Does your small business have the right foundation?
According to global statistics, 80% of small businesses worldwide do not make it through the first two years of existence. Of the 20% remaining, statistics prove that a further 80% of the remaining 20% will not pass the four-year anniversary mark.
This prompts the question: Why do some small businesses achieve success and most small businesses fail?
I suggest the biggest reason for business success and failure is due to or a lack of a proper foundation. A business, like a building, needs to be built. And any builder will tell you that if the foundation is not solid, the building will not last. A business can be seen in the same light, if the foundation is weak, the future prospects of the business will be weak. And even if a business does manage to grow with a weak foundation, chances are pretty good that any growth will come crumbling down, like a deck of cards due to weak infrastructure.
It is critical for a small business owner in the first couple of years to spend most of their time, resources and energy on building a foundation for their organisation. A strong foundation is, therefore, more important in the infant stages of your business than exponential growth. As a matter of fact, the right foundation will create a climate within your business for organic growth. And organic growth is the most sustainable form of growth and will lead to sustainable and consistent results over a long period of time.
A foundation for your business needs to be planned, created and built – it does not just happen! A strong foundation consists of five key building blocks. And without a strong foundation, business growth is wishful thinking.
Building block one: Viable business strategy
The first and most important building block is a viable business strategy. Your entire foundation hinges on this aspect. If you do not have a clear strategy, you are basically attacking the enemy blind.
An easy way to setup a strategy is by answering the following questions:
NB: If you just implement one or two aspects above, you will have a good strategy. However, if you can implement all three aspects, you will revolutionise the industry and market.
In 2020, I assisted Leenta Marx from On Your Marx (Pty) Ltd. to create and launch her new ‘life coaching business’. One of the key aspects I worked on with Leenta was her business strategy. In South Africa, there are thousands of life coaches and psychologists all aiming for more or less the same market. I guided Leenta to target a niche sector in the market and showed her how to set up a competitive service package that would make it easy for people to sign up. After creating a clear strategy, Leenta was able to double her business in a couple of months!
Click here to see Leenta’s testimony on the process of creating a strong foundation for her business.
Building block two: Branding
Your brand can literally make or break you. Branding is a game of perception; your brand portrays your identity. Your identity will create a perception in the prospect’s mind of who you are, what you can do and how you will do it. If your brand is off target, the prospect’s perception is wrong about your business from the start. Remember, branding is like introducing yourself to the market and first impressions last.
An easy way to test your brand accuracy is as follows:
In 2019, I worked with Michela Webster from UXperio (Pty) Ltd. When we started with the 12-week programme, her brand was called ‘Nommad’. After her strategy was set up, I addressed her brand by asking a stranger to explain to Michela what the brand identity and message told her (the stranger). The stranger took about 30 seconds to try and pronounce the brand name, and needless to say I didn't even have to say anything after that – Michela got it straight away. We worked in a new direction with her brand, which was focussed on her technical expertise.
Click here to see Michela’s testimony on the process of creating a strong foundation for her business.
Building blocks three and four: Marketing and sales
Marketing is the process of generating leads. Lead generation is probably the biggest operational reason for your success or failure as an aspiring entrepreneur, a startup or a small business. If you cannot generate a lead, you cannot make a sale, and if you cannot make a sale, it does not matter how valuable your product or service offering is because nobody will pay any attention.
Sales is the process of converting generated leads into closed business. Sales for many entrepreneurs and small business owners is a scary concept, as people do not want to feel like beggars, for lack of a better word.
However, marketing and sales is nothing other than an excellent product or service, at an affordable price, communicated clearly and delivered with excellence. The better your product or service offering, the easier the process of marketing and sales will be, as you believe in the value you offer to the market.
In 2019, Niel Smuts from Sparkdust (Pty) Ltd. came to me to assist him with his small business. I assisted him firstly to write down a clear vision. Secondly, I started working on his marketing and sales processes, as Niel had no lead generating and lead converting channels in place. Sparkdust started to receive leads within the middle of the business programme and managed to convert three of the leads into more than R80,000 in sales before the end of the 12-week programme.
Click here to see Niel’s testimony on the process of creating a strong foundation for his business.
Building block five: Operations
Operations is the effectiveness in which your business runs from day to day. The better the systems, the smoother the workflow. Strong operations will also help a small business owner to exit their business and work on the business, rather than being the business.
There are five key departments every small business owner must create:
In 2020, I assisted Helen Shongwe Phillips from Pinocchio Creche with her organisation’s operational flow. Helen’s problem was the ‘self-employment mindset’. She was stuck in her business, or rather she was the business. She had no structure, order and control and her employees were difficult. I guided Helen in the direction of replacing herself with systems for each of her departments. This dynamic brought a massive shift in her mind, as she freed up her time for more important tasks, such as growing the organisation.
Click here to see Helen’s testimony on the process of creating a strong foundation for her business.
David Allan Coe said: “It is not the beauty of a building you should look at; it’s the construction of the foundation that will stand the test of time.” If you want to grow your existing small business, I suggest you get down to basics and ensure that your foundation is strong and will be able to carry the weight of growth. If you can manage to build a foundation, the result will be a business that grows organically. And a business that grows organically is a sustainable organisation that will withstand the test of time.