Enjoy the following video excerpt from my FREE What You Need to Know About Starting a Business course where I talk about the five things every small business needs to be successful.
Lightly Edited Transcript:
I want to jump right into something that’s really important right now. These are five things that every business needs to be successful. There’s a reason I didn’t put them on the slides because I want you to write these down because when you write them down you will remember them. When you revisit them in about a week from now it’ll stay with you probably for the rest of your life.
Business Needs – Access to Capital
All right the number one reason that businesses fail which is also the number one reason why people need or they need to be able to be successful in business is access to capital. 85%… I’ve read this in another article this morning, 85% of businesses that fail, fail from cash flow issues. They run out of money.
I used to have a co-counsel that used to be a friend of mine and he’d tell me, “Steve if you have a successful business you’ll need more money” Would you agree with that statement? Then he would say “Steve if you have an unsuccessful business you will need more money.” Would you agree with that statement? So the deal is the reason that access to capital is number one in this list is that unless you execute your plan exactly per the way you’ve factored it out, you will probably need more money either you will grow or you will be a little bit slower than you expect it to and you will need to feed the beast. At some point, you’ll need access to capital. We’ll talk a little bit about that and where those sources kind of come from.
Business Needs – Business Acumen
Number two business acumen that’s why you’re here today. Many of you are what we call technicians and we’ll talk a little bit about that as well later. Many of you understand the technical parts of your business but don’t necessarily understand the language of business. What is an income statement and how is that different from a balance sheet? What is the difference between finance and accounting? These are some of the things that we’ll try to talk about here today to kind of build up some of this business acumen. The role of the SBDC in your life right now is to be that partner to educate you on the business acumen part.
Okay because we can’t necessarily help you with the funding part, but we can help you with this business acumen part.
Business Needs – Energy
Number three energy. This is not a nine-to-five job. You don’t turn it off at the end of the day. I work every day. Saturdays are my blog day where I write my Monday blogs on curated articles. I read two hours a day every day reading articles amassing those trying to pick the four best articles to put on my blog post on Monday #PickOfTheWeek posts. This happens all the time. When I go on vacation, I bring an iPad with me or a laptop. I am constantly doing things every time I see things. If I’m traveling between one location another one I’m listening to a book on tape (Audiobook) listening and trying to get out a nugget of information that I can try some type of an experiment to see if it really works or not and write those kinds of things down. It is something you will not turn off.
Business Needs – Limited Industry Knowledge
Number four is industry knowledge. [It is number four and not one for a reason.] Now, wait a minute some of you are probably saying you’re trying to tell me I could be in an industry and I don’t really have to know a whole lot about that industry and my answer to that is absolutely yes. Because as we’ll talk about in a few minutes you’re probably the technician you probably know a lot about your industry the problem is like my dad used to say if you’re a hammer everything looks like a nail.
Okay and so that the fact is when things start going bad you begin to work IN the business not ON the business all right. And as a matter of fact, there are different ways to get into business, we’ll talk about that as well later. But if you were to purchase a franchise many franchisors, if you have any industry knowledge you will be immediately disqualified. If you are a good cook, you will never get a restaurant franchise. If you’re an automobile mechanic you will not get an automobile-related franchise. The reason for it is they give you the script. They give you the system. They don’t want you reinventing it.
I own a Wendy’s restaurant, if I want to make breakfast I don’t have that option. They do not want you to have any ability to understand that the industry of cooking because they’re going to give you the recipes. They’re going to tell you exactly how it’s done because it’s a repeatable thing. That’s what franchise is all about. That’s why it’s number four.
Business needs – Idea
Number five, which is probably what many of you are here thinking I have number five and I think I can build a business about that and that is the idea. I have a great idea I think I can start a great business. What I usually like to share with people as I say this modest invention right here is the ballpoint pen. This ballpoint pen replaced the fountain pen the pen had many problems. It only wrote in an almost purely vertical position. If you tapped on it a little bit, a little bit of ink would drip out of the end of it. It had a lot of flaws so you would think that the time that this ballpoint pen was invented and began to be marketed to the general community that it would have just removed [the need for] all the fountain pens on the planet and been replaced. How long do you think it took for the time from this invention to the time it reached mass appeal? Ten years… anybody else? Fifty years. So the inventor who came up with this idea probably never saw a penny from it. He probably died long before he would ever have seen this.
Most people I talk to say, “Listen Steve I got this great idea.” and I say “Hmm how old are you? how much time do you have to get traction?” Because it does take a long time. We see things like Facebook oh wow it’ll happen but you don’t realize it took 10 years for Facebook to become a common household name. It takes a long time. There’s perseverance that actually goes in there okay so coming up with a great idea is not necessarily going to be the be-all-end-all and that’s what’s going to drive it happens to be number five out of five on that list of important things.
Related post: 5 Things Every Start-Up Needs
IF YOU LIKE OUR CONTENT PLEASE SUBSCRIBE AND SHARE IT ON YOUR SOCIAL MEDIA CHANNELS. THANK YOU!