National Small Business Week: Why 8 of 10 small businesses fail and what you can do to be one of the 2 that succeed!

In the Art of War, Sun Tzu says:

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

This means planning, preparation and training- before you set off to battle.

The two biggest mistakes I see small entrepreneurs make are:

Starting without a plan
Starting without experience

If you’re a solopreneur running a hot dog cart you probably don’t need an 80 page business plan- although if I remember right, the business plan for my cart was at least 12 pages.

I’ve actually taught workshops in The Cocktail Napkin Business Plan. If you’re working alone and you’re not seeking investors or financing, your plan doesn’t have to be big…

…but plan you must!

Before you open your doors or hitch your hot dog cart and head for the beach, you’ve got to have a clear picture of what it’s going to cost to get through the day, the next week and hopefully beyond. The number one reason most small businesses fail is poor planning, or no planning at all.

I’m a little contrarian in this regard, but I’ve learned to start with costs first…

How much will it cost me to serve one hot dog from from my cart? Once I know the costs…ALL the costs, then I can figure out how many customers I have to hunt down to cover those costs.

All the costs means the cost of big stuff like my rent and equipment down to the last roll of toilet paper.

The second and equally fatal mistake is starting a business with no experience…

In a recent THINK Like a BLACK BELT for the Entrepreneur event one guy said he was going into the restaurant business. He was an experienced executive with a lot of business experience on the corporate level.

Being the instigator, I asked, “Have you ever worked in a restaurant?”

You can guess what his answer was.

My advice was- “Be the busboy!”

I told him as part of his preparation, he should get a front-line job at an established restaurant and learn the ropes…all the ropes.

I wasn’t trying to be a wise guy when I told him he should taste life at the bottom. I knew that as a small business owner, he would be the last man standing when employees called in sick or quit during dinner rush.

A small time entrepreneur must be able to wear any hat at any time to keep the operation running smoothly. In a small operation you’re also working shoulder to shoulder with your employees. You’ll earn much more respect when you can walk the walk as well as talk the talk.

Eric T. Wagner writing for Forbes.com reports that:

“8 out of 10 entrepreneurs who start businesses fail within the first 18 months. A whopping 80% crash and burn.”

You want to be one of the 2 that make it?

Prepare…train…plan…

…win BEFORE you go to battle!