Businesses fail all the time, it’s not a secret. A new shop that opened just around the corner is gone after only few months. A new restaurant that doesn’t make it to its first birthday or a freelancer who starts looking for a full time job 10 months after going solo.
Starting a business is not easy, sure. Running it is even more difficult. What is really heartbreaking though is that most of them could have survived had they done one, extremely important thing before they even started to operate:
Build a solid business foundation.
I talk to small business owners all the time, it is part of my job. It is quite frightening though to see how very few of them realize that they need more than a great product or low prices to survive. Usually, they don’t and end in failure.
The mortality rate for new businesses is close to 40% in their first year. Out of the ones that survive, more than a half are gone within the next 4 years of operation. These numbers are high, sure, but they become really scary if you look at them in the context of their owners. People invest their savings in their business, their pensions, or borrow money to start their companies. Now, more than half of them will lose that money, possibly also their homes and security for the future.
Even if you have started a business as a freelancer without spending any money at all, you still might face tough times if your business doesn’t survive. Unpaid loans and money owed to suppliers can add up too.
Most of that happens because of a lack of one of the most important ingredients, a business foundation.
Why Most People Never Work On a Business Foundation?
To be honest, usually it happens because they don’t realise that they need it. It’s a fact that most business owners start their companies “accidentally” and go into operation without any prior business knowledge.
Some of them are simply dissatisfied with their work and want to do something else and thus started their companies. Others think they can run a business better than their boss. Some are deluded by the prospect of freedom and easy life while many others simply want to work on their passion and have the freedom to work on the projects they are passionate about.
Only very few go into business knowing what to expect and with a full realization of what is needed to be successful in running a company. Those are the ones that usually have no problems in business, the rest sooner or later start to struggle.
How to Build a Solid Business Foundation When Starting a Business?
Building a business foundation is something that should have happened before you start a business. From my experience however, I know that it is rarely the case. The good news is though that you can still save your company by going back to the beginning and putting that foundation where it should be.
And let’s be honest, doing so is your only chance to be successful in business.
In order to protect your company from a failure and ensure its survival you have to:
1. Have a clear vision.
Your business vision tells you how your company is going to look like when it’s finished. This is the idea of a company you strive for. This is what you are building.
You may want your company to grow into a large, multinational business operating from ten of the largest capitals of the World. You may want to have a turnover of X millions and so on. Or your vision may be that your business is going to be a small, home-based eCommerce store like thehappybike.com. That you will be working on your projects in the evenings and generally make enough money to pay for your mortgage but the majority of your income will come from somewhere else.
Your vision can be anything that you desire your business to become. The point is, without this vision you are only drifting and we all know what chances do you have to arrive to your destination by drifting.
2. Realize your mission.
Your mission answers a very simple question, why you do what you do. Why you want to be a writer, designer, and so on. The trick is, there are two layers to this question.
One relates to you. This is your personal mission for the business. It tells you what will bring you the personal satisfaction and realization from the business. It is also the mission you will not reveal to anyone.
The other layer is the mission that you communicate with your clients. This is what you will answer to them if they asked you why you do what you do. This is what they will base their reasons for working with you and giving you the business.
Your mission can be anything. For me, my personal mission behind writing and publishing business books is that I have always wanted to be a writer. My publishing house is a realization of a life long dream, simply.
I also want to help small business owners to start their companies properly and avoid making the same mistakes that caused my first company to fail. This is also my mission, the reason why I get up at dawn every day to write and help people like you to succeed in business.
3. Know your most immediate objectives.
Once you know your vision, you need to start setting up objectives to make it come true. Building the business of your dreams may take some time and you will have to complete many small milestones along the way. So it is important to always set those milestones for yourself to keep yourself on the right track.
4. Be willing to pay for quality education.
Running a business is not something you can learn once and then just get on with it. If you want to succeed you need to constantly learn new things.
However, there is only so much that you can discover for free from blogs like this one. The true wealth of knowledge though is always reserved for those very few who understand the value of good education and are willing to spend some money to build a successful business.