying good food is not enough to open a successful restaurant. If you love gardening, that’s not enough to open a landscaping business. You must learn the business from the inside out by working for someone else for at least two years. That will greatly reduce your risk of failure if you make that investment of time.
In Europe they have apprenticeship programs for the trades. Think of these two years working in your industry like an apprenticeship.
It takes about two years to see most types of problems that arise from customers, subcontractors, suppliers, competition and employees cycle through. You should do as many jobs as you possibly can to get a 360 degree view of every job the customer requires.
Don’t be afraid to sweep floors or wash dishes or answer the phone for customer service. Think of it as paid training. No pride allowed in the learning process.
Find the experts at each job function and learn from them. See how they do their jobs and ask yourself if that’s what you would want your employees to do. Let them tell you all their war stories. Solomon was right; there’s nothing new under the sun. Those war stories are case studies in small business. When you see those problems in your own company, you’ll know how to solve them.
My friend Sally was an executive for AT&T for many years. She left her job to open a day spa in New Jersey. She went to beauty school to get her license.
Her classmates were gum-smacking teenagers with purple hair and she learned the business from the ground up. She was very successful but made the investment of time to learn the industry and she learned to run the business.
Every business owner pays in time or pays in start up capital. If you don’t have experience in an industry, few investors will even look at you. Experience is the first question banks ask when you want a loan or credit line.
If you want to understand the basics of running a business, take a look at the Learn section of our website. It’s a condensed curriculum every small business owner needs to know. In the time it takes you to drink a cup of coffee, you can view one of these videos, available to you anytime.
Stay tuned for Top Ten Reasons Small Businesses Fail – Reason Two!