Whats Keeping You Up At Night?

Small businesses make up the foundation of industry in the U.S., with over 50 percent of the working population, or 120 million people, receiving their living wage from an operating small business in America. Quite simply, small businesses make up a significant percentage of the market share and contribute greatly to gross domestic product and the economic stability of the nation.

According to the U.S. Small Business Administration there are almost 28 million small businesses in the nation and over 22 million of those are self-employed with no additional payroll or employees.

Many small business owners claim that they spend most of their time trying to fix what is broken. They feel as if they are putting out fires all the time, trying to find solutions to issues that seem to creep up daily and sometimes continuously.

“One of the things that they get into is duct tape solutions, slapping duct tape on problems just to make them go away momentarily, only to find that they keep coming back. One of the reasons certain issues are chronic for many business owners is not necessarily because they do not know how to fix them. It is because they do not know how to identify the root cause of the problem associated with the symptom they are seeing,” said Terry Powell, founder of AdviCoach.

But what does this mean to you? You already understand the trials associated with running a business. According to an AdviCoach study, and our coaches’ experiences, we have found that all businesses are subject to some common dangers. It’s crucial, in the effort of creating a sustainable, thriving business, that entrepreneurs not only understand the landscape of the current economic marketplace, but also what moves are necessary to reduce risk and stay competitive today – not just tomorrow.

50%Of working individualscount on wages from

small businesses in America

The USA has almost

28MILLION

small businesses

PUTTING OUT FIRES

Unfortunately, an astronomically high number of organizations classified as small businesses by the U.S. government are predicted to fail each year. Different sources and studies show varying results on business failure rates but all the data reveals an alarming trend: .

• The SBA reports that over a four year period 50% of small businesses fail.

• The Harvard Business Review takes this even further - a study HBR published stated that 75% of all startups fail.

• Forbes reported that 8 out of 10 entrepreneurs who start a business fail within the first 18 months.

Arguably, you already have heard these very statistics or something similar. The presentation of these figures are hardly intended to dissuade an entrepreneur from venturing out and pioneering the creation of his or her small business. Instead, it’s meant to highlight how 95% of companies need assistance in some form or another to ensure proper management processes and operations are put into place for greater success.

“Companies stumble for many reasons, among them bureaucracy, arrogance, tired executive blood, poor planning, short-term investment horizons, inadequate skills and resources, and just plain bad luck.”

– Clyton Christensen in Across the Board

Every business, regardless of how small or how large, faces similar hurdles. Bumps in the road can help push a business toward extinction if not properly addressed and AdviCoach has seen issues like the following examples crop up in numerous businesses, regardless of industry, in three main categories: Time, Team and Money.

THE REALITY OF THE SMALL

BUSINESS LANDSCAPE

50%Of small

businesses fail

75%Of all

startups fail

8/10Entrepreneurs fail

within the first 18 months

TIME | TEAM | MONEY COMMON HURDLES

ALL BUSINESSES FACE

There never seems to be enough of it to go around. Business owners are pulled in a million directions, which means that some items can fall through the cracks. By creating effective time management strategies and identifying one of the causes of stress in a business owner’s life, AdviCoach coaches are able to help an individual create a better balance for them. Below you will find one of the key areas impacting a business owner’s time.

Hyper-Focusing on the Small Items

Small business owners who get caught up in doing administrative tasks or recruiting and human resources instead of focusing on the larger, big decisions can overlook the actions items that require their attention. Only a leader can make the decisions about key issues and getting bogged down with minute details can create conflicts.

AdviCoach Ann Connor has worked with business owners in the past who failed to empower their staff and delegate everyday tasks. As a result, the business owner was too busy with day-to-day operations to focus on closing sales and marketing strategic decisions or take time for himself.

“Needless to say this individual rarely took an uninterrupted day off, a vacation or had time to work on his business. A business does not grow with this type of owner involvement,” said Connor.

“To solve the issues we created systems and checklist for the employees to follow. If a machine broke they had a system or a check list that they could refer to. Once they completed the checklist and the issue was not resolved then and only then could they reach out to the owner. This system empowered the employees to fix whatever issue came their way and allowed the owner to take some much needed time off. Sometimes it’s the simple, comprehensive solutions like a solutions checklist that really make a difference and provide a business owner the time they need to focus on big-picture items.”

TIME“Leaders need to learn the difference between what is essential for your business to operate, and what is important. You need to be fanatical about this.”

– Lee Roberts, Chief Executive Officer and Chairman at FileNet Corporation

Like the saying goes, there’s no I in team. A business’s team is crucial to the quality of a company’s service and/or products. The right combination of team management, hiring and recruiting and training is required to build a foundation for success. Below find the top three hiccups a business owner can experience relating to their team.

Mismanagement of Human Capital

Human capital in the Information Age is the equivalent to natural resources in the Industrial Age. How well do you manage and measure your greatest resource?

“The essence of business in the 21st century is tapping the talent of good people. It won’t be how you locate the plants, but how you locate the best people and motivate them, how you trust them and have them trust you”

- Reuben Mark, CEO Colgate-Palmolive

Once an employee is in the door, it’s up to the company to identify the individuals’ talents, assign an appropriate work load and provide measurable goals for people to work toward. Micro managing can create as many issues as being an absent boss – it’s up you to decide where the line is drawn for each individual case.

Training also makes up a crucial component of managing human capital. A four-year study by the American Society of Training and Development showed that firms who invest $1,500 per employee in training compared to those that spend $125, experienced on average:

• 24 percent higher gross profit margins and 218 percent higher income per employee.

• Even a modest 2 percent increase in productivity has been shown to net a 100 percent return on investment in outsourced, instructor-led training.

Mismanagement of human capital even encompasses the miscommunication that can occur in a top-down structured business. When morale is off because of poor communication between a business owner and his or her staff, productivity can suffer.

“I once worked with one memorable computer company that had huge team issues. Poor communication between the company owner and the staff created toxic morale allowing dissonance within the organization. Employees rarely spoke to one another and avoided the owner as much as possible,” said Connor.

“Early on it was apparent that the best thing for this company was to evaluate and identify each employee’s preferred communication style. Educating the team about their preferred communication style and how to identify and communicate with team members who have different styles created a solution that would build upon itself and strengthen team morale and employee performance beyond the initial solution.”

Bad Hiring Decisions

On average, employee turnover costs U.S. businesses an estimated $300 billion each year, according to the U.S. Bureau of Labor Statistics. The staggering costs associated with employee turnover can be viewed as the price of doing business in the modern age. However, it’s not as simple as that. A business owner or manager has some control over how many employees leave each year. The most common reasons employees give for voluntary separation include boredom, weak or toxic supervisor relationship, wrong cultural fit and job descriptions that don’t match the reality of the position, reported TEKsystems in a report titled “The Real Cost of a Bad Hire.”

• Replacing an employee can range from two to seven times his or her salary.

• Hiring and training a replacement employee can vary from 25 to 200 percent of annual compensation associated with the position.

• The more an employee earns, the more difficult and costly it is to replace him or her.

Talent Acquisition

Bridging the talent gap can create a significant headache for a small business owner. Larger organizations have greater name recognition and potentially a greater pool of incentives to pull from to gain the attention of top talent.

However, as mentioned previously, a large number of Americans work for small businesses and that’s not because they are the “leftovers.” Working for a small business appeals to a lot of professionals if the organizations tailor compensation and benefits to meet the needs of workers.

Hiring and training a replacement employee

can vary from

25%-200%of annual compensation

associated with the position

Replacing an employee can range from

2X-7Xhis or her salary

In addition, how a small business recruits its workforce matters. A report from Deloitte stated that by 2018, 50% of the workforce will be millennials aged 24 to 34. These workers are engaged with social and mobile technology, which means making sure your recruiting process is optimized for mobile means greater access to candidates.

It’s no surprise that financial difficulties or even basic money-related issues can have a drastic and immediate impact on the fiscal health of a business. Entrepreneurs understand the value of staying in the black and monetary worries can have the greatest, most immediate impact on the psychological and emotional state of a small business owners, which is why AdviCoach coaches work tirelessly to set strong strategies in place to boost profits.

“Understanding internal expense and costing structure is critical to the financial health of a company. Many times business owners are so concerned with making the sale that they give away the product or service,” said Connor. “I had a restaurant that ended 2012 with a loss of $100,000+ in net income.”

“They did a great job with marketing, their restaurant was filled, they had happy customers but they were not making any money. By focusing on their internal financial systems we were able to turn their negative net income into $100,000 positive net income in 12 months. We did this by focusing on how they spent money. Their food/beverage costs were out of line – we began doing inventory on a regular basis, which helped them buy only what they needed as well as to have a better handle on waste. We reviewed and cut back on expenses – they had abdicated all financial control to the bookkeeper so they had no idea of their cash flow,” said Connor. Bottom line - we created budgets and systems and got the owner involved in the financial management of the company.”

Below find a few other common reasons a business may be struggling with its fiscal stability and cash flow.

MONEY

50% of the workforce will be

millennials aged 24 to 34 by 2018

Sales Team Lacking Focus

What are the two departments in a business that bring in revenue? The answer is marketing and sales. A study conducted by Dr. John Sullivan, Professor of Economics at San Francisco State University found that underperforming sales people bring in at minimum 50% less revenue than top performers. Couple this with studies telling us that 65 % of a sales person’s time is not spent selling and a business could have a catastrophic revenue problem.

Bad Marketing Strategies

As the previous bullet point mentions, marketing is the other department other than sales that brings in revenue – so what happens when marketing fails? Well, it could mean the doom of your business or at least the introduction of a new product or service. According to one study by AC Neilson BASES and Ernest & Young Global Client Consulting titled, “New Product Introduction-Successful Innovation/Failure: Fragile Boundary,” the failure rate of introducing new US consumer products and services is 95%. Couple this with how hitches in the release of a product and service and competitor’s marketing abilities and a business owner could experience

Case Story:

In 2007, when Microsoft launched Windows Vista, the media and the public had high expectations. So did the company, which allotted $500 million for marketing and predicted that 50% of users would run the premium edition within two years. But the software had so many problems that even Microsoft’s most loyal customers revolted. Vista flopped, and Apple lampooned it in an ad campaign (“I’m a Mac”), which caused many consumers to believe that Vista had even more problems than it did.

Underpreforming sales people bring in

50% Less revenue than

top performers

65% Of a persons time

is not spent selling

Cash Flow Problems

Cash, or the lack of, is the lifeblood of a company. Cash flow problems are responsible for 70 percent of businesses failing. Issues like low profits or high losses, over investment in capacity, over production, allowing customers too much credit, over trading and seasonal demand can all contribute or directly cause cash flow issues to develop.

Don’t Just Survive – Thrive

If any of the previous issues mentioned above seem familiar you’re not alone. Small business owners are challenged in their pursuit of professional success. However, that doesn’t mean they have to work alone and toil through challenges as a matter of due course. Many small business owners have found the assistance of business coaches the next step toward maintaining a thriving business.

Over the past 10 years, coaching has gradually risen to a $1 billion industry - outpacing the growth of the consulting business. Currently, there are more than 40,000 coaches worldwide, in virtually every industry. According to a Right Management Consultants survey, about 47 percent of organizations surveyed see coaching as essential to their decision-makers.

Experienced business coaches provide small business owners with greater insight into the opportunities and dangers that may plague a company. AdviCoach’s unique coaching process provides information in every aspect of business and is customized to meet the needs of small-to-midsize businesses. By prioritizing a goal and implementing practical changes any small business owner can be empowered to make a positive change. Don’t you think it’s time to take the next step with the help of a business coach?

Cash flow problemsare responsible for

70% of businesses failing

40,000Coaches worldwide!

COMPLIMENTARY Coaching Session

(800) 289-0086Find out about how you can reclaim your business vision with one of our coaches.