R.I.P. Small Businesses
According to the U.S. Census Bureau, the U.S. now ranks 12th among developing nations in business start-ups, and for the first time in 35 years, the number of start-ups per year is less than business closures. Until 2008, start-ups were greater than closures by about 100,000 per year—but over the last six years that has inverted and we’re losing about 70,000 businesses per year (2010 data). In 2010, we created about 400,000 businesses and closed 470,000.
The Bad News
The government and the economy are not making it as favorable for people to start a business, hence, we are seeing a significant drop off in business starts. Unsure economy, lower employment, higher healthcare costs (much of it paid by businesses), and high tax rates on profit all make for a harder decision for someone to start a business. Yet, not impossible…
The Good News
During the 1930s depression saw many people fail and the country with an unemployment rate of 25%—yet, it also saw many make their fortunes when the economy was hard (notably: Colonel Sanders, Glenn Miller, Babe Ruth, J. Paul Getty, Gene Autry, Charles Darrow, Joe Kennedy, Michael J. Cullen, James Cagney, Howard Hughes).
How? Knowledge of what to do, some money to do it—though not necessarily a lot, and the willingness to take a risk—to give up to go up. Mostly that they took the action. There were many who had the wherewithal but they didn’t act. It’s like saying, “Image if you had bought Apple, Google, or Oracle when they started.” But you didn’t.
So when is the time to start a business?
- When you have a product or service that the population wants—there’s a market for the product.
- When you have enough money stored away to get you through the starting of the company and one to three years of initial start—or if you’re working full-time elsewhere and doing this on the side.
- When you’ve done your homework, checked the competition, and know well your financial situation.
- When you have formed your idea well in your mind.
- When you’ve talked to an accountant and tax consultant to know what it’s going to take to keep you from trouble.
- When you’ve taken the time to understand marketing a little so you sell your product/service.
You don’t have to be great at everything, but you do need to be wise to protect you and your family from business loss. You just need to be a little smarter than the problem to keep from falling into it—and that means you need to understand what the potential problems are. Doesn’t take Rocket Science but it does take some diligence and study.
Do the homework and start—or don’t start. But do or don’t do because your research dictates it—not just your heart. I’ve been working on a one-day course called “How To Make Your Business Thrive” and it covers the top things that will cause your business to fail. We will learn how to take on each area and be great at it so we’ll have a much higher chance of not only surviving, but thriving. I am really excited about this course. Stay tuned for more. It’s a live course because this really needs a three dimensional element about it to get the points into our heads and our hearts—two dimensions (video) won’t work. Looking to hold the first one in the Washington, DC area in early April. It’s going to be killer.
More Good News
According to StatisticBrain.com, 2013 and 214 saw a rise in new starts so it’s heading back to being a positive number instead of a loss. Time will tell—but you can still make a thriving business during tough times. Just do the homework!
Reflection: Ask yourself why you want to start a business… make sure the reason is a good one and not only because you want to do it or because you can do it as well as someone else.
Action: Wisdom is in the multitude of “good” counselors—not just anybody. Talk to the right people—people who understand business… people that have been successful… not your family or friends. Ask—I’ll be happy to give you my input. I’ve got to stress—do the homework.
MAKE it a great day!