If I knew then what I know now.

Real Experience – not just fancy content 

“Been There, Done That” 

According to the Small Business Administration (SBA) Office of Advocacy, roughly 80% of small businesses survive the first year. After five years, that number drops to only 50%, and for ten years, it’s even lower - about 30%.

Don’t be fooled by this number, thinking a small business is unlikely to be successful in the long-term. Most small businesses start out with enough capital, minimal costs, and even built-in clients/customers. It is harder to go out of business because of this –at least, initially. 

So what’s the problem? Why a significant drop in success and survival over time? 

All too often, it is easy to get lost in the day-to-day challenges and successes of your small business. But to maintain success, equally important is the long-term, big-picture vision. For example:

1. With the capital you do have, are you prioritizing and being effective in what you purchase?

2. How well do you know your market? 

3. Do you have someone to talk to? Someone to guide you and offer suggestions and experience? 

“My Story:

? I launched an eCommerce company in 1999 with bootstrap capital.

? My focus was cutting edge technology and hired a young prodigy for programming.

? It was recommended by an IT expert to buy a Dell PowerEdge 6400 server ($32,000 retail) that I could get for his wholesale cost. It was cutting edge. It would provide an excellent shelf-life because of how advanced it is. The cost? $16,000…a significant outlay for a new business. 

“My Mistake”

? It would have been better to spend most of that cost in (say) marketing, which would have provided a return on investment then looked at a potential upgrade.  

? Using capital for long term vision may have been the best thing.

If I had someone (like myself) who learned from these mistakes, it would have saved me $16,000 (in 1999 dollars), or increased revenue/profit by strategical marketing. Oh, and within four years the server had less capacity than our staff PCs.

In other words – there was really was no discernible need to have cutting edge and expensive hardware. This purchase did affect our capital enough that other investment decisions were made based on money - not a common business practice for a startup. It did not cause a failure of the company, but the subsequent decision-making – based on the outlay of funds - may have had a snowball effect because of cash flow.

Lesson – If I had an “advisor” that knew what I know now (“I have been there”), they would have pointed me in the direction.

In the beginning, what you don’t know can hurt you the most – at the end. 

For example, a client in a service industry was advised to spend $30,000 on marketing upfront, including direct mail to a general list that did not target potential clients. This person paid for this with credit cards and because they did not receive any leads that converted, they began already deep in debt.  

Lesson - Within the one-hour free consultation, it was obvious what the target market should have been – and it would have taken very little or no capital to reach the appropriate market.  

Another… at one of my speaking events, a woman came up to me afterward. She started a specialized service business and the majority of her work was done from her home computer. She had just rented “discounted office” space for $1,200 for six months. Her current goal was to obtain a certificate that would allow her to charge almost twice the amount of her current hourly rate. However, she did not have the money to obtain this certificate. I asked her is the office was necessary – she said no. Then I asked how much the certificate cost - $800 dollars.  

Lesson - She could have saved $400 and earned the certificate which would have increased her hourly rate dramatically, had she not chosen to rent an office she ultimately did not need. 

Always remember big-picture planning is just as important as day-to-today tasks!