New business establishments make an important contribution to the economy; however, it is inevitable that some of these establishments will eventually fail. Despite the recent surge in the number of new small businesses and start-ups, too few of these companies manage to achieve sustained growth, according to a recent report from the Center for Urban Future (chart below is for NY metro). According to the Bureau of Labor Statistics (BLS, 2016), survival rates for establishments vary by industry. The health care and social assistance industry, for example, consistently ranks among the industries with the highest survival rates over time, while construction ranks among the lowest.
Many cities and states are actively exploring ways to provide operational and investment support and can help – by investing in infrastructure and technology from green buildings to 3-D-printers, incenting small business lenders, creating affordable workspaces, etc., to create more opportunities for firms to grow. However, growth begins with the entrepreneur and business owner.
1. Invest in Your ‘Secret Sauce’
What got you started in your business? What gets you up in the morning? To quote Oprah Winfrey;
What does your business do best? Better than anyone else? What is your ‘secret sauce’? Is it your response time, your creativity, your ability to raise funds, your customer service; what is it? When companies seek to finance investments, they often struggle to explain their businesses to non-experts. You may still get rejected for the loan, but it should not be because you didn’t have or couldn’t quickly explain what you do best. Knowing your ‘secret sauce’ also helps prevent you from going off on tangents and down the rabbit hole. Unfortunately, too often businesses are spending scarce resources ‘validating ideas’ instead of further developing their secret sauce anchored on a sound business plan and model. This may even lead to a ‘game over’ scenario.[Tweet “Grow your #smallbiz. 3 tasks #entrepreneurs need to be doing.”]
2. Shed Your ‘Multiple Hats’ and Create a Support Network of Advisers
Wearing too many hats can hurt your head and your business’ performance. No matter how ‘passionate’ you are or how many hours you put in and no matter how smart you are, you cannot achieve rapid growth solo. You need advisers and you need employees. As Heleynn Boughner, a successful African-American realtor in White Plains commented:
Heleynn has since become an active mentor in the community. In order to grow, it’s important to take guidance from experienced advisers and spend the time to find the right people, and then create a mission-aligned collaborative culture.
3. Develop Processes and Systems to Simplify the Ever Emergent Complexity
As you scale, there are more moving parts. Complexity is simply an emergent feature of this increase in the number of moving parts.
Like cholesterol, there is good emergent complexity and bad emergent complexity, as you scale. Offering new products and services to new segments is good complexity and helps increase your top line and your margins. Bad complexity, on the other hand, is just like bad cholesterol, it erodes profits and limits capabilities.
You will be overwhelmed by this increase in moving parts, especially if you are doing things ad-hoc or even the old (your!) way. The right processes and systems help simplify complexity. Of course, some things simply can’t be automated via systems or outsourcing. For everything else, build process based systems; they’re a lot easier to quickly scale than people. While implementing completely new processes and systems are inherently risky (operational risk, cultural risk etc.), if they are built or based on what is currently working or something you’ve already been doing, you can eliminate much of this risk. As long as these processes and systems are aligned with and support the growth and execution of the ‘Secret Sauce,’ it is okay to experiment and tweak as needed to get them right.
Have fun and remember, to quote Oprah again: