The success statistics for small business entrepreneurs in Australia are pretty dismal, with more than half of small business startups failing to make it past the first three years of operation.
We chatted to one of our clients, a successful entrepreneur who has launched a lucrative online retail store to garner some great first-hand advice to ensure that your company fully leverages the opportunities that are available while also avoiding some of the more common pitfalls.
Starting a small business can be one of the most exciting times of a person’s working life, but following the advice of others will make the process much smoother and less stressful overall.
June Hanson, who first launched her own business nine years ago, has also had experience as a small business owner and has a wealth of knowledge to share with her colleagues and students.
According to June, 60 percent of small businesses fail within the first three years of operation. However, there are important lessons to be gained in the early stages that can help you prevent a premature shutdown.
It takes a lot of effort to run a small firm.
After running a café for three years, June decided the time was right to pursue her entrepreneurial dreams on a full-time basis.
It was familiar territory for her, having grown up in the countryside in Western Australia, but transitioning from corporate roles in the insurance and mining sectors in Perth to running her own cafe in the tourism industry was an entirely different experience.
June was driven by her motivation to be her own boss. She had a young family and wanted to achieve a better work-life balance through which she could spend more high-quality time with her children. As such, she kissed goodbye to the city life and relocated to the countryside.
During the first six months of running her own café, June quickly learned that her business wasn’t quite the escape from the hustle and bustle of city life she had previously anticipated. She was soon working every hour under the sun to balance all the tasks associated with running a small business and found very little time to spend with her family.
June’s experiences are no different from the majority of entrepreneurs who embark on the path to running their own businesses. Many small business owners work more hours than 40 hours per week, with some working up to 60 hours a week.
As such, if you’re contemplating branching out on your own, it’s important that you know this: It’s tough working for yourself, and you may need to be prepared to work very long hours on a regular basis.
Instead of focusing on the trees, consider the forest.
You’ll need a solid business plan
Something that can stand you in good stead and reduce your need to work long hours trying to balance multiple balls is a solid business plan. Essentially, preparing for the future will help you to better manage the here and now.
June understands the importance of this first hand. Although she did have a holistic financial strategy in place, she hadn’t invested sufficient time in thinking at a high level. Essentially, she was stuck in the day-to-day operations and treading water. In reality, she was working FOR the business as opposed to ON it.
When you first start out, it is critical you set aside time for long-term thinking and planning.
You need to think about how your objectives might change over time. In today’s dynamic economy, you must also be aware of the ways in which your firm could be disrupted, as well as the ways in which you can disrupt your competitors. You should also prepare for unforeseen risks with liability insurance policies that fit your business model.
Be prepared to take on tasks outside your comfort zone
The most effective business owners are those who are a jack of all trades.
Another problem you may encounter as an entrepreneur is the need to manage all aspects of your company. While many owners of small companies are deeply passionate about their business ideas, they often don’t quite grasp the fact that they must learn to be the IT person, the bookkeeper, the human resources specialist, and the marketing guru. Being resilient is extremely essential.
Don’t underestimate the importance of cash flow
Something that June admits to overlooking during the early stages of her venture is the cash flow. She’s not alone; one of the most important aspects impacting the success of small enterprises on a daily basis is cash flow. As a result, June believes it is critical to be comfortable with the management of normal balance sheets and profit and loss statements as well.
It doesn’t matter how successful you are in winning business, poor cash flow can have devastating consequences. Take proactive steps to ensure you have access to lines of credit or cash flow to aid you through any difficult times you encounter. You must have a clear understanding of what you’re getting yourself into from the start, and you must set aside time for strategic planning since it is critical to the success of a small firm.
What is clear from June’s experiences is that running your own business is time-consuming, challenging, and complex. However, being your own boss is an immensely fulfilling experience.
While the stakes may be high, individuals who take a well-considered strategy, seek counsel early on, and persevere can reap significant rewards – both in terms of personal fulfilment and increased business income.
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Regardless of what business you decide to pursue, take time to research your insurance requirements and the steps you can take to safeguard your assets.