I was in my home town just outside of Philadelphia last week on my way back from a business trip in India and I was hanging out at my cousin’s house one night watching a Flyers hockey game and after the game the subject of different T.V. shows came up; Tony and I watch a lot of the same programs so it is a topic that we discuss often. He told me about this show he started watching called Restaurant Impossible which is a show about a Master Chef who goes around the country to failing restaurants and completely redoes the restaurant, everything from the items on the menu to the interior design and sometimes even the chef. It sounded interesting and he happened to have a couple of episodes recorded on his DVR so we watched one and I liked it, the next day I watched another and since then I have watched a few more.
Here’s the thing; after watching these shows it became clear to me that what I have been saying for years is a fact, just because you own a business doesn’t mean you know what you are doing. The restaurant owners in this show from what I have seen so far had no idea how to run a business, and I find this to be true across the board in small businesses. Sometimes people get lucky and somehow are able to survive for years, but all in all many small business owners have no clue about what they are doing.
According to the SBA small business represents over 99% of all businesses in the U.S. and alarmingly over 50% of all small businesses fail within the first five years, and according to them guess what the number one reason for their failure across the board is? If you guessed Lack of Experience than you are absolutely right. And it makes perfect sense if you ask me; let’s take the restaurant business, just because you know how to cook, does not mean you are qualified to run a business, because there is a lot more to running a business than just preparing dishes; you have to order supplies, you have to do payroll, pay taxes, you have to know what your return on investment (ROI) is on the various foods that you are using, you have to know the best place to purchase in bulk, you have to know where and how to market. This is the case in most businesses, just because you know how to do the core aspect of the business doesn’t make you qualified to run the entire operation.
In large companies, these various roles are broken up among various departments with each being run by someone who has had training whether that be in the form of formal education or experience and has had years of experience doing the type of job they were hired to do, but in a small business it is more likely that employees are wearing multiple hats and performing various tasks. So what is the answer? The answer is education. Learn about the business you are going to be in or in already, and if possible hire people that have experience, I refer you to the article I wrote a couple of weeks back “The rules of Acquisition” and pay special attention to rule number #8 “Surround yourself with people that are smarter than you”. There are also organizations such as the Small Business Administration (SBA.gov), SCORE (score.org), your local Chamber of Commerce, that can be of great help. Also taking some basic business courses at your local community college and self-education, reading books written by successful entrepreneurs’ that have already gone through much of what you are experiencing or about to experience can also go a long way.
Whatever it is do something, there is help out there and there is information out there, do whatever it takes to ensure your long term survival because the world depends on small businesses, the better they do the better local economies do and so on.