Being an entrepreneur can be tough. You make critical decisions daily and at times, without a buffer to cushion any errors. Resources are limited and must be allocated not only efficiently but with effectiveness to ensure success. It is no wonder why 80% of small businesses fail in their first year. Entrepreneurship can be a ruthless endeavor.
At Silver Lining, we set out on a path to figure out why 80% of small businesses fail. We conducted four hundred interviews and working with small business owners; we discovered that small businesses fail because they neither have enough time nor money. Due to resource limitations, small businesses need more time to make money and more money to make time — this tug of war results in planning paralysis and action frenzy, ultimately leads to failure.
Before we get into the key to your success, let us take a look into Aesop’s fable of the Fox and the Cat. The fox boasts to the cat that he has hundreds of ways to escape the hounds while the cat admits he has just one. When the hounds start approaching them for capture, the cat immediately puts its escape plan into action. However, the fox, on the other hand, starts pondering which of his escape actions plans to use. While trying to figure it out, the fox, of course, gets caught by the hounds. The moral of the story is simple: Always better to have one safe way than a hundred on which you cannot reckon.”
Aesop’s fable illustrates what we believe is the biggest hurdle for most entrepreneurs, their mindset. To be successful in business, you need clarity and one action plan. Lack of focus spreads you thin, and in the end, you will hardly get anything done. Take a minute and answer the three questions below and escape the hounds of stagnation or worse, failure.
1. WHAT you do?
2. WHO you do it for?
3. At what SCALE?
What do you do? Seems like a simple question to answer, doesn’t it? However, most small business owners will react to negative external pressure on their business by quickly changing their product or service offering. Constantly changing what you do will only end up confusing your clients, diluting your brand, and will result in more harm than good. Having such a mindset that lacks clarity on what you do, will affect your long-term planning and decision making as you will blow wherever the wind takes you. Make sure you are clear on what you do and stick to it.
The next question to ask yourself is, who do you do it for? This “individual” is your ideal client, the “person” who is happy to buy from you, talks about your business positively and refers other people to your business. Once you know who matters to your business, you can easily make decisions on whether an opportunity is a right fit for you or not, and if it will help you get closer to these people. Entrepreneurs tend to take every chance they get to market their product to make sure they are not losing out on potential customers. Attracting these people towards your business will probably do more harm than good and will be a waste of resources as the effects will be limited compared to concentrating on your ideal client.
The scale you operate on is the market size your business will cover. Are you looking to reach people on a global, national, or local scale? It determines your strategy-setting process and your financial requirements, and it means you won’t waste your resources on markets that are irrelevant to your business growth.
Once you are clear on the above, it’s now time to put a plan in place that is guided by your answers. By plan, we don’t mean a business plan but an action plan. Your action plan breaks down your big vision into a one-year goal to quarterly goals to monthly action items and then finally weekly to-dos. This action plan will guide towards connecting you with your ideal client, get the sales that will allow you to hit your financial goals.
Carissa Reiniger is the Founder & CEO of Silver Lining Ltd. She started Silver Lining in 2005 and created the Silver Lining Action Plan – SLAP! – a methodology that has helped over 10,000+ small business owners in 14 countries set – and hit – their growth goals. She is on a mission to help more small business owners make money doing what they love because she genuinely believes that we CAN change the economy one small business at a time.