Every year, more than 1 million new businesses are started across Canada and the United States. Within 5 years 80% of small businesses fail.
Unfortunately, it’s too early to breathe a sigh of relief. In the second five years, another 80% of small businesses fail.
Why is this? Why do so many people start a business only to fail?
It’s about three common mistakes, which if you understand, will give you the ability to create an exciting and rewarding small business.
Now let’s go through these mistakes and ways how to avoid them to help you grow a small business.
1. Most small business owners work IN their business instead of ON their business.
Chief Executive and firefighter: you put out fires, make sure work gets done right, and keep the business running. You do it all!
At first, it feels like a lot is getting done but over time it becomes exhausting. The pace slows down and you find yourself going from one fire to the next.
Read on to find out how to remove yourself from the business and grow your company without burning out.
Which brings us to the next common mistake…
2. Understanding the technical work of your business does not mean that you understand a business that does that technical work.
You might be the best baker in your city but that doesn’t make you the best business owner.
A business owner needs to be able to do the financials, hiring and training, and sales and marketing. Likely new skills that you would need to learn and master.
It’s a harsh truth: just because you are the best baker does not mean that you will be the best bakery owner.
Luckily there are ways to help you master those new skills! We’ll get there shortly.
3. Approaching work with a fixed vs growth mindset.
Now this one may be a little cliché. But it holds true!
Being insatiably curious and open to trying new ideas can help you see and take advantage of new opportunities that others would miss until it’s too late.
Your drive and mindset also trickle down to your team and play a critical part in your work culture. In order to align your team around your vision and create a positive culture, you need to be able to have a growth mindset.
Now, on to a couple of ways that you can avoid these three common mistakes as you grow a small business.
Learn to change your mindset and think as three people: the Entrepreneur, the Manager, and the Technician.
Entrepreneur: the grand strategist, the innovator, the Entrepreneur is our creative personality.
Manager: pragmatic and calculated, the manager is the planner in each of us.
Technician: the do-er. The baker, artist, or musician that actually does the work.
In order to succeed in business, you will have to learn how to step away from the role of technician and into the role of manager and Entrepreneur.
Each persona will be responsible for a different part of the business.
- Innovation, or finding the best way to solve a problem, is led by the Entrepeneur
- Quantification, measuring how well everything works is overseen by the manager
- Orchestration, or the development of a consistent experience is performed by both the manager and the technician
By beginning with the customer and focusing on innovation, quantification, and orchestration your business will grow and succeed.
Now to ensure that this success is maintained long-term, you will need to…
Remove yourself from the business by putting the right systems in place.
If your goal is to gain freedom by growing your business you will need to learn how to remove yourself from your company.
Instead of coming to rely on hiring and retaining extraordinary people you can focus on developing an extraordinary system. That way ordinary people can achieve extraordinary results.
This begins with determining your ideal corporate structure and defining the roles that you need to perform. Complete with job descriptions and tasks, this will help you avoid confusion around responsibilities as your scale.
Once your structure is in place it’s time to move to documentation. Create an operations manual. Simplify it. Train people using your manual and keep improving it until anyone can get the process right. Choose and develop your leadership team wisely.
Then you can choose to scale (through a franchise model) or to hire other people to replace yourself in the business.
Avoid becoming one of the 96% of businesses that fail within the first 10 years by avoiding these common mistakes.
Learn to put the right systems in place and to balance the different aspects of running a business in order to succeed.
Best of luck! Let us know in the comments what has worked for you over the years.