“Success is a journey, not a destination.” Ben Sweetland As most new businesses never make it, here are seven questions and answers that can guide you to prosperity and business survival. Making it in the business world is more common sense than luck or crafty planning. Read on and you will find that how grow your business is up to you. 1. Why do so many small businesses fail? Unfortunately, the majority of new businesses fail within three years of opening. Surprising to many, most of the failures are caused by the owner(s). While failed entrepreneurs like to blame their failure on lack of capital or poor market conditions, the truth is, too many new owners are ill prepared, lack the necessary skills and start their venture based on wishful thinking. Most business failures-unfortunate for those that have pinned their hopes on a dream and lost their nest egg in doing so- can be traced back to the poor leadership and the lack of marketing and financial skills of the “wannabe” tycoons. 2. Are businesses that have been around for a few years still at risk? How can they continue to safeguard against failure? All businesses are at risk. Owners can become complacent and careless. Markets can change. Technology can render the company obsolete. Acts of “God” such as fire, storms, or floods can wipe out a company. The best safeguard against going bankrupt is caution, caution, caution. Years of profit can be wiped out with a single poor or hasty decision. I suggest that before you decide on some action such as a new product, new venture, additional locations etc. that you plan to fail. That is, work out a “what if “ plan. What is the worse that may happen if your plans go sour? Can you and your business survive? If you can’t, don’t do it. Why risk all for an unknown future? If you always plan for failure, it is unlikely that you will ever fail. 3. Why do some business owners fail to determine if their company is making money or not? Because they may not understand the most basic of all business principles- that if you do not make a profit, you can not stay in business. Look at the lack of understanding of the dot coms whose backers and owners were yelling “growth, growth growth” regardless of the piling losses. Many investors and founders found out the importance of profit when their Internet stocks fell off a cliff. Another major reason is not understanding financial statements. An owner’s business skills may lie in other areas-believing that ‘bookkeeping is boring” and leave it to others. A big mistake! 4. How does being a good leader protect a business from failure? By sensing how certain actions or inaction can result in bankrupting your business. There are many ways of insuring against failure; one is developing customer and product diversity. If a company is dependent on a handful of customers, there is the risk of losing a customer and suffering a drop in sales pushing the company into the red. On the other hand, if the company is dependent on a single product or two, its’ market may be wiped out by technology or competitive practices. As, much as possible, management should work to reach goals of not more that 10 percent of the sales volume from one customer and not more than 25% of the business from a single product. Not always easy! 5. What are some good tips for being assertive---particularly for people who are not naturally assertive? To start with, understand what it means to be assertive. Many confuse it with an aggressive attitude or “pushy” behavior. Whereas, assertiveness means to be honest with yourself and have the courage to be honest with others. For example, do not be a people pleaser, that is, do not say yes when you mean no. Do not do what many parents do with their children, say “we’ll see” when they really mean no. If you are afraid of being assertive, start with the little things in life such as not hesitating to tell a waiter or waitress that you are unhappy with your meal or not tolerating rude behavior from sales clerks. But foremost, master one of the basics of business success; learn to say no-if you don’t and say yes to every demand placed on you than you will not have a business. 6. What is the right balance between growing your company and not trying to become too big? A tough question. With the explosion of tech companies experiencing phenomenal rates of growth fueled by rapidly expanding markets, the “right” balance may not be possible. A particular market opportunity may be a one-time event. - And not to act may doom the company to stagnation. Under more normal circumstances, the owner(s) should grow the business at a rate that is comfortable money-wise and time-wise. Bigness may not mean happiness or success. Look at Amazon.com-getting bigger and the losses are getting larger. With rapid growth, you may be exchanging little problems for bigger ones. I say grow at the rate that you can stay current with your bills and your responsibilities. Do not hastily add overhead as expansion is easy but cutting back is painful and difficult. 7. How do you diversify while staying focused on the core business? Every business should have a plan, But a plan that is frequently reviewed and even revised. The original concept of the business may no longer be valid or practical as markets and products change. If you focus on a narrow product base and refuse to consider that your product may become obsolete is courting failure. In addition, if you think that your customers are married to your company, you are unrealistic. Successful owners know that the need to diversify is always present. Planning to diversify is a form of ‘‘protection insurance,” planning and understanding that “all good things must come to an end.” By looking to other markets or products for opportunities, I do not mean losing interest or neglecting your company’s bread and butter; I am urging you to look beyond the present to stay in business. Look at Philip Morris and how they have changed their product and customer base by acquiring related companies. Dr. Paul E Adams, Professor Emeritus Business Administration Ramapo College of New Jersey Author “ Fail Proof Your Business: Beat the Odds and be Successful.” Available at Amazon.com If you have questions about your business, contact me at drfailproof@earthlink.net.