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10 Things That Keep Small Business Owners Up At Night

Small Business Owner FEAR

FEAR leads to frustration for many business owners

The top challenge will surprise you … only if you haven’t bothered to ask what challenges small businesses really face.

If you ask any small business owner “How’s business?” invariably they will respond: “Well, I can always use more customers.” So, if someone asked you what’s the greatest concern of small business owners, you could be forgiven for being wrong if you said they need more sales, because that’s what most people think—especially politicians.

Small business owners are actually pretty good at buying and selling—every company has been built to do those things. But operating a small business in the 21st century has become more complicated than ever before, which is why people who know small business know the best way to find out what’s really going on is to ask the owner what keeps them up at night.

One organization that knows how to ask the right questions is the National Federation of Independent Business. As you may know, the NFIB’s monthly Small Business Optimism Index has been the gold standard for such research for 43 years. They also have a quadrennial report that speaks directly to the question, “What keeps you up at night?” It’s the NFIB’s Small Business Problems and Priorities survey, and you may be shocked to learn that “more sales” came in at No. 45 out of 75 possible concerns in the 2016 report.

The 2,831 small business owners who responded to the survey told the NFIB that their greatest challenge isn’t competition (No. 31), or social media (No. 64), or online retailers (No. 61). What about poor profits? Nope, that’s No. 16. Even the most experienced observers of small business would feel safe in presuming that cash flow would be No. 1, but this primordial Main Street challenge is actually No. 25 on the list of top concerns.

If you listen to politicians, you’d think needing a loan is what makes small business owners wake up at 2 a.m. Surely you know better than to listen to politicians when it comes to small business, because needing a loan is almost last, at No. 70. That monthly NFIB index has reported that since 2007, established small businesses have been adhering to what I call “The Great Deleveraging.” They don’t want no stinkin’ loans.

So what is the No. 1 greatest small business challenge? Drum roll, please: The cost of healthcare.

No. 2 is oppressive government regulations. No. 3 is federal income tax on businesses. No. 4 is uncertain economic conditions. No. 5 is tax compliance complexity. And numbers six through nine are also all government related. This next point is very instructive: The first operating challenge to rank on the list is No. 10—finding qualified employees.

Let’s review: Nine of the top 10 greatest small business challenges are directly associated with government.

Some might say healthcare costs are not the government’s fault, but that would be Rip Van Duffus who just woke up from a seven-year nap and never heard of Obamacare. To be fair, let me hasten to add the cost of healthcare was a small business challenge prior to Obamacare. And this law did “bend the price curve,” as promised. Unfortunately, for the small business sector, Obamacare bent the cost curve up, not down.

Thanks to the NFIB Survey, President Trump and the 115th Congress can’t say they don’t know where to start helping small business owners. Indeed, they’re neck deep in the Obamacare “repeal and replace” debate right now. But here’s some breaking news: We polled our online audience about that issue and 94% said “Yes” to repeal and replace, but half said, “Take the time to do it right this time.”

There’s no doubt that 26 million American small business owners—with healthcare costs on their minds—had a significant impact on the November election. So my advice to the political class of all three parties—Democrats, Republicans and Trumpicans—is to take the time to get healthcare right this time. And then quickly start reducing the other eight non-operating challenges government is imposing on the most important job creators in America: the heroes of the Main Street economy—small businesses.

Jim Blasingame, one of the world’s foremost thought leaders on small business and entrepreneurship, is the author of “The Age of the Customer: Prepare for the Moment of Relevance.” Jim helps small business owners have the maximum opportunity to be successful, and teaches big businesses how to speak small business as a second language.

#9 of the Top 10 Reasons Businesses Fail… Lack of a Succession Plan or Exit Plan

man-with-doorThere are many reasons why businesses fail.  One of the most common is that the business owners rarely plan the details of developing someone to replace themselves and how they will get out of their business.  Without those plans in place well in advance, the likelihood that their succession plan / exit strategy that will meet their needs or expectations is extremely poor.  And, it is very possible that the business may die, or will not yield the financial return that the business might expect.  But it doesn’t have to be this way…
When an owner starts on their path to start or grow a business, there is rarely a plan on how they will get out of the business.  Why? … working with business owners over the last 25 years,  here are the most common reasons…
  • They are too excited about building something – why would they plan to get rid of it?
  • They are passionate about the products they produce or the service they provide and feel like they will always want to do it
  • They like serving their customers needs, wants and desires – that’s why they went into business.
  • There is a ‘movie’ going on in the back of their head that they will grow this amazing empire.
  • There will always be time to think about how to exit.  There is just too many other things to think about to grow the business  
When an exit strategy is not determined in advance, there are some big challenges that develop. 
  • The growth of the business may not be balanced. Systems development is a powerful tool that will enhance the value of any business.  Most new businesses don’t invest the time to create those systems thinking that there will always be time later.
  • Succession plans to move the business to a family member or key employee are undefined, unclear and confusing.  You run the risk of loosing good people
  • The measures of Success are part of that exit strategy – and how do we know when we achieve success if we don’t know what to look for?
  • There is a significant change in perception when you know you’re only going to be doing something for a specific period of time – as opposed to ‘forever’
No matter what stage you are in the growth of the business, every owner should answer this question…”Will I want to exit my business”.  Most business owners will immediately say “Yes”, but few ever take time to consider the criterion that would lead to a transition to the next generation – like health issues, , a strong team to take over and run the company, family issues; or to actually sell the business – like, a great offer to purchase, achieving profit goals, changes in your industry, or economic conditions.   If your answer is “Yes” to this question – then you need to develop a transition plan and an exit strategy
 
Who should be involved in an exit strategy?  There are a number of thoughts about who should be part of your exit planning strategy, but here is a starting list for you to consider…
  • Key Family Members
  • Key Employees
  • Accountant / CPA 
  • Business Consultant
  • Executive Coach
  • Business Attorney
  • Financial Advisor
  • Business Insurance Agent

The process of successfully planning a succession plan and an exit strategy requires time, the right team of advisors, and the focus on achieving your goals.  A simple process, but not always easy.  But making the decision as far in advance of the transition date as possible will increase the likelihood of achieving the exit plan.

If you’d like to know more, please contact me at michael@abcbizcoach.com or call Advanced Business Coaching at 262.293.3166