According to the Bureau of Labor Statistics, about 20% of small businesses fail within the first two years in business. In 10 years, this is true for about 60% of them. The most horrifying thing here is that this statistic has barely changed over the last 30 years, which means that taking the easy way out and blaming the market won’t cut it this time.
There’s clearly something that these successful businesses are doing right that others aren’t, and if you could just figure out these rules, you might just increase your fighting odds. With that in mind, here are a few things you should try to increase your small enterprise’s resilience.
1. Analyze why small businesses fail
The first step on this journey is to determine why small businesses often fail.
The two most common reasons are the lack of funding and market need. You’ll already make a massive difference by fixing just these two issues.
Many small businesses underestimate how long it would take them to become self-sustainable and profitable. For many businesses, it will take 6–18 months to become fully profitable. At the same time, many small business owners will be too optimistic and expect to make money immediately. Therefore, they’ll just get the money for the launch (perhaps even the first one to two months of expenses), and that’s it.
The solution here is simple – get more money during the fundraising stage. However, this requires you to do a proper financial projection and budgeting, which is quite a demanding thing to do.
Another thing you need to figure out is the lack of a market need. So, how do you fix that one? You do the market research. This is supposed to be a part of your business plan, to begin with, but you would be surprised at how many entrepreneurs just skip over it. If you do it, however, you can skip many unpleasant surprises in the future.
2. Harnessing the power of technology
There are so many ways in which innovative technology can save money, increase efficiency, or make your business less dependent on external factors (making you more self-reliant).
Modern technology has an answer to the majority of old-school business processes. For instance, instead of installing a traditional phone line, you can look for the voice over internet protocol service. These save time and are much better for remote workplaces, making calls much cheaper.
Secondly, the use of digital marketing is incredibly important. Digital marketing gives you much greater targeting accuracy, easier cost control, and a far greater reach. This means that you get to see where your money goes and always have a way of telling which methods give you the best ROI.
Automation helps you achieve a lot more with fewer staff members. This allows your small business to outcompete much larger enterprises. It also speeds up things and minimizes the likelihood of human error. With the recent AI development, this technology has become more reliable and accurate than ever before.
This is not all that AI is good for; you can use it to analyze a lot of data (far cheaper than hiring an actual analyst), and you get to improve your decision-making process for good. This technology is always available and always accessible, which is helpful for an entrepreneur who’s always on the run.
3. Setting both long- and short-term goals
While having long-term goals is important to find something to focus on, the truth is that setting short-term goals helps correct your course.
If you said that you want to have X revenue by 2030, the only way to see if you did right was to wait for seven years. This is what milestones are for. There’s nothing wrong with planning seven, ten, or even twenty years in the future. You just have to know where you want to be in a week, month, or year.
Remember that goal-setting doesn’t just help with the overall business strategy. It’s also essential for project management. According to Parkinson’s law of project management, your team will use all the time you give them. This is why you need to learn how to make weekly and even daily goals for your team.
Setting goals, however, is not easy. First, you need to become great at estimating your team’s capacity. You want to give them something you know they can do. At the same time, you don’t want them to be able to do it too easily, since this means that you’re A) underutilizing their potential and B) robbing them of a sense of accomplishment.
It’s far harder than it seems at first, but if you figure it out, it will help you with everything you do.
4. Increasing your financial literacy
Running a tight ship usually means completely controlling your finances, and, as an entrepreneur, you have so much to do. This is why, by improving your financial literacy, you stand to save quite a bit of money and boost the overall efficiency of your enterprise.
First, you must consider a few online courses, especially enterprise finances. You’ll find many of these courses online, and the fact that you can attend them remotely robs you of an additional excuse.
You can also download some financial books. The fact that you can find them in audiobook format means that you can listen to them while riding in your car, or you can read them on your phone while flying.
Workshops and seminars are everywhere; all you have to do is discover those with topics worth attending.
Most importantly, there are so many great financial apps and platforms. By learning how to use them and always looking for new platforms, you’ll already put your business far ahead of its competition.
If you’re willing to learn and self-improve, your business is already in safe hands.
5. Building a strong team
Your team is your enterprise, and you should always keep this in mind. Having the right team means having people who care almost as much as you do about the future of your business. We’re talking about people doing their job even when they know you’re not watching. People that you’ll never worry about leaving at the office even when you’re away because you’ll know everything is under control.
Small businesses usually don’t have that much to pay, so their available talent is usually a bit shorter than for some bigger enterprises. Having fewer applicants will put you in a position where you’ll assume that you don’t have the privilege to pick based on the cultural fit (and you’ll be wrong).
First, many teams are remote, meaning you have a virtually unlimited talent pool. It also means that it won’t be that hard to find people willing to do odd shifts (since they’re from a different time zone either way). It also saves you money on office, travel, and other fixed expenses.
Now, you’ll soon feel the pressure to grow your team, and you need to resist this urge. Sometimes, it’s better to hire temporary employees unless you’re 100% certain that an increase in workload is here to stay (it’s not just a seasonal thing or a fluke).
It’s all about increasing your odds
It’s important that you understand one thing – you can never guarantee the survival of your enterprise, only improve its odds. It may not sound reassuring, but this is true for any enterprise or organization. There are a lot of factors involved, some of which you will never be able to control. It’s your job to lay a solid foundation to your business and hope that it’s resilient enough to survive even when facing great adversity.