Business survival / mortality rate; what does it mean for currently successful business owners?
For the first time in more than 35 years, business creation TRAILS business closings. (USA Today) This means that we are witnessing a trend that, if not reversed, will kill entrepreneurship and small business.
Of course, I realize that I’m speaking to many established business owners whose businesses are not closing, and who may, in fact, be doing very well. But here’s the part that should concern all of us: The primary reason that small businesses are struggling is down to one mean and nasty word: regulation.
Now, let me be VERY clear about the fact that this blog will NEVER be a political platform. So the side of the aisle each of us falls on matters not. What matters is that, for the first time in 35 years, fewer businesses are being created than are closing. As business owners, THIS is what must occupy the forefront of our thinking!
With that in mind, I think we are all smart enough to understand that changing the regulatory structure is not a fast process. At the moment, there’s not much stated political pressure on changing it at all. What this means is that as small business owners it’s unlikely that there’s any regulatory “cavalry” coming to rescue us. No, if we are to beat this trend of business failure, we’ll have to do it with our own cunning. But, hey, that’s nothing particularly new for us. We’ve beat the odds before, we can keep doing it.
What is critical for us, though, is understanding that we MUST focus on innovating our business in ways that we may not have needed to innovate in the past several decades. Why do I say this? Well, let’s look at the past two decades:
The decade (2005-2015) is earmarked by the worst recession since the Great Depression. During this period, most small businesses had no time nor money to “innovate”. The key was to have more staying power than our competitors, which came down to savvy financial management. (Basically it was a “Rocky Balboa” strategy: Just go the distance.) Some made it; many did not.
The decade before that (1995-2005) saw UNBELIEVABLE growth in most sectors, with small businesses in much of the country reaping the benefits of loose lending and an extremely hot real estate market. The key during this time was to “grab all you could” and try NOT to scale for the blitz in such a way as to be unable to easily scale BACK. Obviously, the businesses who did not cling to this strategy during this time-frame had a much more difficult time surviving the next decade.
The point is, that for the past 20+ years, we, as small business owners, have not NEEDED to find innovative, cunning ways to survive in the same way we will be required to do so going forward.
During the last 20+ years regulations have been a good bit lighter than they are today. That we cannot change (at least today). What we can change is how engaged our team is and how we use data to drive decision making. These are fine points of business management which have been applied in large organizations for many years. They have not been “required” in small business but “…the times--they are a changin’”. The time is coming when every business will need to understand their market, their employees, and their products / services in a way they’ve not had to before…because our survival will depend on it!
I always try to end a blog on a positive note, so here’s today’s inspiration: In every crisis there are three parties--those who warn, those who heed the warning, and those who don’t heed the warning. Storms aren’t nearly as scary when you know they’re coming and you’re prepared to weather them. Heed the warning and begin TODAY to look at your business very closely. Don’t assume ANYTHING. Don’t assume you can’t fail, don’t assume that the current blast of business you are enjoying will be here for years (or even months). No, look at the equation very pragmatically. Of course there are dozens of questions you could ask yourself but start with some like these:
1.) Could my business weather another 10% increase in regulatory costs per employee?
2.) How can I connect with my team in a way that inspires them? (Remember that inspiration and motivation are not synonymous in this context.)
3.) Does my product / service communicate with laser-like clarity, and are we marketing assertively (if not aggressively) to our market with the same laser-focus?
Be honest with yourself. Take the tough answers from your team and begin to make evolutionary changes. If we, as small business owners, change the way we’re leveraging the assets around us, we will not only survive this pressure, but we will thrive!