Home Business My 4 Biggest Failures as a Small Business Owner and Lessons Learned

My 4 Biggest Failures as a Small Business Owner and Lessons Learned

by Olufisayo
entrepreneur failure to success story

If there is one thing that small business owners have in common, it is that they have all failed. Personally, in growing my small business, I have had my share of failures; quite a few actually.

When you fail in your business, you basically have two options:

  1. Beat yourself up, stay negative, and bury yourself in a hole.
  2. Turn every failure into a learning lesson.

Believe me, option 2 is the way to go when it comes to failure. First, come to terms with the fact that you have failed. Next, figure out what you did wrong. Last, make the necessary notes and adjustments to prevent that failure from happening again in the future.

Below are the four biggest failures that I had when growing my small business and the lessons I learned the hard way.

entrepreneur failure to success story

  1. No Detailed Documented Processes

I put a written set of standard operating procedures first on my list for a reason; because this is by far the most important when it comes to scaling business. A set of formal, written, and detailed processes is the key to scaling a business.

There are plenty of successful business owners who will tell you that standard operating procedures (SOPs) are a waste of time. However, let me shed some light on why I think SOPs are incredibly valuable to a business.

Why SOPs matter to a business owner:

  1. They bring order to a business and make the system scalable.
  2. They set up a business or an owner to exit.
  3. They build a more valuable business because there is a playbook.
  4. They give employees a reference guide on how they are expected to operate.

Let’s look at a scenario where you are seeking to acquire a business and you find two attractive businesses. Both have a good track record of growth, similar revenues, a great sales process, etc. Company A has a written set of SOPs and Company B does not. Which one are you more likely to make an offer to purchase?

Once you buy into the fact that you need SOPs, you still have to write standard operating procedures for your business. This can be a long and daunting task. This is a much easier task to get done when the business is fairly new and then it should become a document that is constantly updated.

Business lessons learned from not having written procedures. You will be fine up to a certain point without SOPs. However, when you begin to hire and train employees you will understand why having these written procedures is so important.

Our business struggled because we didn’t have SOP’s in place. When we went to scale and add employees we struggled due to a lack of a training program and SOP’s.

It is a lot harder to get people to work the way you want them to than you might think. A written set of SOPs will be a huge asset to your business.

  1. Not Focusing On Scalable Systems In The Beginning

First, let’s define what it even means for a business to be scalable. I like the Merriam Webster definition of scalable: “Capable of being easily expanded or upgraded on demand.”

Let me give you a real life example of a non-scalable system that we built into our outsourced bookkeeping services company. At the time we started, we knew that working remotely from one spot was going to be crucial if we wanted to scale. We couldn’t spend lots of time driving from office to office to do bookkeeping.

Instead of coming up with one solution, we offered several or even used a customer’s solution to our problem. That left us working with Logmein, GotomyPC, VPN connections, etc.

Eventually, we hit a roadblock where it just wasn’t working. It was messing with our SOP’s because there was nothing standard about how we accessed a customer’s books. Our bookkeeping business wasn’t scalable because our onboarding and monthly services were not consistent.

Fast forward to the present day and we have a very specific system for how we bring a customer into our business and have them fit into our operations. The result is that once we have successfully onboarded a customer, anyone within the operations team can work on their bookkeeping. That is a scalable system.

Lesson learned on building a scalable system. Every time you put a new process in place ask yourself one simple question: Is this scalable? Can you actually do this new process seamlessly 10, 100, or 1,000 times over with ease? Focus on making your business scalable from the beginning.

  1. Not Delegating

If you are the type of person who believes that you can do everything better than everyone, stop right now; you should not start a business, you should get a job. Learning to properly delegate certain tasks is an important skill that every successful small business owner needs to learn.

Letting go of certain tasks and trusting someone to do it as good as you, or even better than you, is a difficult thing. First, you are going to have to get good at hiring people better than you in areas where you struggle. Next, you will have to have a good training process in place (SOPs will be a huge help here). Then, you will have to come up with a good way to follow up on tasks that you delegated to make sure they were done up to your standards. But, you’ll need to do it without micromanaging people.

How to determine what to delegate:

  1. Spend a week making a list of all of the tasks you do that week.
  2. Sort the list into 5 categories: likes, dislikes, strengths, weaknesses, and income-producing.
  3. From your likes, strengths, and income-producing categories, pick 5 to 10 things that you want to focus on.
  4. Write those tasks down and tape them to your monitor, put them in Evernote, or make them your screen saver to make sure you only focus on those tasks.
  5. Outsource or delegate everything else.

Every small business owner is busy. However, what I have learned is that they are busy being busy on tasks that don’t matter to the growth of their company.

Lessons learned from not delegating enough. It is really hard to grow beyond a certain point without letting go of certain tasks. Additionally you are not the best at everything in your business. Focus on hiring people who are better than you in areas where you are weak. Then, delegate tasks that you are not good at so that you can focus on what you do best.

When we were a younger company we all did a little bit of everything. What we should have focused on was doing the few things we were really good at and delegating the rest of the tasks we were presented with.

  1. No Exit Plan From The Beginning

Developing an exit plan is something you should do right from day one. It’s hard to understand why you need an exit plan for a business that doesn’t even exist yet (except as a concept).

An exit plan gives you a be-all and end-all goal for your business. This is beyond your vision for the business. An exit plan surpasses any long range forecast or goal.

Without an exit plan, you are kind of just going along with no real agenda. An exit plan creates a trigger; it lets you know that it is time to get out of your business.

An exit doesn’t necessarily mean selling your business either; there are many forms of an exit. A few examples of an exit from a business are: removing yourself from the business so it runs itself, passing it on to a relative, or even having an IPO.

Lessons learned from not having an exit plan. You should develop an exit from the very beginning of your business. It should be written down so that you can revisit it every 6 to 12 months and modify it as needed. An exit plan gives you the structure of having something in place that triggers you and lets you know the right time to exit.

What failures have you had while growing your small business and what did you learn from them?

Author bio:

entrepreneur failure to success storyMatt Roberge is the founder and CEO of SLC Bookkeeping. He built an outsourced bookkeeping service with a culture that supports a strong work/life balance. He was also a scholar of the Goldman Sachs 10,000 Small Businesses Program.

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Tom September 1, 2016 - 9:20 PM

thanks for this vary helpful article .

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