According to the Australian Bureau of Statistics, more than 60% of small businesses cease operating within three years of launching. Given there are more than 2.2 million small businesses nationally, that’s a lot of dashed hopes and unfulfilled dreams.
At the other end of the spectrum, many small businesses go on to achieve phenomenal growth and great success. So what are the key differences between the SMEs that make it and those that don’t? While there’s no “silver bullet” to achieving success as a small business owner in Australia, there are certain characteristics that many entrepreneurs boast.
1. They’re hard workers
Successful small business owners are driven to succeed and understand that working hard in their business is vital to achieving their goals. Being your own boss certainly has its benefits – but long hours and work weeks, a small salary (or no salary at all if you’re investing your income back into the business), limited time off and significant blurring between work and home are common challenges that SME owners face into, particularly during the early years of a startup.
2. They’re passionate
Passion for their product or service is what drives successful SME owners during the tough times. Starting and running a small business is challenging – you’ll face into numerous issues you expected and many you did not. Whether you’re struggling to find clients, wrestling with erratic cash flow or have been left in the lurch by a supplier, without an unwavering passion for and belief in what you do it can be tempting to give up during times of adversity. The majority of small businesses in Australia close within their first three years of operation. To succeed against these odds, a healthy dose of passion is essential.
3. They embrace change
Heraclitus, the Greek philosopher, is known for his saying: ”Change is the only constant in life.” Savvy SME owners know that to grow, they must continue to reinvent themselves, responding to a marketplace that is changing more rapidly than ever before. How will you react if a new competitor starts selling the same products you do at a significantly lower price? What if one of your products suddenly becomes effectively obsolete due to emerging technology? Successful small business owners are continually scanning the market and anticipating the next change to give them the best chance of staying ahead of the game.
4. They’re persistent
Along with passion, persistence is key. It can be tempting to take an “it’s all too hard” approach if your business or industry is going through a slump, but the SME owners who show up every day and do the work during tough periods are the ones who’ll get ahead. Making the cold call, dropping in on customers who haven’t placed an order in a while – these are the sorts of things that persistent owners are doing when business is slow.
5. They’re resilient
As a small business owner, it’s inevitable that you’ll face setbacks – no matter how successful or longstanding your business is. Business can often be cyclical – one month you’re setting new sales records or celebrating a major product launch, and the next a competitor is chasing your biggest and best clients. Successful SME owners understand that navigating these ups and downs is an essential part of being a leader. They’re resilient and able to bounce back from setbacks, often using them as motivation to refine and improve their operations.
6. They’re willing to learn from their mistakes
Accepting that things will sometimes go wrong is important – but learning from mistakes you’ve made that have contributed to problems is a must for SME owners. Whenever you’re facing into an issue, ask yourself – have I done anything (or not done something) that’s had an impact? Maybe a customer is disputing that they approved an order – do you have a signed contract or proof of purchase, are your terms and conditions clear, do you have a process in place where orders are cross-checked before being delivered? Likewise, if you’re managing many late payers, examine your invoicing and accounts receivable process to ensure you’re giving yourself the best chance of being paid on time.
7. They’re financially astute
Good financial skills are a must for successful small business owners. You may have a fantastic product, great team and outstanding customer service – but unless your business is financially viable, it’s likely to fail. You should maintain a budget that’s accurate, realistic and up-to-date with projections for income and expenses – and ensure you stick to it. If financial management isn’t your thing, hire someone to support you – a business without a solid financial foundation is at a high risk of failure.
A report by the Australian Securities and Investments Commission found that cash flow was identified as a factor driving insolvency for 40% of failed businesses. If a lack of capital is holding you back from achieving your growth aspirations, invoice finance could be a sensible solution.
Earlypay has provided Australian SMEs with flexible invoice finance solutions for more than 30 years. Call us on 1300 760 205 or visit www.earlypay.com.au for more information about how we can take the pressure off when cash flow is tight.