I have approximately 11,000 people who receive my weekly newsletter. Inevitably, almost every week I receive this type of auto responder from a business which has fallen on hard times.
“Unfortunately, our businesses shut our doors and we will no longer be performing weddings. If you are a supplier who is interested in purchasing some of our equipment, please contact us at the following phone number.”
The US small business administration has estimated that 9/10 businesses will not see their fifth birthday. It is my estimation that in the wedding world, the face of business changes every five years. In other words, there are very few veterans who have been out in the industry that are still out there. If you have been in business for more than five years, you have defied the odds – congratulations! If you are a business, who has been in business less than five years, then the following may be interesting to you.
There are three typical reasons why a business fails. These reasons are very generalized, and there are very intricate specific reasons why a business will begin to fail. And the end result, if you can avoid these three major issues, you stand a strong chance of staying strong and alive in the business that you have chosen and built. Here are the three typical reasons:
1. Not enough customers. While this sounds simplistic either a) people didn’t know they were in business, or b) didn’t want to do business with them. Too many times people open up a business with the idea that simply opening the business will bring in droves of people to their business, because somehow, someway, their businesses automatically match. I have seen in lean times that one of the first things to go out of the business is their advertising. Interestingly enough, most business plans fail to include proper amounts of marketing, if any at all sometimes. Bringing people to your business is the first step. The next step is being able to sell them what you have for them to buy.
2. Undercapitalized. The businesses that start on a wing and a prayer planning on using sweat equity are usually the first ones I go out. I’ve seen restaurant start up with the plans that they will take care of everything, and they are fully undercapitalized and what happens is at that point where something goes wrong, that they did not plan on (and that will happen with most situations). They are stuck. They have overspent and they have nowhere to go but out of business. If you are ever the point to where you realize it, you are undercapitalized and you want to maintain your business. Do everything you can to infuse cash into your business. Whether that means taking on a second job, or taking out a loan, if you believe in your business, you need to press forward. If you don’t maybe now’s the time to get out.
3. Improper structure. When I speak of improper structure I’m talking about the business that’s built up on one person, one person alone. When something happens to that one person, such as death, divorce, sickness or other major distractions and tragedies, the business cannot function because it is reliant on that one person. By setting up other people within the business to help and to delegate proper tasks and duties to, you spread the ability of survival of that business should something tragic happened. There’s a certain form of automation that needs to be put in place, not to mention emergency plans.
Times are lean, but not impossible. Fortify your business and protect your family – it’s worth the investment.
Until Next week, Here’s to your success!