The Travails of Young Businesses
If you were to ask enough people to find out why new business failures are so high, you would probably end up with 100 reasons for the failures. To borrow an analogy from Benjamin Franklin concerning his experience developing the lightbulb:
“I didn’t fail the test, I just found 100 ways to do it wrong.”
― Benjamin Franklin
Sometimes, young businesses remind me of lightbulbs.
Small Business Assistance
Congress stepped up and formed the U.S. Small Business Administration (SBA) in 1953 to: “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” The SBA has become the lead Agency for business assistance from a Federal perspective for the past 70 years. The SBA has a number of resources available to help individual businesses stay alive and build success.
Small business assistance comes in a number of forms and as ubiquitous as the SBA’s programs are, in many cases they are unknown as some of those programs are accessed through partner organizations, an example being many of their lending programs. The State of Oregon has a number of these types of programs also, from technical assistance through direct lending programs, most often when lending opportunities are not available from the private sector lenders.
For rural areas, the United States Department of Agriculture – Rural Development (USDA RD) programs provide a range of services to the small business community in non-urban areas. Business Oregon has technical assistance as does the Small Business Development Centers scattered around the State.
Free Money for Your Business Startup!
Many new businesses become sidetracked looking for ‘free’ money. There is nothing better than free money, right? Is ‘free’ money available now? Where is it? How do I get some?
The answers were an easy ‘NO!’ until a few years ago, when the unprecedented COVID-19 Pandemic shutdown issues caused the Federal Government to print billions of dollars and distribute them all around the nation to small businesses. As a result, many businesses have been weaned onto free money distributions and have been kept alive from the liquidity injections. But nowadays, things have reverted back to where businesses that are able to generate sales and cash receipts and earn profits are growing successfully once more. The ‘free’ money is gone and the temporary safety net has been withdrawn.
Of course, there are still a few ‘outlier’ business grants for research or value-added agricultural products development. These are programs that have been around for some time and pertain to only a very small portion of businesses. They are directed at a very narrow segment of the business population for specific purposes that support the public’s needs. On occasion, there are programs available to select businesses made available as part of Diversity, Equity and Inclusion measures, but they are sporadic and typically of low amounts. On occasion, private foundations will have a grant opportunity in a sector that is an interest area for that Foundation. Typically though, these are directed at non-profit organizations. That’s about it.
OH, there never really was any money made available to startups, as the COVID money was directed at maintaining viability and employment levels in businesses that were already in business when the emergency was declared.
We are Back to Where We Were, or are We?
Being in business is tough. It is not becoming easier, and the near-term forecast is the trend continues to drift towards increasing difficulty. In other words, more of the same we have become used to. The businesses that will survive in the future are those that:
- Have established a market and are successfully defending it through great client service and satisfaction rates;
- Are keeping their trained employees who are more productive than new ones who need extensive training;
- Have capital or have access to capital so that cash-flow issues are mitigated and growth capital is not difficult to obtain;
- Have unique value propositions that customers cherish through regular patronage;
- Maintain a creative and innovative edge;
- Have a plan for growth and articulate it to all stakeholders, and;
- Are great communicators and facilitators.
However, to me the ‘feel’ of business today seems different than it did before the COVID-19 Pandemic. I don’t know what it is so I can’t describe it to you, but the feel of the business culture seems different. More reserved maybe. Perhaps it is because it seems that we are due to go into recession or macro events in the world have shifted the focus off of what businesses need in order to thrive.
Regardless, We Need to Be Prepared for the Best and Worst of Times Now
Over the past six years, I have written extensively regarding the planning process, the reasons to plan, and the benefits that can be gained through proper planning and the execution of those plans. Repetitive entreaties for us all to plan our organizations’ strategies for the principal elements of our business’s needs. As a review, these are:
- Market: Taking care of customers so they stay; branding; promotions; outreach and persuasive sales techniques; increasing customer numbers and satisfaction rates
- Operations: Running lean; employee empowerment; enterprise efficiencies; detail on safety; incorporating new: processes, materials, products and techniques
- Finance: Knowing your costs, markups and margins; using your data to inform decision-making; strengthening your banking ties; benchmarking your performance
- Executive: All the fun stuff – the visioning and modeling of outcomes; development of new markets and/or products and services; building a company culture that creates legacy
— OR —
“We can fail the test, and stop at 99 ways of doing it wrong.”
― Marshall Doak
Marshall Doak is the Director of the Southern Oregon University Small Business Development Center and a huge supporter of innovation and the community that forms around innovation in the economy. In private practice, he works with businesses that plan to transition to new ownership within the next five years, assisting them to build value that can be converted to retirement income when the business sells. He can be reached through: email@example.com or 541-646-4126.
By Marshall Doak, SOU SBDC Director