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A heartbreaking email that every small business owner should read

I want to share something important with you today. It’s a heartbreaking email I received last year, from a reader.

He was a small business owner, who had to cease trading after 5 years in business, because of 2 critical errors he had made. As well as showing you the errors, I’m going to show you how to make sure this never happens to you.

The following excerpts are quoted, with the author’s consent, though they have asked me not to use their name. Here’s a section of the email, quoted unedited:

“Me and my wife quit our regular jobs in 2007 to start a business. We were excited and worked like crazy to make it a success. By mid 2011 we knew we were in trouble as our life savings were almost gone and the business was still making too little money to cover our overheads. We’d been dipping into our savings from the get go to make up the short fall from the business. By February this year we knew we had to quit the business and get jobs. Last week the business was closed for the last time”

He went on…

“Looking back I see we made two major errors that I’d like to share with your readers to stop them doing the same. First up, I was trying so hard to keep our costs down that I didn’t invest in the help we needed. I wanted our savings to last as long as they could so we hardly spent anything and ended up starving the business of the professional help that would have saved us. Second up, we were waiting for some big sudden sign to show we were screwing up but it didn’t happen like that at all. We didn’t go broke over night. It was a slow process which looking back had been happening for years. That’s what stopped us taking urgent action years ago.”

Failure doesn’t happen overnight

One of the reasons so many intelligent, hard working business owners fail, is that failure doesn’t happen overnight. It’s extremely subtle. It creeps up on you. It’s seldom the result of one cataclysmic decision, but usually the result of small errors, repeated often.

Here are just a few examples:

  • When you push your marketing at people, it hurts your business a little.
  • When you think you’re saving money by doing it yourself, rather than hiring an accountant, a marketing professional, a web designer etc, it hurts your business a little.
  • When you copy the social networking approach of your peers, making yourself almost invisible, it hurts your business a little.
  • When you can name the judges on the top reality TV shows, but you don’t know who the key people in your marketplace are, it hurts your business a little.
  • When you allow an amateur looking website / blog to make you look bad, it hurts your business a little.

Success doesn’t happen overnight

Like failure, success doesn’t happen overnight either. People want overnight success, which is why there are so many bullshit books, webinars and seminars that promise it. In reality, we know that business success takes time. It’s subtle. It’s seldom the result of one smart decision, but usually lots of smart decisions repeated often, over time.

Here are just a few examples:

  • When you learn how to attract the attention of your marketplace, so you never have to push your marketing at people, your business gets a little stronger.
  • When you decide to get the expert help you need, rather than try and succeed in the worst economy in living memory without it, your business gets a little stronger.
  • When you stop using social networking sites like a sheep and start building a highly visible presence, your business gets a little stronger.
  • When you take time to learn about the people who make up your marketplace, so you can help them overcome problems and embrace opportunities, your business gets a little stronger.
  • When you invest in a professional looking website or blog, which reinforces the promises you make in your marketing, your business gets a little stronger.

The link between failure and short term thinking

If you want a business to succeed in the medium and long term, you need to avoid making decisions based on the short term.

Short term thinking means you see money going out of the business as a bad thing, so you avoid it. People thinking short term are fearful of making an investment, even an essential investment as mentioned in the email earlier, because they see little difference between a business cost and a business investment. In reality, the 2 couldn’t be more different.

Keeping costs down is a great idea, but starving a business of essential investment, is like starving a plant of sunshine!

Short term thinking also leads us to look for short term answers. That’s why every scammy, bullshit filled webinar, ebook, software product and seminar – promises fast results or secret formulas to get rich quick. We have to be smarter than that.

In short: Business success requires a long term perspective. If you are not seeing the results you need, now is the time to take action.

About Jim Connolly: I help small business owners grow their business, make more sales and boost their profits. To see how I can help you and your business, read this.

20 Comments

  1. CJ Harrison

    May 10, 2012 at 08:57

    Jim this is perfect and I hope a lot of people see it and share it.

    Before retiring, I worked as a business advisor for over 20 years.
    Without doubt, the single biggest reason small businesses failed was because they tried to do the specialist tasks themselves.

    They thought nothing of leasing an expensive car or buying fashionable laptops that were 3 times the price of what they needed, but wouldn’t pay to bring experts into their businesses.

    They always suffered with cash flow problems because they refused to hire a good accountant and marketing consultant. Thus they made too few sales and were managing their money poorly.

    The few who did, were the ones that flew.

    Thanks,

    CJ

  2. Great post, Jim.

    Recently, our company has been working on providing our clients with a great experience, when working with our company. I always felt that it was having a great price or more services, but our clients want an “experience.”

    There is a local coffee shop I frequent, and I couldn’t tell you the price of the coffee, but the experience I get in the coffee shop, is priceless, and I will bring that same concept into my business.

    I haven’t posted on your blog for awhile, and I can tell, because this post has been such motivation for me.

    Thanks.

  3. Very true – and I particularly like point 4! I’ve had an accountant from the get-go, I outsource my payroll even though it’s very small, and after spending a few days investigating writing my own database, I realised I’d be wasting my time and outsourced that too. While I’m not making huge profits and I’ll probably never win any business awards, I am making a living thank goodness, and I’m sure that concentrating on my core competencies and outsourcing the rest is a part of that.

    • Hi Anne. I agree. Getting the help you need is a major element in the success of any business. Thanks for the comment.

  4. Jim,

    I don’t think start-up ventures differ from very mature organisations with regards much of what you refer to here. Even mature businesses seem to make decisions that seem so short sighted it staggers belief. Your lessons are hard learned and clearly came at a tremendous cost. It is at great personal expense you learn these lessons. Corporations have deeper pockets perhaps yet the mistakes still cost dearly. The percentage impact is sometimes minuscule in the bigger picture but at a micro level the numbers add up…

    Thanks for sharing the thoughts and lessons learned.

    • Hi Grant. Thanks for the feedback, however, the lessons here were not mine. They were the person who emailed me.

      You’re right that some more mature businesses also hamper their potential, by refusing to invest where required. Good point.

  5. Most business owners have blind spots, we spend some time in denial too.

    This is a very strong post Jim, I hope it gets some eyeballs.

    Owen

    • Hi my friend. Yes, denial plays a part in refusing to get the help you need. many think things will just magically get better.

      Thanks for the feedback, Owen.

  6. This is some powerful, no nonsense advice.
    When people feel the crunch, they stop spending money on their business. Many people feel they can tighten the budget and still achieve growth. My question is – growth from where?

    I love this statement- “When you take time to learn about the people who make up your marketplace so you can help them overcome problems and embrace opportunities, your business gets a little stronger.”

    This, also, relates to the social marketing aspects of your business. Get to know your customers and how you can reach them to give them what they want and need.

    Great Stuff. I totally enjoyed this post.

  7. What great insights – it’s so true… over the years I’ve set up few businesses and I only worked on my strengths – the rest was outsourced. Trying to do everything, or go cheap is suicide. You get what you pay for.

    Personally I strive to be the master of one or 2 things, not a jack of all … I have someone to help me with techie issues I could probably work out but would take me days, I also have an accountant … helps me stay focussed on my core skill set!

    Do you think the online world is contributing to more people trying to set up businesses, doing it all themselves and then falling flat on their faces?

    • Hi Ameena and thanks for sharing your thoughts.

      I certainly believe many online gurus, make creating a successful, sustainable business sound too easy. There is work to be done and much of that work is highly specialist.

      The reality online, is that there are billions of web pages out there. To read some of the commonly quoted ‘Internet marketing’ bullshit, you’d think getting yourself noticed and building a great business, was a simple matter of writing blog posts regularly and guest blogging.

      Thanks for widening the conversation, Ameena.

      • What? It’s not that easy? :)

        Yeah, I feel bad for people who come to me saying that they’ve guest posted, commented, created facebook pages… etc and they have to go and get a full time job because their business failed.

        If only more people would realise that business is business and that online isn’t that different to offline. You can’t just build it and think people will come!

        • Actually, business online is NOT the same as offline, if it was, the results would be the same as offline.

          The problem with online, the world has been made to believe it’s like having a winning lottery ticket. You just buy the ticket and your rich!

          The online world is actually harder than offline, it’s a cold place at times, the reason it’s harder, it’s very misunderstood.

          Offline, you are only dealing with your immediate population base, online, you are trying to be heard in a very crowded room. A noisy one at that, in my humble opinion, we can’t compare online & offline the same way.

          My 2 cents.

        • I love this from your comment, Ameena:

          “If only more people would realise that business is business and that online isn’t that different to offline.”

          If more people understood that simple fact, the scammers would have a much harder task, screwing people and destroying their financial futures.

          All business (online and offline) is based on developing a valuable product or service, then marketing it correctly, to the right people. So long as the numbers stack up and you have a big enough market, it works. If not, it fails.

  8. I have just begun the process of building my first business and the learning curve has been steep. I am mentored by a couple of very intelligent, business savvy people who are trying to help me. I am grateful they have passed along this post. Thank you for your direct, honest commentary.

  9. Jim, this list is awesome (and so are the other comments!). I talk to lots of small businesses that really don’t get this, and I think this will help me better express what I’m trying to say. You’re right, having a crappy website won’t kill you overnight, but it does hurt you a little.

    I don’t deal with small business marketing directly, but one of my primary jobs is to make them LOOK professional too. Things as simple as not using @yahoo.com for your business email (sad but true) erode a little bit at a time.

    I also love your positives list. I’m happy to see many of those things are things I’m doing right now. Looking forward to massive success ;). Thanks again Jim!

  10. “People want overnight success, which is why there are so many bullshit books, webinars and seminars that promise it.”

    Never a truer word spoken Jim. I smiled.

    It’s true to say that failure doesn’t happen over night – as a fledgling business owner I recognise the that I have made similar mistakes and came close to having to throw in the towel. I am now working to get those right so that I’ll still around for the future to be of value to my clients.

    It’s easy to focus your attentions in the wrong area when you’re close to the coalface – investing in outside professional assistance will bring a fresh and unbiased perspective to the party which will help in the long run.

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