A study done by the Bureau of Labor published in Fundera in America showed that 20% of businesses fail in their first year, and about 50% of small businesses fail in their fifth year. In South Africa, 50% of small businesses fail in their first year and between 70% and 80% fail in their fifth year according to Mondaq.
Among the reasons for this high failure rate: poor management, lack of planning and inadequate financial knowledge.
Saiba member Hillyne Jonkerman is a serial entrepreneur, so who better to provide tips on how to stay in business, and flourish through the inevitable setbacks that accompany anyone journeying down this road.
Before starting a business, Jonkerman explains that you must ask yourself two questions: firstly, why you are starting a business, secondly what problem will you be solving? And after you start, ask yourself if the problem you set out to solve is still relevant. He also highlights the need for start-up funding but, once you have the funds, ask yourself what are the key things that can grow your business?
Jonkerman focuses on four areas thagt he says are critical to success.
Focus on what you are good at or what you do. Being all over the place and doing everything and anything is often the lead cause of failure because you do not work on perfecting your skill. Also, your duty is to help your clients make money. If your service does not impact positively on their business to help it grow, you are failing as a service provider.
As an entrepreneur, understand what amount you need to take home to survive. You cannot pocket all the profit, because you need to sustain the business. Do not be in a survival mode in your business because you are bound to fail. My advice is to start a business knowing that you are going to get two times the money you were earning as an employee, and that creates space for you to live and grow your business without financial difficulties.
You need to be able to sell your business producst or services. Sales and marketing are two different things. You have to invest in both and ensure you have a sales and marketing person or team in your business, sell your product/service and be active on social media platforms. This is very essential in these times because it is one of the few ways to be able to reach your clients. Engage with your clients online, let them not hear from you or see you when you render a service.
I have a social media page for my company where I post content relevant to my clients, motivate them, give them tips and answer questions they might have. This builds trust and your clients can see that you are invested in them and you know what you are doing.
Get your staff to learn your system of working, protocol, and guide them on how to work. Look at ways and means to develop these aspects. Do not rely on yourself only, if you have a small business and have the means, get someone to help you. My business grew three times in the year I decided to take in a PA.
Take in people who will enable your business to grow. Do not neglect your staff members, engage with them regularly and make them feel celebrated, this is how you win their trust and commitment. I have weekly meetings with my staff to plan for the week ahead, and also to celebrate their birthdays or any special day.
The spaza shop by the corner that eventually closes after a few years has failed to evolvie with the times.Develop yourself as a leader and stay relevant to your clients. Have perspective and be open-minded to new developments to improve your service to your business. Like I said earlier, if the problem you are solving is no longer relevant, then you run out of business.
Have a yearly business plan
As an addition to the four spheres that I mentioned, I have one thing I do on an annual basis. This is to reflect on the previous year and prepare for the year ahead. A yearly business plan helps you set up your business and do the necessary adjustments.
Look at previous year’s failures and how to improve on those failures, find strategies and meet with your staff to discuss the changes or difficulties you have experienced. Also, look at your budget. Do you have enough money to run for the next year, and how did you allocate or use your money? These are important.
To make money you must spend money. That is how business works and most people do not understand this.
The way you present yourself to the client is important. If I am the same as last year, how can I bring progress to you? Renovate your office, change something to show progress to your client.
Progress should become second nature to you because your progress motivates your clients. If they see you growing, they automatically know that they will grow too.
Changing small things can grab the attention of your clients and eventually they will see the bigger picture with time.
Jonkerman has been in business for almost two decades and he has had clients who have been with him for over 20 years. This shows that he is doing something right and we hope that you take these tips, apply them to your business and see positive change.