How should small business owners prepare to transition from employee to becoming their own boss?
SmallBizLady: Inside my book Become Your Own Boss in 12 Months, I created the Emerson Planning System, which is a six step system to transition from having a job to starting a business.
- It starts with developing a life plan. You must figure out what you want out of life first and then build a business that supports your personal goals for your life.
- Then you need to develop a financial plan, because the money to start your business is going to come from your right or left pocket.
- Next you need to examine what skills you have and need to run your business. It’s best to work for a business like the one you want to start.
- Step four is developing a marketing plan. You need to develop a niche focus and a specific target customer. If everyone can use your product or service, no one will.
- Step five is developing a business plan. Give your business the best chance of success by writing down how your business will operate, here’s a three part series on how to write a business plan.
- Then, finally start the business while you are still working, if you can.
What are some of the top reasons why small businesses fail?
SmallBizLady: The four biggest challenges that I see for small business owners these days are quite common.
- No Network—People do business with people they like and people they know. Who do you know and, more importantly, who knows you? Start building your network at least 12 months before you start your business.
- Lack of Niche Focus—Small business owners have limited time and limited resources. Choose a niche so you can focus your marketing efforts.
- Lack of Funds—If you do not save enough money to run your household and fund the business, you may not be able to hang on until the business can generate any real revenue. On average, it takes 18-36 months for a small business to breakeven, let alone replace your corporate salary.
- Lack of Fiscal Discipline—Do you run your household with a business with a budget? If not, chances are you will not run your business with one. You must make business decisions based on up-to-date financial information, and not spend any money without asking yourself why three times, and getting three different answers.
What can small business owners do to make sure they don’t burn out, which often leads to failure?
SmallBizLady: Your time is the most valuable thing you can give yourself and anyone else. Every three months, take two days off and unplug. Try reading something that has nothing to do with your business. At least one day a week, stop working at a reasonable hour. If you have a family and children, try to make time for dinner each night, even if you go back to work after bedtime. Try to schedule a date night with your sweetie and only take business trips if there is a contract opportunity involved. There’s always more work to do, don’t let it rule your life.
What would you say to owners who are terrified of taking risks?
SmallBizLady: When you develop a written plan and do your homework up front before starting a business, new opportunities don’t seem so risky.
What advice do you have for small business for managing their money in their businesses?
SmallBizLady: Cash is king, and your ability to manage your cash flow is essential for business operations. The best way to manage your business finances is to have your accounting reconciled monthly. By the 15th of the month, you should have a statement of cash flow, balance sheet and a profit and loss statement, so you can make any adjustments and chase down your outstanding receivables.
What are the common challenges small business owners have online?
SmallBizLady: Many small business owners are struggling to manage their brands online. Your #1 sales tool is your business website. SMB’s must have a helpful website that immediately tells people how you can solve their problem. The website should feature great blog content. Your website should have a mechanism to build an email list such as a free e-book giveaway. Make sure your contact information can be found on every page. When it comes to social media, small business owners should identify the most prominent place where their customers are spending time online, and be there. Focus on just one social media site and dominate there.