When I wrote my books and started blogging it was with the idea of helping the small town business owners in the UnitedStates.
I had no idea that business owners from over 100 foreign countries were going to show up and use the information I was providing.
But thats exactly what has happened. At the present I sell more books in Australia and England than I do in Nebraska orWyoming.
So, if youre in Nebraska or Wyomingbuy abook.
The point Im trying to make here is that my blogs not really a how to, as much as a what to thinkabout.
I dont have all the answers for every type of business on the planet. The purpose of these articles and tips is to simply force you to think about somethings.
Have you considered this? What will you do aboutthat?
And I think thats the reason my blog is so popular both here and overseas.
So perhaps the title of this article should be Ten Things Every Small-Town Business Owner Should Think Aboutinstead.
The Power of SmallBusiness
According to the SBA (Small Business Administration) small businesses are responsible for 58% of the private work force and 40% of the gross nationalproduct.
Small businesses also get the credit for more inventions and innovations of products than their big business counterparts.
Women owned businesses generate over $65 billion each year. Seventy-eight percent of all small businesses are 10 employees orless.
The Downside of SmallBusiness
Only 50% of small businesses survive the first year of operation. Eighty to ninety percent fail by the end of the tenthyear.
Most of these failures could have been prevented if the business owners had been more conscious of the points we will cover in thisarticle.
Ignore these and your business may wind up in trouble. Once again, I stress that these are not how-tos but things to think about andponder.
Now on to the TopTen.
1. Who Are You?Really.
Theres an old saying, Many are called, few arechosen.
Nothing could be more truthful in small business. Business owners are cut from a very specialcloth.
Not everyone has what it takes to start and run a small business. Do you have what ittakes?
If you are thinking of starting your own business here are some quick things to think about. You probably have a current job working for someone else. Someone else makes decisions for you everyday.
Oh, you may make some minor ones in your position but someone else makes the major ones and thats probably why you want to strike out on yourown.
But this is one of the pitfalls of business start-ups. All of a sudden, youre in charge. You make all the decisions big andsmall.
This can be a very scary process when someone else has been doing it most of yourlife.
First your parents made all the decisions, then teachers, then perhaps the military, then bosses in the workforce. Now suddenly youre the person in charge. Can you handleit?
The next area to consider is what are you willing to give up to make your businesshappen?
There are only 24 hours in a day and so far, you are working eight of them for someoneelse.
One hour each way to work and Ill allow you six hours of sleep that will leave you eight hours a day. Three hours of family time and you still have five full hours a day to work on your business.
How you spend it is one of the keys to success. I would suggest that you spend at least 20 minutes of the five hours reading something each day about your business or industry.
At the end of a year, youll know more than 75% of the people in your industry. What do you do with the rest of the time? Simple the other nine things were going to talkabout.
2. The BusinessPlan
According to a study at Harvard University businesses that spent six months or less in the planning of their business had an 80% failurerate.
Those that planned for a year or more had an 80% successrate.
Most potential business owners know the product or procedures in producing what will be sold but very little about the day-to-day operation of the business. See: My Free Ten Step Business Plan onYouTube.
A good business plan will put you on the right track and force you to focus on the points you might otherwise miss.
Youll also need it if you plan to request financial aid from banks or investors. Theyre going to want to know how you plan to make the business asuccess.
Even if youve been in business for a few months or a few years I cant stress strongly enough the importance of revising your business plan on a regularbasis.
At least yearly for the first five years of business. Where can you find help developing and writing your business plan? S.C.O.R.E. can help. You can contact them through your local Chamber of Commerce.
3. Funds to Operate YourBusiness
I said above that only 50% of businesses survive the first year. The toughest period for most businesses is actually the first two years because of the monetary demands of the business. I
ts that second year that the business usually starts its downhill slide to failure.Why?
Inadequate start-up financing. The money runs out before the business is able to sustain itself on itsown.
Its typical for most businesses not to see any real cash flow into the business for at least three to six months. Oftenlonger.
And it may be two or three years before the business may actually produce enough for the ownerssalary.
Before even thinking of starting a business you need to make a commitment to at least five years before quitting.
This commitment will keep you focused through the bad times during the early startup months. And trust me there will be some badtimes.
You either need a loan or money from your day job to sustain the business for at least the first year. Longer if possible but 12 months is the bareminimum.
Once again S.C.O.R.E. or the Small Business Administration can help you with preparing the financial statements youll need before contacting banks or investors.
4. Keeping theBooks
No successful business I know of keeps a bad set of books. They know where the money is coming from and where itsgoing.
Good bookkeeping can alert you to a whole host of potential business failures that might go unnoticed in the day-to-day operation of the business.
Fortunately, in todays world the computer makes it easier than ever for the average person to maintain the business records necessary for a successful business.
Products like QuickBooks or Quicken can produce all the records you need to evaluate and adjust your business for a strong financial position.
Good accountants are worth their weight in gold. They can help you set up your initial bookkeeping system and they can show you the red flags to look for eachmonth.
I would suggest checking with them before buying a software package and see what they use so you can just take them a disc from time totime.
It will also save you a ton on your taxes in the time they have to spend preparing yourreturn.
5. The Most Common Cause of BusinessFailure
That would be poor management. When youre a one-person business you are the only one you have toplease.
Here are the most common mistakes small town business owners make when it comes to management.
They hire the wrong people??Inexperienced owners often hire people they like or have a good feeling about rather than the most qualified applicants for the position.
Poor training??Even the most dedicated employee cant perform to their highest level if theyre poorlytrained.
Trying to do too much??As you move from a one employee shop (you being the only employee) to having more people you still feel the need to do toomuch.
Sooner or later, you must delegate some of your responsibilities to others to improve efficiency.
Poor use of time??Organization is always a sign of a good manager. Its not difficult to juggle several business problems if you have an organized plan for doingit.
Not being there to run the business??Absentee ownership is a tough way to run a business. You arent there to see the day-to-day problems.
A good manager for this type of ownership is essential but they cant make the major decisions and you may not have all the information you need when the time comes to make those decisions.
If you feel you are not a good manager perhaps that position should be filled by someone who has the personality to handle thattask.
The best player is not always the best candidate to be your leader. If you follow professional basketball, youve probably heard of PhilJackson.
As coach of the Chicago Bulls, he and Michael Jordan led the Bulls to six NBA championships.
As a player Jackson was a second-string bench warmer. He has no records and one NBA championship as aplayer.
He also took the LA Lakers to a championship in his first year with theteam.
Contrast Phil Jackson with Magic Johnson. Arguably one of the greatest players of alltime.
Johnson was a horrible coach, lasting only half a year before getting out. Great player but lacked the motivational and people skills to bring out the best inothers.
Larry Bird, great player went on to become Coach of the Year after retiring as aplayer.
6. Knowing Your Customers
Or as we like to call it??marketing. Who are the people most likely to want to buy your products or services?
Here again, planning is key. About a third of your business plan will be devoted to marketing. Your marketing plan will be the road map to success for your business.
You will create goals and marketing and advertising strategies to meet thosegoals.
Your plan will assist you in identifying your target market and the message they want to hear that will make thembuy.
How to price your product. The strengths and weaknesses of your product or service. What adverting and promotions to try. How to identify your targetmarket.
7. Location, Location, Location
This used to be thought of as one of the most critical criteria for opening a new business. If you had a bad location that was usually the main reason forfailure.
As stated above, running out of money and poor management are the key causes. Location is not as critical as once believed.
Dont misunderstand, location is important but its not the most important thing.
What are the most important things to consider when selecting a good location?
Visibility??Do you need a visible storefront like a shoe store or drycleaner?
Traffic??Is it a high or low trafficarea?
Is there adequate parking for your customers?
Is your target marketthere?
Condition of the property??Will it need any repairs now or soon?
Is the location in a growing or decaying part oftown?
Can you expand if necessary?
How healthy is the local businessclimate?
Are there other draws nearby that will help attract your customers? Movies? FoodStores?
Level of crime in thearea?
Zoning restrictions?
Are there compatible businesses nearby.
Rentcosts
Finally, how close are your competitors? How do they compare in appearance to your business? Do they look more or less prosperous?
Before beginning the search for that perfect location create an outline of what your current and future needs will be for the property.
Associations and industry magazines can help you determine the amounts of traffic youllneed.
You can find a listing of these people online. Look for The Small Business Source Book, The Encyclopedia of Associations, The Rand-McNally Commercial Atlas and Marketing Guide and The Encyclopedia of Periodicals.
8. CustomerService
My idea of customer service probably differs with most you have read until now. I dont believe in customer service above and beyond the call of duty.Why?
Because its almost impossible to maintain and it will create an economic hardship.
For example, if you buy my book from Amazon.com they will ship the book in 34 business days. Why dont they overnight the book toyou?
Wouldnt that be superior customer service? Certainly better than Barnes & Noble right? The reason is the overnight cost would be almost as much as the book. It would be economically irresponsible to dothat.
So, as you can see, knock your socks off service is not always the best way to run a business.
What I recommend instead is steady consistent service. Every time the customer enters your business, they know the level of service that they are going toreceive.
Could McDonalds service be better? Possibly but you know whether you walk into one in Maine or California the service is going to be consistent.
McDonalds has found a level of service that is acceptable to their customers, and they can provide that service day in and day out??consistently.
My definition of Customer Service is: The best service you can deliver day in, and day out and still be profitable.
9. Dont Be Afraid to Ask for Directions
There is an old joke that men refuse to stop and ask for directions whenlost.
We would rather drive around aimlessly knowing that eventually we will find the right road. Unfortunately, in business this can be a disaster. But there is goodnews.
You dont have to spend a fortune on a consultant to give you direction. In most cases the information is free or at least reasonable.
Go back to the last paragraph in #7 above and ask industry associations and trade magazines to recommend someone who is successfully doing what you want todo.
Get online and look for businesses like yours from towns similar in size to yours. Call business owners there and ask how they deal with the challenges youre having. Most will be happy to help youout.
10. Technology??Are YouReady?
I spent eight years selling furniture in a family-owned furniture store in Alton, Illinois. I left that company in 1977 and they were using a manual bookkeeping system.
Every sale was manually entered into two big ledger books. The way books were kept for hundreds of yearsbefore.
I had the opportunity to go back for a visit in 1989 and was curious to see what type of computer system they had decided touse.
The answer??none. They were still using the old ledger method of keeping thebooks.
The question I had to ask myself was, Could they have benefited by using a computer system and software designed for the furniture industry. My answer had to be YES theycould.
The computer could have told them so much that the normal bookkeeping system couldnt.
For example: Rate of sale of certain styles and colors. What items sold asgroups.
Hourly sales for staffing. Sales comparisons among vendors. These are just a few items that would have made the store more efficient with the knowledge the computer could have provided.
Does every business need a computer? No, of coursenot.
There are many successful businesses that continue to operate with pen and paper. The point here is to findout.
Contact your industry gurus and find out what the pros and cons of computer systems in your industry are. Maybe they can help maybe they cant. But at least investigate.
The Last Word on What Every Small Town Business Owner ShouldKnow
So, which of the above do I think is the most important? Easy the firsttwo.
Without those two the others will never happen. Number one you must have the entrepreneurial spirit. A self-starter who will not bedenied.
And secondthe business plan. No business can be successful for long without a plan forsuccess.
Without a business plan you are simply reacting to the economic climate of the marketplace.
Sooner or later your reactions may trip you up. The business plan will consider and make you focus on how you will tackle the eventual adversity that every business mustface.
As I said in the beginning this is not really a how-to article but an article to give you some things that you must think about if you expect to have a long and prosperous business.
If youre just starting your business, I wish you all the luck in theworld.
If youre an old timer then youre in a very enviable position because no matter when you read this we are poised for the greatest business times inhistory.
Take advantage ofit.
Take a look at Tom Egelhoffs Amazon Best Selling Small Business book, How to Market, Advertise and Promote Your Business or Service in Your Own Backyard.
Subscribe to Toms New YouTube Channel??The Art of Learning Small TownBusiness
Listen in on Toms weekly Saturday radio show 8 am to 11am Mountain Time Open For Business on AM 1450 KMMS Radio, Bozeman. Go to kmmsam.com and Click Listen NOW. You can call the show or textTom.
Business Start Up: Ten Things Every Small Town Business Owner Should Know was originally published in Startup Stash on Medium, where people are continuing the conversation by highlighting and responding to this story.
