According to the Small Business Administration, in 2020 alone the number of small businesses in the U.S. reached 31.7 million, making up nearly all (99.9%) U.S. businesses.
This is also representative of sustained growth as it marks a 3.15% increase from the previous year and a growth of 7.09% over the three-year period from 2017 to 2020.
To me, that just affirms that entrepreneurs and prospective business owners are the epitome of confidence. They believe that no matter what, no matter when, they can start something from scratch and they can succeed even during a pandemic, but I think that so many are not properly prepared.
Hyper Grow Your Business
The most recent example I can speak to is I recently met with a business owner that does over $1 million in revenue. This person started their business about three years ago and has the ability to grow to $5 or $6 million this year, which is an incredible increase.
When I talked to them about structure, checks and balances, liquidity, and the resources needed to properly grow a business without killing it, they had no clue. They stared back at me like a deer caught in headlights.
Most owners think that because they started a business, they’re unstoppable. I find it very alarming that they don’t focus on what it takes to consistently maximize profits and grow their business properly.
Despite wanting to grow sales, they don’t delve into the complexities of accomplishing such a feat. They don’t sit there and calculate how many pennies of every dollar generated in revenue should be profit. This is partially why “successful” businesses fail over time. For instance, the likelihood of a business surviving five years and ten years drops significantly from 50% to 33%, respectively.
I hate to bring up 2020, but the issues brought on by the pandemic were catastrophic. Yelp reported that over 80,000 businesses shuttered permanently from March to July alone.
Bright Future Business Plan
People do indeed have short term memories, which is very sad to say. Four or five years from now, owners aren’t going to remember they relied on PPP or EIDL to survive. Or, if they do happen to remember, they’re going to put blame solely on the pandemic, when in reality it was a lack of planning.
Business owners don’t like to think like that, but it’s still fresh in everyone’s mind and as things begin to revert back to “normal,” whatever that looks like, it’ll be a thing of the past.
Every business should possess the key tool to survive anything: a business plan. My best piece of advice is to not start a business unless you have one.
Make sure you know your costs and prices and the margins you should demand. There is no need to write a 100-page report, as I’ve already mentioned. You don’t have to follow in the footsteps of Jeff Immelt, who once mentioned his 5,000-page capital plan for General Electric. I’m willing to bet no one knows what’s on page 11.
Business Made Simple
I have always been a firm believer in the KISS principle, “Keep It Simple Stupid.” Regardless of how big your company is, keep your business plan simple and direct to the point.
There is no minimum or maximum number of pages you need to abide by. Every business is different and every owner possesses different skill sets.
The more detailed you can be in your planning and execution of the plan with the timeline, the better.
