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This podcast is for small to medium business owners. You've got a lot to gain, a lot to lose, and business is tough; there's a lot at stake. Business acumen is what every business owner needs, it will make a profound difference to your business.
This podcast will cover marketing, positioning, branding, lead generation, selling, negotiating, customer service, managing staff, managing finances and accounts and much more.
https://www.businessveteran.com.au/
mark@businessveteran.com.au
The fatal assumption business owners make
Just what is the fatal assumption in business and what has this got to do with you? In turns out, quite a lot. Michael Gerber in his book "The E-myth" coined this expression and it's the single assumption the vast majority of people make when they start a business and is the root cause of small business failure.
Speaking of failure, how many businesses fail, do you think? It turns out that the data isn't great but the best estimates made by the Australian Bureau of Statistics put it at around 20% per year. Now failure doesn't necessarily mean millions of creditor dollars vaporized in bankruptcy, it can simply mean walking away from a business that isn't working. 20% doesn't sound too bad but remember that dice gets rolled every year. So if a business has an 80% chance of surviving its first year and an 80% chance again of surviving its second year, then it's actually only a 64% chance of surviving to the end of year 2. Compounding that out to five years gives you approximately only a 33% chance of surviving. Those figures are brutal.
Now here's a confronting thought: what is worse than your business failing? How about a business that only just makes a modest wage for the owner, and very little to no profit, and rumbles on for years and years like that. It never quite collapses, the owner stubbornly keeps going, but the business never really repays the owner for all the long days, the stress, the missed opportunities with friends and family. These businesses are not included in the statistics of business failure, but I'm afraid to say they are all too common. How might those business owners feel looking back on those years?
By the time businesses get to medium size, the survival rates improve a little. This is probably because the owner has more experience and has survived the trials of small business and learned a lot. By the way, a small business is defined as 5 to 20 employees, and a medium business, 20 to 200 employees. Under five employees, a business is called micro.
Now to the fatal assumption. 97% of people who start a small business assume that just because they can perform a service, they can run a business that performs that service. For example a car mechanic assumes they can run a workshop, a doctor assumes he can run a medical practice, a baker assumes she can run a bakery, and so on.
The thing is, the skills required to run a business that does anything are different to the skills required to make the product or perform that service.
Put simply, a business requires four distinct skill sets. The first is the widget maker. I use widget in place of whatever service or product the business provides. It is usually the widget maker who starts the business. However three more people are required. They are the sales and marketing person, the finance and accounting person, and the boss. You can spend a lifetime learning just sales, or just marketing, or just finance, or just leadership. We don't have enough lifetimes to become super expert in all of these, but the more you can learn about each of them, the more successful your business will be.
Now here’s the thing, people who start businesses not only don't have these skills, they don't understand what's involved in the skills, and they have no idea how badly they need the skills. So in blissful ignorance they start the business. On one level, maybe it's just as well, because if people knew just how much they didn't know, they might not start the business!
Let's examine an example. A landscaper came to me and said “I'm a really good landscaper, I do great work, but my business is just not making me enough money”. I created for him a quick profit model, a simple spreadsheet which models the costs of the business and predicts the profit. It became immediately clear to this landscaper that he was charging too little and would never make money if he continued to do so. It also showed him how much he needed to charge. “The customers will never pay that!” he exclaimed.
I can tell you, because I have other landscaping clients, that customers do pay that and pay it gladly. These other clients are doing very nicely, thank you very much. This landscaper lacked the skill to predict business profit and therefore has been working for years before discovering that his business wasn't making money. He also lacks the skills in sales and marketing which would enable him to charge properly and pay himself a proper wage to make his business successful. Most importantly, he wasn't aware that these things were knowable - he didn't know what he didn't know. He started his business making the fatal assumption that his landscaping skills were enough.
My job as business coach is to help business owners work out the root cause of what's frustrating them in their business and help them come up with ideas to solve it. In doing this, business owners gain business acumen, and an improved business.
Why don't you put me to the test? I'm happy to give any business owner an hour of my time to look at an issue which is vexing them. It hasn't happened yet that I can't come up with something which will make a profound difference.
Make contact!
By for now.