Small Business Consultancy

Over the course of my 14 years career experience, working at Procter & Gamble and The Clorox Company, and now as an Independent Consultant, I have seen too many small businesses fail, everywhere from US to Argentina, I have seen again and again business owners fail in the same traps and do the same mistakes that most of time put them out of business or in a very tough financial situation, that’s the reason why, from now on, I will spend part of my time trying to help business owners to accomplish their goals, important to note that small business accounts for 65% of US employment (new jobs) last 10 years and unfortunately only 44% will have a 4 year of operation, this two figures explain by itself the key role that small business will play in the future, not only in US but as well as in the rest of the world, especially in undeveloped countries where small business are the only way for most of the population to get some money and wealth.

So, which are those traps that I strongly recommend that business owners should avoid at any cost?

· Know your business: This might sound pretty obvious, but on the course of the years I have seen too many people that went into a business which they are not familiar with, the only logical result will be stress, financial losses and finally closed doors, is very important to go into a business that you know and masters from the very beginning, bottom line, go only into a business if you know all its fundamentals and you are comfortable with, any other reason like “this is a trending business” should be avoided.

· Know your customers and shoppers: Before invest a huge amount of money, probably your life savings and/or going into huge debt, you must know what customers demand in your area of business as well as you should understand how shoppers behave and what drive demand in the categories or services that you will provide, is desirable to have a hint on what trends are affecting your business as well as which one will affect the future.

· Lack of a solid business plan: “if you don’t know where you are going, any road will get you there” Lewis Carroll / Alice´s adventures in Wonderland. This is absolutely true, if you, as business owner don’t develop all your vision, strategy, goals, time frame to reach those goals, how to measure your progress, your financial metrics, your marketing and sales plan and finally, your contingency plan; you will be walking on the darkness and if by any chance you succeed, will be only because of luck, but trust me, sooner rather than later the lack of a solid business plan will take its toll and in the end, your enterprise will fail, and with it, your dreams, future and money.

· Miscalculated Cost, as well as sales and volume potential: Research, compare, analyze and then calculate all your cost from day one of the project or you will regret it, let me put this in the simplest possible way, if you launch your business without clear, accurate and realistic operating, start-up and initial costs, you are totally prone to fail in a matter of months, why? Because if all your assumptions regarding costs are wrong, all your financials will be wrong too and for sure your business will not make any money, this logic apply to your sales and volume potential too, I have seen over the years that most of business owners have the tendency to be over optimistic regarding the potential of the business they are going to start, especially the initial curve of volume is always miscalculated, this means, the gains in volume month after month until the curve gets flat, if it is true that you have to maintain a positive state of mind in every aspect of your life, is also true that you must base your sales numbers in solid figures and in a deep understanding of the market that you are going to cover, you should be aware of the different variables that impact your future business: prices range, competitors, trends, possible demand issues, customers’ requirements, shopper behaviors and finally market size, with all of this in hand you can calculate a more realistic number regarding your sales potential.

· Mispricing their products: As a consequence of inappropriate job calculating the operating costs you will probable set the wrong price range for your product or service, that will be bad news for your business because you will lose money on a daily basis and we know which will be the consequence, additionally you can misprice charging more than the average of the products or services that customers are willing to pay, if this is the case, you will lose sales and therefore money and again, the result will be the same, eventually going out of business, so, what can you do to set the appropriate price range: do a good job calculating all your cost, do a in depth price research (price points, promotions, margin, etc.), select a price range where you will compete based on your whole value proposition and then, after your product launch, monitor and control.

· Budget their own salary: Believed or not, most of the small business owners fail to budget their own salary for diverse reasons, this is a huge error than should be fixed from the beginning, two main reasons for this: 1) You never work for free, why should you do it in your own business? You must set a reasonable salary base, I recommend to use as base the salary in similar jobs in your areas as minimum and if by any reason the business could not afford it, you must review your numbers and take actions to fix it, if there is no way to include your salary, you should rethink your whole business, and 2) When a business owner fail to set his own salary, there will be a tendency to take money out of the business as needed for personal purposes, that will be a huge mistake that will compromise the financial performance of your business, therefore should be avoided at any cost, the best way to set yourself out of this trap will be earning, in a monthly basis, your fair salary.

· Become a Family job board: In tough economic times you probably have at least one close relative or friend unemployed, this is a terrible and undesired situation, but when you start your own business can be an additional burden, hard to deal with, why? Because you will be seen as the solution of the unemployment issue, not to mention, the rest of family members than want to be part of your success, therefore, I strongly recommend avoid to become the family job board that solve employment and unemployment issues in your family, this might sound a little bit unfair, but you cannot afford to exchange performance and business results to hire unprepared or unqualified relatives, even though that everybody wants to show solidarity and kindness with the closest ones, you must think twice before hire anyone, especially when talk about key positions that will play an important role in the future of your company, all of this off course, under the assumption of unprepared relatives, if you have among your family the ideal candidate for any given role there is not issue hiring he/she, the only catch is that the relationship should and must be maintained professional while working, this will help you to run your business in the best possible way.

Hope this small set of advice can help you in your enterprise; I wish you the best of lucks and remember, if you believe that all the workload that is needed to set up a business is too much for you, probably it is, so I finally recommend you to look for a professional Consultant that will help you during the whole process, and finally to succeed.