09 Nov Building A Small Business That Thrives

Of all the businesses in Australia, 88% employ 4 people or less. We are a nation built upon small businesses, driven by our go-getter attitude, DIY passion, and the courage to give new things a go. However, only 54% of these small businesses will last more than 4 years in operation. My guess is that you don’t want to be in the 46%, and neither do I. Let’s look into what sets apart small business failure from small business success.

The Challenges Small Businesses are Facing

Taking these statistics further to highlight the tough business environment small businesses find themselves in today, of all the businesses that started 4 years ago, almost half are no longer in operation. With the changing economy, rising costs of living, and costs of running a business, the business environment is only becoming tougher. But this doesn’t mean that your small business can’t thrive! You can be a part of the 54% that thrive beyond the 4-year mark.

For business owners everywhere, challenges aren’t a foreign idea. Some of the most common challenges business owners face that place their business in jeopardy are red tape compliance costs with legislation and regulations. 2 in 5 business owners or managers say that red tape costs have an extreme or significant impact on their business. Another challenge that small businesses are facing is digital presence. In this day and age, if a business is not online, they don’t exist. So, having an up-to-date, modern, easily accessible website and social media presence is critical. However, in an age of information overload and digital saturation, this can be challenging to find the exposure businesses need to thrive.

Another challenge that businesses are facing relates to staffing and the different priorities that Gen Z are bringing to the workforce. Instead of pay being the main attraction for Gen Z, they are looking for flexible working hours, purpose, growth, realistic workloads, and workplaces that value well-being. Different needs and desires can make it hard for businesses to retain Gen Zs. There are lots of things that you can implement within your business to retain Gen Z’s within your workplace, but the reality is that you’re going to have to shift your focus a little!

Are You Willing to Get Out of Your Own Way?

Often, people will overestimate their strengths and underestimate their weaknesses, yet not know that they’re doing this due to cognitive biases. Small businesses that fall prey to these cognitive biases will often find their business doesn’t thrive. It is because the underestimated weaknesses and overestimated strengths are getting in the way. Business owners and leaders in general who can’t get out of their own way, will not make it very far.

The SWOT technique is a simple yet powerful tool that small businesses can use to make sure they aren’t their own obstacle on the way to success. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The strengths of the business are the part we want to build upon; spend time developing the strengths. The weaknesses are simply what’s not working properly. Put measures in place to make sure that these weaknesses don’t continue; if something is broken and damaging success, stop it and fix it. Time spent on fixing these weaknesses is not time wasted.

Opportunities are external factors that hold good things for the future. It is so important that you make the most of opportunities when they arise! Threats are adverse factors that have the potential to harm the business. For example, competition is a simple one. Identify the areas that are potential threats, and plan for them! Don’t wait for threats to arise before you have a plan on how to tackle them, because by then, it’s too late.

Successful Small Businesses are Businesses that Debrief

Imagine doing the same mistake over and over for years without ever realising it because you never took the time to evaluate your plan and where you stand against the plan often. Businesses that don’t debrief where they are, where they want to be, and how they’re going to get there often, will be the businesses most likely not to make it past the 4-year mark. Debriefing is critical! It is an absolute must for any business.

Set time aside daily, weekly, and monthly, to honestly evaluate the progress or lack thereof that you are making. Figure out what is working and what isn’t, and plan to do more of what is working and do less of what isn’t! A simple formula that you can use alongside the SWOT technique, is debriefing the three Rs. The first R is result; what is the gap between my result and the planned objective? The second R is reason; what is the reason for the gap in my result? And the third R is response; what am I going to do about the gap so that I don’t encounter it next time?

Debriefing helps you stay up to date with your success and progress while staying relevant to the trends and patterns in the tough business environment. Incorporating debriefing into everyday business life will also enhance the culture of the business. A key to debriefing is a safe culture where people trust that they can be honest and not experience shaming for their honesty. It all becomes a cycle that will then draw Gen Zs to your business to find value and purpose and helps to solve many of the issues small businesses face.

Small Business Life is Tough but Not Impossible

If you have spoken to a small business owner or if you are one yourself, you will know by now that starting, running, and maintaining a small business is tough! But in the same breath, it isn’t impossible! Don’t let the statistics scare you away because you certainly can be a part of the 54% that find success beyond 4 years! Be willing to get out of your own way – but don’t forget that the only way to know if you are your own obstacle is to debrief often! Keep measuring where you are against where you want to be and keep planning the right steps to take you there!

Hey! You’re Biased! – #32 Decision Fatigue

Decision fatigue is the exhaustion we feel after making many decisions in a short time. The more decisions we make, the lower the quality of our decisions. Have you ever had a really long day at work where decisions and meetings have come at you from all angles? By the end of the day, you are exhausted and make a bad call on a decision. That is decision fatigue at play. Obama took a seemingly simple step in the right direction of managing decision fatigue during his presidency. Obama wore the same type and colour of suit every day so that he didn’t have to waste brain power on that small decision and compromise on bigger decisions. It is small habits like that that can have a big effect on decision fatigue. Let’s get unbiased!

References

Fell, A. (2018). Australia, the small business nation. McCrindle. https://mccrindle.com.au/article/australia-the-small-business-nation-2/#:~:text=Small%20businesses%20still%20dominate,employing%20less%20than%2020%20people

Onibalusi, A. (2022). How to overcome small business failure and thrive. The Balance. https://www.thebalancemoney.com/how-to-overcome-small-business-failure-4142683