We live in an age where entrepreneurship is glorified. Everywhere we turn, there’s a story of businesses kicking goals or being sold for a number in the hundreds of millions, lots within their infancy too. The truth is, that’s only a reality for a handful of companies and concepts. In Australia, more than 60% of small businesses fail within three years. In the US, 20% fail within the first year, and after five years, only half of the businesses still exist.
I’m not for a second saying don’t go for it. I want you to. We need more entrepreneurs in the world, because they create jobs and often go on to solve big social issues when governments can’t. We particularly need more female entrepreneurs, especially those who might be parents themselves as they inherently understand the demands facing working mothers and can work to shift the needle on those challenges.
I’d love for everyone to experience the thrill of getting a business off the ground. Starting a business teaches so many skills and opens up a whole new world of learning and challenge. Here’s the caveat though: it can’t be at the ongoing expense of the things that truly matter to you. The key word here is ‘ongoing’.
You should expect your startup to consume you and take you away from almost everything else in the beginning. Sacrifices need to be made initially, but there may come a time when you have to face cold, hard facts and acknowledge that it’s time to stop, and, ahem, give up.
I speak to lots of people who are so unhappy because of the stress their small business is causing them and their families. They’re petrified of failing and they dig their heels in, unwilling to admit the truth. Every day seems like an ongoing battle, and yet these people keep waking up each morning, blindly believing that things are going to be different somehow.
And no one is willing to talk about this.
A friend reached out to me a few weeks ago in complete exasperation. “I’ve been doing this for three years now and haven’t gotten anywhere!” She went on to say that she was drowning in the reality of raising three young children and trying to grow her small business. We workshopped it together and the reality emerged: she just didn’t have a viable business. Even if we removed the kids from the equation, no matter how hard she worked at it, the results in her business just wouldn’t change. It wasn’t really a business.
It’s all very well to find your passion — to do what you love and love what you do — but at the end of the day, it’s not always going to put food on the table. Sometimes what’s required is having a really tough conversation with yourself about whether you should continue or not.
You’ve got two options if you’ve stagnated like my friend and you haven’t gone anywhere. You can either decide here and now to stop what you’re doing, or you can dramatically change something. If you go with option B, just make sure your business is viable first. No point losing another three years flogging a dead horse.
No one is quick to offer this advice, and few are willing to have the tough conversation. We’re playing too nice and pretending that everything’s going to be okay. We tell these people to have a massage, take a holiday, run a bath, or hire a babysitter for an afternoon. While these tactics might work for a couple of hours, or days even, no amount of time away from your business can mask the pain that comes with this idea: it might not be working.
“One of the hardest parts of life is deciding whether to walk away or try harder” – Ziad K. Abdelnour
In my experience, these are the common reasons why small businesses fail (or should be given up on).
They don’t have an obvious audience
One of the best ways you can approach starting a business is to identify the audience you have available to you, rather than focusing on what the actual product or service is. Does your best friend have a chain of stores that you might be able to put product into? Is your cousin an Instagram influencer who could help kickstart you? The aim of the game is to get some sales happening straight out of the gate by using the audience or distribution channel that’s already available to you.
This is in direct opposition to the thinking that says, ‘I want to start a candle business’, where you go out and learn how to make candles, make 200 of the buggers in your dining room and, after you’ve sold some to your mum and her friends, you’re left with 185 and have no clue how you’re going to get them out of your apartment.
Carly Brown is the founder of swimwear label UNE PIECE. Carly started her business by tapping into her existing audience of girlfriends and colleagues and then bringing demand forward. While conducting consumer research for UNE PIECE’s ‘original sexie rashies’, Carly kept getting asked the same question: ‘When can I buy this?’ So she created a wait-list. First, she had 30 women on the list. Then a handful more. As it grew, she put it out to her social media community and by the time she was ready to launch her business, Carly already had 500 customers ready to buy and a story worthy of the PR it eventually received.
At the start of Business Chicks, I had a bunch of relationships and a reasonably good-sized database through my recruitment company that I could tap into. I knew I was giving myself the best possible shot at success, because I had a ready-made group of potential customers. It meant that I could easily (well, quite easily) get over 500 people along to my first event. Trying to get it off the ground with just my mum and her friends wouldn’t have had anywhere near the same result.
At the end of the day, almost everything in business comes back to sales. You can have the best idea in the world, but without a solid distribution strategy, and a strong path to sales, you’re just another candle business.
“Don’t find customers for your products, find products for your customers” – Seth Godin
They quit their day jobs too soon
If you have aspirations of starting a business, you don’t always have to leave one form of income behind altogether. Alyce Tran’s luxury accessories empire The Daily Edited started out as a style blog. Alyce and her co-founder Tania Liu admit that they didn’t think anyone would look at the blog initially, so they tried turning it into a clothing collection, but that failed after eighteen months.
It was only when Alyce struggled to find a clutch that was reasonably priced but didn’t look cheap that they made the move into monogrammed accessories, selling direct to the audience they’d accidentally built on social media. Their initial $7000 worth of product sold out in just three days, and over the next few years Alyce and Tania continued to work their day jobs while building their business on the side. It wasn’t until Alyce sat down with her accountant that she finally decided to throw in the towel on her paid gig and go full-time with The Daily Edited. “My accountant told me that we were doing over two hundred thousand dollars a month and it was clear we were growing significantly. He said, ‘You realise you’re selling a lot of stuff. You could quit your day job and work on this if you really want to. It could be something.'” Alyce says about that time: “I didn’t realise! I was just doing it all, just trying to get through everything, not knowing where I was going.” Today, The Daily Edited has an annual turnover of more than $30 million and has expanded into the United States and Singapore.
When I first bought Business Chicks, there was a period where I was trying to do two jobs. I would get to the office and start my ‘normal job’ with my recruitment agency at 7.30am. I’d work until about 7pm, then I’d go back to my tiny little apartment which was about a five-minute walk from the office to start working on Business Chicks. I’d sit on the floor, processing the booking forms that had been faxed in that day for an upcoming event and entering them into a spreadsheet. I’d process the raffle ticket sales on an EFTPOS terminal. I’d send requests to prospective guest speakers, and I’d pitch to brands that I wanted to partner with.
I’d do whatever it took and work whatever hours were needed to get it off the ground and turn it into something. It wasn’t until Business Chicks was starting to hum and I could see massive potential that I decided to exit the recruitment company and make it my new day job.
This is an extract from Winging It by Emma Isaacs. Available now from Macmillan Australia, RRP $34.99.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.