Ten Things
Every Small Town Business Owner Should Know
By Tom Egelhoff
 When I wrote my book and started
this web site it was with the idea of helping the small town
business owners of the United States. I had no idea that business
owners from over 100 foreign countries were going to show up
and use the tips and advice offered here.
But, that's exactly what has happened. At the present I sell
more books in Australia and England than I do in Nebraska or
Wyoming. So if you're in Nebraska or Wyoming...buy a book.
The point I'm trying to make here is that this site is not
really a "how to" site. I don't have all the answers
for every type of business on the planet. The purpose of these
articles and tips is to simply force you to think about some
things. Have you considered this?
What will you do about that? And I think that's the reason
the site is so popular both here and overseas. So perhaps the
title of this article should be "Ten Things Every Small
Town Business Owner Should Think About" instead.
The Power
Of Small Business
According to the SBA (Small Business Administration) small
businesses are responsible for 58% of the private work force
and 40% of the gross national product. Small businesses also
get the credit for more inventions and innovations of products
than their big business counterparts. Women owned businesses
generate over $65 billion each year. Seventy-eight percent of
all small businesses are 10 employees or less.
The Downside
of Small Business
Only 50% of small businesses survive the first year of operation.
Eighty to ninety percent fail by the end of the tenth year. Most
of these failures could have been prevented by if the business
owners had been more conscious of the points we will cover in
this article. Ignore these and your business may wind up in trouble.
Once again I stress that these are not how-to's but things to
thinks about and ponder.
1. Who
Are You.. Really.
There is an old saying, "Many are called, few are chosen."
Nothing could be more truthful in small business. Business owners
are cut from a very special cloth. Not everyone has what it takes
to start and run a small business. Do you have what it takes?
If you are thinking of starting your own business here are
some quick things to think about. You probably have a current
job working for someone else. Someone else makes decisions for
you every day.
Oh you may make some minor ones in your position but someone
else makes the major ones and that's probably why you want to
strike out on your own. But this is one of the pitfalls of business
start-ups. All of a sudden, you are in charge. You make all the
decisions big and small.
This can be a very scary process when someone else has been
doing it most of your life. First your parents made all the decisions,
then teachers, then perhaps the military, then bosses in the
work force. Now all of a sudden you are the person in charge.
Can you handle it?
The next area to consider is what are you willing to give
up to make your business happen. There are only 24 hours in a
day and so far you are working eight of them for someone else.
One hour each way to work and I'll allow you six hours of sleep
that will leave you eight hours a day. Three hours of family
time and you still have five full hours a day to work on your
business.
How you spend it is one of the keys to success. I would suggest
that you spend at least 20 minutes of the five hours reading
something each day about your business or industry. At the end
of a year you'll know more than 75% of the people in your industry.
What do you do with the rest of the time? Simple the other nine
things we're going to talk about.
2. The
Business Plan
According to a study at Harvard University businesses that
spent six months or less in the planning of their business had
an 80% failure rate. Those that planned for a year or more had
an 80% success rate. Most potential business owners know the
product or procedures in producing what will be sold but very
little about the day to day operation of the business. See: My favorite business plan links
here.
A good business plan will put you on the right track and force
you to focus on the points you might otherwise miss. You will
also need it if you plan to request financial aid from banks
or investors. They are going to want to know how you plan to
make the business a success.
Even if you've been in business for a few months or a few
years I can't stress strongly enough the importance of revising
your business plan on a regular basis. At least yearly for the
first five years of business. Where can you find help developing
and writing your business plan? S.C.O.R.E.
(Service Corps Of Retired Executives) can help. You can contact
them through your local Chamber of Commerce. You'll find a good
outline for a business plan at: http://www.nemonline.org/bus_plan/
Also see: How
To Write A Business Plan
3. Funds
To Run Your Business
I said above that only 50% of businesses survive the first
year. The toughest period for most businesses is actually the
first two years because of the monetary demands of the business.
It's that second year that the business usually starts it's downhill
slide to failure. Why? Inadequate start-up financing. The money
runs out before the business is able to sustain itself on it's
own. It is typical for most businesses not to see any real cash
flow into the business for at least three to six months. Often
longer. And it may be two or three years before the business
may actually produce enough for the owners salary.
Before even thinking of starting a business you need to make
a commitment to at least five years before quitting. This commitment
will keep you focused through the bad times during the early
start-up months. And trust me there will be some bad times. You
either need a loan or money from your day job to sustain the
business for at least the first year. Longer if possible but
12 months is the bare minimum.
Once again S.C.O.R.E. or the Small
Business Administration can help you with preparing the
financial statements you'll need before contacting banks or investors.
4. Keeping
The Books
No successful business I know of keeps a bad set of books.
They know where the money is coming from and where it's going.
Good bookkeeping can alert you to a whole host of potential business
failures that might go unnoticed in the day to day operation
of the business.
Fortunately in today's world the computer makes it easier
than ever for the average person to maintain the business records
necessary for a successful business. Products like QuickBooks®
or Quicken® can produce all the records you need to evaluate
and adjust your business for a strong financial position.
Good accountants are worth their weight in gold. They can
help you set up your initial bookkeeping system and they can
show you the red flags to look for each month. I would suggest
checking with them before buying a software package and see what
they use so you can just take them a disc from time to time.
It will also save you a ton on your taxes in the time they have
to spend preparing your return. For more on this see: "How To Read Your Business Condition".
and "Financial
Statements: How To Read And Profit From Them".
5. The
Most Common Cause Of Business Failure
That would be poor management. When you're a one person business
you are the only one you have to please. Here are the most common
mistakes small town business owners make when it comes to management.
- They hire the wrong people - Inexperienced owners
often hire people they like or have a "good feeling"
about rather than the most qualified applicants for the position.
- Poor training - Even the most dedicated employee can't
perform to their highest level if they are poorly trained.
- Trying to do too much - As you move from a one employee
shop (you being the one employee) to having more people you still
feel the need to do too much. Sooner or later you must delegate
some of your responsibilities to others.
- Poor use of time - Organization is always a sign of
a good manager. It's not difficult to juggle several business
problems if you have an organized plan for doing it.
- Not being there to run the business - Absentee ownership
is a tough way to run a business. You aren't there to see the
day to day problems. A good manager for this type of ownership
is essential but they can't make the major decisions and you
may not have all the information you need when the time comes
to make those decisions.
If you feel you are not a good manager perhaps that position
should be filled by someone who has the personality to handle
that task. The best player is not always the best candidate to
be your leader. If you follow professional basketball you probably
have heard of Phil Jackson.
As coach of the Chicago Bulls he and Michael Jordan led the
Bulls to six NBA championships. As a player Jackson was a second
string bench warmer. He has no records and one NBA championship
as a player. He also took the LA Lakers to their first championship
in his first year with the team.
Contrast Phil Jackson with "Magic" Johnson. Arguably
one of the greatest players of all time. Johnson was a horrible
coach; lasting only half a year before getting out. Great player
but lacked the motivational and people skills to bring out the
best in others.
6. Knowing
Your Customers
Or as we like to call it.. marketing. Who are the people most
likely to want to buy your products or services? Here again,
planning is key. About a third of your business plan will be
devoted to marketing. Your marketing plan will be the road map
to success for your business.
You will create goals and marketing and advertising strategies
to meet those goals. Your plan will assist you in identifying
your target market and the message they want to hear that will
make them buy. How to price your product. The strengths and weaknesses
of your product or service. What adverting and promotions to
try. How to identify your target market.
You'll find articles on how to do each one of the above in
my search section at: http://smalltown.custhelp.com/cgi-bin/smalltown
where you can search by keyword or topic. If you can't
find what you are looking for you can also ask your specific
question and I will do my best to answer it for you. For more
on target marketing see: "Target
Marketing: Who They Are And How To Find Them"
7. Location,
Location, Location
This used to be thought of as one of the most critical criteria
for opening a new business. If you had a bad location that was
usually the main reason for failure. As stated above, running
out of money and poor management are the key causes. Location
is not as critical as once believed.
Don't misunderstand, location is important but it's not the
most important thing. What are the most important things to consider
when selecting a good location?
- Visibility - Do you need a visible storefront like a shoe
store or dry cleaner?
- Traffic - Is it a high or low traffic area?
- Is there adequate parking for your customers?
- Is your target market there?
- Condition of the property - Will it need any repairs now
or in the near future?
- Is the location in a growing or decaying part of town?
- Can you expand if necessary?
- How healthy is the local business climate?
- Are there other "draws" nearby that will help attract
your customers? Movies? Food Stores?
- Level of crime in the area?
- Zoning restrictions?
- Are there compatible businesses nearby. For example a video
store would benefit from a pizza shop and vice versa.
- Rent costs
- Last but not least.. How close are your competitors? How
do they compare in appearance to your business? Do they look
more or less prosperous?
Before beginning the search for that perfect location create
an outline of what your current and future needs will be for
the property. Associations and industry magazines can help you
determine the amounts of traffic you'll need. You can find a
listing of these people at your local library. Ask for "The
Small Business Source Book", " The Encyclopedia of
Associations", "The Rand-McNally Commercial Atlas and
Marketing Guide" and "The Encyclopedia of Periodicals".
8. Customer
Service
My idea of customer service probably differs with most you
have read until now. I don't believe in customer service above
and beyond the call of duty. Why? Because it's almost impossible
to maintain and it will create an economical hardship.
For example, if you buy my book from Amazon.com
they will ship the book in 3-4 business days. Why don't they
overnight the book to you? Wouldn't that be superior customer
service? Certainly better than Barnes
& Noble right? The reason is the overnight cost would
be almost as much as the book. It would be economically irresponsible
to do that.
So, as you can see, knock your socks off service is not always
the best way to run a business. What I recommend instead is steady
consistent service. Every time the customer enters your business
they know the level of service that they are going to receive.
Could McDonald's service be better? Possibly but you know
whether you walk into one in Maine or California the service
is going to be consistent. McDonalds has found a level of service
that is acceptable to their customers and they can provide that
service day in and day out.. consistently. For more on my thoughts
on this see: "How
To Find What Your Customers Are Really Looking For"
9. Don't
be afraid to ask for directions
There is an old joke that men refuse to stop and ask for directions
when lost. We would rather drive around aimlessly knowing that
eventually we will find the right road. Unfortunately in business
this can be a disaster. But there is good news.
You don't have to spend a fortune on a consultant to give
you direction. In most cases the information is free or at least
reasonable. Go back to the last paragraph in #7 above and ask
industry associations and trade magazines to recommend someone
who is successfully doing what you want to do.
Head back to the library and check out phone books from towns
similar in size to yours. Call business owners there and ask
how they do the things you're having trouble with. Most will
be happy to help you out.
For more references to help you out go to: "How
And Where to Find Small Business Information"
10. Technology - Are you ready?
I spent eight years selling furniture in a family owned furniture
store in Alton, Illinois. I left that company in 1977 and they
were using a manual bookkeeping system. Every sales was manually
entered into two big ledger books. The way books were kept for
hundreds of years before.
I had the opportunity to go back for a visit in 1989 and was
curious to see what type of computer system they had ended up
with. The answer.. none. They were still using the old ledger
method of keeping the books.
The question I had to ask myself was, "Could they have
benefited by using a computer system and software designed for
the furniture industry". My answer had to be YES... they
could. The computer could have told them so much that the normal
bookkeeping system couldn't.
For example: Rate of sale of certain styles and colors. What
items sold as groups. Hourly sales for staffing. Sales comparisons
among vendors. These are just a few items that would have made
the store more efficient with the knowledge the computer could
have provided.
Does every business need a computer? No, of course not. There
are many successful businesses that continue to operate with
pen and paper. The point here is to find out. Contact your industry
gurus and find out what the pros and cons of computer systems
in your industry are. Maybe they can help maybe they can't. But
at least investigate.
The Last
Word On What Every Small Town Business Owner Should Know
So, which of the above do I think is the most important. Easy
the first two. Without those two the others will never happen.
Number one you must have the entrepreneurial spirit. A self starter
who will not be denied. And second...the business plan. No business
can be successful for long without a plan for success.
Without a business plan you are simply reacting to the economic
climate of the marketplace. Sooner or later your reactions may
trip you up. The business plan will take into account and make
you focus on how you will tackle the eventual adversity that
every business must face.
As I said in the beginning this is not really a how-to article
but an article to give you some things that you must think about
if you expect to have a long and prosperous business. If you
are just starting your business I wish you all the luck in the
world. If you're an old timer then you're in a very enviable
position because we are poised for the greatest business times
in history. Take advantage of it.
(Return
To Small Town Marketing.Com Main Menu)
Listen
to a radio interview with Tom and Entrepreneur Magazine - Click
Here!
This article may be reproduced for your non-profit
group or organization provided it is not altered in any way and
the following is attached:
©1998 - 2004 Eagle Marketing PO Box 271 Bozeman, MT
59771-0271
http://www.smalltownmarketing.com - (406) 585-0219 - Toll FREE
(888) 550-6100
email: tommail@smalltownmarketing.com
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter
and trainer. He may be reached at 888-550-6100 or PO Box
271 Bozeman, MT 59771-0271
Can't
find what you're looking for?
Click here >  < Click here
Our Search Engine From Right Now Technologies
is amazing. Take a Test Drive.
The best small
business guides in print today! I guarantee it - 100%!!
Haven't you done without them long enough?
Decide
which order option below is best for you.
|
Order TOLL FREE USA/Canada
1-888-550-6100 FREE Shipping
