Many people want to run their own businesses. Why? The reasons are many and varied. To turn an idea into reality. To call the shots. To prove oneself. To get away from the dreary nine-to-five. To make more money.
That’s the dream. Then there is reality. Nobody wants to think about their business failing, but businesses do.
Statistics from the Government of Canada report that, on average, between 2002 and 2014, 98 percent of new firms survived their first year. Just 63 percent survived after five years, and only 43 percent survived after ten years. In 2013, for example, the total number of births of small and medium-sized businesses in Canada was 78,430, compared with 83,240 deaths, which resulted in a net decrease of 4,810 businesses for that year.1
Be Prepared
What’s the best way to avoid becoming an unhappy business statistic? Start on the right foot—be prepared.
Being prepared is more than believing you have a product or service people need. It means assessing your market, knowing your competition, having adequate financial resources to start out, understanding what your financial statements tell you, and recognizing your legal responsibilities.
Being prepared means doing some planning and putting things down on paper. It’s called a business plan. A business plan itemizes what you intend to do in your business. More importantly, it makes you accountable for what you do. Reviewing it regularly makes you consider whether your business is running according to plan or whether your business and/or plan need to be revised.
Know Your Risk
Financial management is one of the key things that determines whether a business succeeds or fails. Cash comes in from customers. Cash goes out to suppliers. Money is always moving. But are you really making money? How long can you afford to operate without a profit or without paying yourself?
Financial management can be overwhelming when all you really want to do is do what you’re good at: work with your customers, build your product, and develop your ideas. If, however, you’re not making money over the long run, you risk not only the money that you, your family, and your friends put into the business, you risk your credit rating and your financial future. At some point, you’re going to want to retire.
Understanding where you are financially will tell you what you need to change, whether you are “right-sized,” and even if you can afford to stay in business.
Need Some Help?
Small and mid-sized enterprises, often called SMEs, are a significant contributor to the Canadian economy. In 2015, they employed 90.3 percent of the private sector workforce.2
Recognizing just how crucial small and medium-sized businesses are, the Niverville Chamber of Commerce alongside Niverville’s town council are developing a business enhancement program to provide information and assistance to SMEs in their early years.
If there is enough interest, they plan to host a Welcome to Business seminar in October or November to talk about business basics. They are also identifying mentors who can assist business owners in navigating their early years.
Making a business successful is hard work. Your local Chamber of Commerce would like to lend a hand.
