Why do small businesses fail?

June 16, 2013 By Laura Humphreys Leave a Comment

sorry we're closedAccording to a Dun & Bradstreet* study, ‘businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years.’ Restaurants have only a 20% chance of surviving two years. Of these failed businesses, 90% closed because the business was not successful, did not provide the level of income desired, or were too much work for their efforts. The failure rate for new businesses was 70% to 80% in the first year and only about half who survived the first year would remain in business the next five years.

I spend much of my life working with and listening to small business owners, and I am now certain the true reason so many businesses fail (cease to exist) before year four is because people go into business for the wrong reason.

When I make presentations to business groups and ask why they chose to start a business, the answers are always the same. I wonder if you identify with one or some of these reasons people give:

  • I thought I could run a business better than my boss.
  • I was tired of working for someone else.
  • I wanted to be in control of my destiny, choose my own hours, and go on holiday whenever I felt like it.
  • I am good at something or trained in a particular field and have built my business around my skill set.
  • I had a good idea and believed I could make a business out of it.
  • I don’t know; it just sort of happened.
  • I want to help people, I’m not in it for the money (this response is particularly true of health practitioners).

Do any of these answers resonate with you? Have you really given much thought to why you are in business or what you really want out of it? Or have you stumbled into business as a reaction to your own personal circumstances without a true sense of purpose driving you?

It’s important to ask yourself; because your reasons for being in business will determine the way you approach it, which, in turn, will influence the ultimate success you have.

There are only two reasons to go into business for yourself:  to make money and to make a difference.  My book Liber8 Your Business shows you how you can do both and build the business you really dreamed of.  I’m looking forward to sharing it with you soon.  In the meantime if you have any questions about your business  model feel free to email me laura@liber8me.com

Cheers
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*Dun & Bradstreet is a public company headquartered in Short Hills, New Jersey, USA that licenses information on businesses and corporations for use in credit decisions, business-to-business marketing and supply chain management. D & B maintains information on more than 205 million companies worldwide.

If you want to put your business under the spotlight – Laura’s next Acceler8me Programme, inspiration and support for passionate business owners, kicks off in August.  Click here for details

 

Filed Under: All articles, Business success, Daily small business mentoring tips, Top Tips Tagged With: business, Business advice, Business blogs, Business book, business coaching, business mentor, Business mentoring, business owners, Business partnerships, business planning, business planning tools, How to write a business plan, small business mentor, success

Freedom is knowing you’d keep doing what you are doing if you knew you were about to die

June 10, 2013 By Laura Humphreys Leave a Comment

STEVE-JOBS1

I just watched this amazing speech from Steve Jobs when he knew he was going to die.  It moved me as I expect it will you.  Watch it by clicking link below then come back and tell me what you think.

http://youtu.be/a5SMyfbWYyE

Understanding freedom and how important it is to us as human beings is becoming an obsession of mine.  Freedom is the very essence of happiness.  Life is a gift, we don’t have long in the scheme of things.

So what is your answer to the late Mr Jobs’ question?

 

 

 

From the desk of Liber8me. Small business mentors and publisher of Liber8 Your Business:  The revolutionary business planning technique that will set every small business owner free.  Get your copy here http://liber8yourbusiness.com/

 

Filed Under: All articles, Business success, Daily small business mentoring tips, Laura's rants Tagged With: business, Business advice, Business blogs, Business book, business coach, business mentor, Business mentoring, business owners, business planning, Exit strategies, Inspiration, success, Talks

The ten traits of wealthy entrepreneurs. What are they and do you have them? Score yourself here

June 5, 2013 By Laura Humphreys Leave a Comment

financial freedom imageOver the past two years I have interviewed over forty successful entrepreneurs.  My criteria for an interview subject is that they must have built and sold at least one successful business.  Many of them have been serial entrepreneurs – having created more than one business and learned many lessons along the way.

As I’ve talked to these people it has become apparent that they all share certain traits that ultimately lead to their success.  If you want to succeed at your business (of course you do), you could do worse than focus on developing the traits exhibited by the rich and free.  Work out which ones you have in abundance and work on the ones you don’t.

Take a look at the traits listed below and grade yourself on a score of 1 to 5, where 1 means ‘not at all’ and 5 means ‘totally got it nailed’, against each of the traits. Don’t feel you have to be close to a 5 score to be successful. This is a reality check to identify the areas you will need to work on as you grow your business.

10 Traits of wealthy entrepreneurs:

  1.  Vision. Rate the clarity of the vision you have for your business when it is complete and you’ve created financial freedom from it.

1                      2                      3                      4                      5

 

  1. Self-belief. Rate your confidence in your ability to build a business that will generate great wealth and freedom for you.

1                      2                      3                      4                      5

  

  1. Passion. Rate your passion for your business

1                      2                      3                      4                      5

 

  1. Being goal-orientated. Rate the clarity of the goals you have set for your business

1                      2                      3                      4                      5

 

  1. Planning. Rate your current plan for a business that will feed you wealth

1                      2                      3                      4                      5

 

  1. Being action-focussed. Rate your ability to take action as needed.

1                      2                      3                      4                      5

 

  1. Determination. How do you rate your determination to succeed?

1                      2                      3                      4                      5                     

 

  1. Willingness to fail. How would you rate your willingness to learn from failures?

1                      2                      3                      4                      5

 

  1. Being wealth positive. How would you rate your willingness to be very wealthy?

 1                      2                      3                      4                      5

 

  1. Giving back. Rate your desire to make a difference through your business

1                      2                      3                      4                      5

 

Review your scores for each of the 10 traits. In which areas do you already feel strong? Which areas do you need to work on?   And what plan can you put in place to lift your game in your weaker areas?

In my book, Liber8 Your Business, I go into more detail about these traits and show you how to develop your strength in the areas you need to.  To be notified of the book launch just click here http://liber8yourbusiness.com/

 

From the desk of Liber8me. Small business mentors and publisher of Liber8 Your Business: The revolutionary business planning technique that will set every business owner free.

Pre-register for a copy of Liber8 Your Business here: http://liber8yourbusiness.com/

Find out about working with Laura here: http://www.liber8me.com/one-on-one-mentoring-programme/

Filed Under: All articles, Book excerpts, Daily small business mentoring tips, Traits of the Rich & Free Tagged With: business, Business advice, Business blogs, Business book, business coach, business coaching, business mentor, Business mentoring, business owners, business planning, business planning tools, entrepreneur, Exit strategies, Exit strategy, goal setting, How to write a business plan, Planning an exit strategy, small business mentor, success

Why I invested $24,000 per annum in external advice in my second year of business… and how it paid off.

May 20, 2013 By Laura Humphreys Leave a Comment

money-treeBusiness owners listen up.  I’m going to make a point I believe PASSIONATELY in.  I’m going to share with you the one decision I made early on in business that ensured my success.

The business was my advertising agency, Red Rocks. The decision was to hire two external Directors.  One was a retired advertising guy who added both experience and credibility to my fledgling agency.  The other was a smart and logical businessman who I knew would challenge me.   I had my Yoda and my Dr Spock… both complimentary to my creative, slightly wild approach to business. We agreed I would pay them each $1,000 per month each – not much really compared to standard Director’s Fees.  But for me it was $24,000 off my bottom line in my second year of business.  It was a terrifying decision.  I was barely making that much in profit!  I knew I’d have to seriously up my game in order to afford them.  I was scared, but I was sure with the right action plan and these two men to challenge and support me I could get there.

I can now say with complete certainty that it was the best business decision I ever made.  Business ownership can be a lonely business.  I couldn’t afford to hire senior people to bounce ideas off, to give me feedback on my strategies.  I was naïve when it came to business and needed guidance around the financial goals I set.  I was headstrong and had regular love affairs with my own sense of brilliance (always followed swiftly by equally strong feelings of inadequacy).  My lack of business experience and fleeting spells of over-confidence made me a dangerous force.  But with my two Directors meeting me every month, I had to get my act together.  I had to have a solid business plan, with convincing strategies.  I had to set targets and run a budget.  I had to grow up and learn not to be a solo operator.  With my two Directors guiding, challenging, supporting and motivating me I grew my business rapidly year on year.  My profits grew alongside my sales, thanks to aggressive new business targets and tight control on expenses.  I stopped looking at their fees as an expense and viewed them as an investment.

Now I strongly advise all small business owners to invest in an external advisor of some sort.   You can look for an independent Director like I did, or you can get an Advisory Board.  Or you can bring in a mentor or coach to work alongside you.  A piece of cautionary advise whichever way you go, is to be sure the people you invite into this critical role have earned the right to be there.  They MUST be experienced business people, who have successfully built their own businesses and understand what it’s like first hand to be in your position.  Please DO NOT hire a business coach who has never owned a business or engage a Director who has no experience with governance.

Having been on the receiving end of good external advisors, I know how important it is.  I have a couple of spaces coming up and am looking for a committed, ambitious and dedicated business owner to work with me.  You can be sure I’ll challenge not only you but your business model too. My aim is to see good businesses become exceptional businesses.  If you’d like to talk to me about my mentoring programme click here:

http://www.liber8me.com/one-on-one-mentoring-programme/

  From the desk of Liber8me.  Business mentors and publisher of Liber8 Your Business – The revolutionary business planning technique that will set every business owner free.

Filed Under: All articles, Business success, Daily small business mentoring tips Tagged With: Branding, business, Business advice, Business blogs, Business book, business coach, business coaching, business mentor, Business mentoring, business owners, business planning, business planning tools, small business mentor, success
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