It is a well established fact that most small business startups fail within the first two years. Why is this and what preparations can be made to avoid this pitfall?
First of all is the shortage of startup capital. It is probable that anyone over 40 years old has tried to start up some type of small business. Since most of them do not have a lot of money to start with many try to start a new business and hold onto a regular 9 to 5 job which is too demanding and hard for most people. The obvious solution for this problem is to look ahead at this need realistically and in some way arrange to have the backing and support to last for at least one year or until there is enough income from the business to make it self supporting.
Another common problem with a new small business startup is lack of knowledge. Here we consider a carpenter, or any other craftsman or trade. He/she may know their trade well but be lacking in the necessary business acumen of getting the required license or permits, knowing who to call when something is needed, knowing any hazardous materials regulations, knowing shipping and marketing and advertising practices and so on. The best solution for this is to get to know someone who is already established in business and be able to draw from their knowledge about some of these problems.
Another very common problem facing a new startup is the staffing of QUALIFIED help. There has been many a failed attempt to start a small business that failed simply because the owner could not get, and keep, good help to work with him/her. Among the various crafts and trades this may not be much of a problem because the craftsmen generally know the other craftsmen of the same craft that are in the same general area. A bigger problem might occur when the business may need more specialized skills that may be hard to find. The solution to this is to consider the staffing needs ahead of time and ensure that there is a sufficient pool of workers to be able to maintain an adequate stall or postpone any attempt at startup until you can be confident of having the people needed to do the work.
Some Availabe Resources
The government’s Small Business Administration (SBA) has reams and volumes of printed materials and online help sources to help guide anyone in what they might need to startup a new business. Besides the printed and online materials available there are often counselors and agents that will gladly offer to assist anyone in finding out what help is available through the agency they work for. Many times there may be outright grants or very low interest money available to help them get started.
The colleges, schools and technical institutions in the area are also very good sources of help and information. Most of these schools will have several people, professors, teachers, administration and staff members that gladly help people in this way. These teachers will also know the businesses and people that can be a tremendous help to someone just getting started.
A Few Problems Facing Small Business Startups
More Available Resources
Almost every town and community has a Chamber Of Commerce that has some members of the chamber who are always looking for ways to attract new businesses to locate in their community. Thse people are a good source of help and should not be overlooked. Many times the community will offer incentives to induce companies and businesses to locate in their community. This can be very beneficial to the new business, especially if it is known that the business is looking for a good place to go. Neighboring towns will try to outdo each other in offering incentives to persuade the business to choose their community instead of a neighboring town. The incentives may be tax breaks, available property, labor supply or practically anything else that might be appropriate.
Another very important aspect is the availability of good roads, airports, railroads or sea-going avenues of traffic and transportation. After all. It is not very good to have the capital needed, the facilities to build a product, the knowledge staff and supplies to build it and then not be able to get your product to the market in a timely manner. For this reason anyone wanting to start a new business must consider the market for his business and the availability of good transportation facilities.
These Times, They Are A Changing.
The days of the small family owned business has just about gone. It used to be that a family might own the same business for many generations and do very well with it. There are still many small family owned wineries in the north central part of the United States and they seem to be doing well. Nevertheless, these small family owned wineries do not compare in any way to the huge wine orchards in California and the Napa Valley wine orchards.
This same scenario applies to other types of small family owned business. In Kentucky, Ohio and other coal mining states there are still small family owned mining operations going that provides a stable livelihood for the families that own the mines. Much of the material discussed earlier in this article do not apply very well to these types of small family owned businesses.
Conclusions
It is apparent from theses comments that starting up a small business from scratch is very risky and challenging. To start out with the knowledge beforehand that the odds are very high against a new startup being successful is a daunting challenge itself. Therefore anyone wanting to start a new business should very seriously consider each of the problems presented here and consider what solutions he/she may have to apply in starting up the business. If it then seems that they can make the startup work and build a strong business then they should go for it and do it. But if the startup fails then do not give up and quit. Just consider that you are still in good company because almost every other person that has tried has also failed a few times before. Keep in mind that as long as you are still trying then you are not a failure… yet.