The post pandemic outlook is promising with new businesses cropping up in great numbers; now to ensure their success.
December 6, 2021
By: Bobby Casey, Managing Director GWP
But the world is quasi-opened up again, and between the harsh economic policies in 2020 and the follow up policies in 2021, I’m watching how the market is responding.
Here is the reality: we’re all in the same ocean, but we’re each in different boats. We each have a different experience. Some will see more damage than others; some will see more opportunity afterwards. It all depends on where you are and what you’re in.
We see this more starkly when we look at the fallout of the pandemic in developing countries and first world countries. If were were all brought down a peg or two, those in first world countries might’ve lost their jobs while those in developing countries lost access to food and water entirely.
This is what policy-makers don’t understand. There was a movie called “Breaking the Waves”. The general plot was there was a man and woman who were deeply in love and got married, but he had to go out to sea for several weeks. She couldn’t bear it, and begged for him to return sooner. Time and again, she was told no; but she insisted upon his return no matter what.
And so he returned before his planned date. In a pine box.
The allegory being: when you’re so fixated on a singular outcome, you lose sight of the costs to get there. In the case of policy-makers, they outright ignore them.
Out of all this came a growing distrust in central planners. And that’s where things get interesting. Societies swung hard toward dependency on the government, then the government failed. So they turned to the private sector.
People moved to less expensive areas. They got more home for less money. “Rising prices, a dearth of homes on the market and the ability to work remotely motivated many Americans to relocate last year, especially those eager to move out of dense urban areas in the Northeast like New York City in favor of more suburban areas.”
People took a chance on starting their own businesses.
Heightened fears, new mandates and regulations, an even more aggravated clientele make going back to work for some not worth it.
We’ve heard about the nearly 9.4 million businesses that either permanently or temporarily shut their doors. How many will return is yet to be fully settled.
But it’s also worth noting the number of businesses that started during the pandemic:
The start of 2020 saw fewer people start new businesses in the US. New business statistics from the first quarter of 2020 show that there were a total of 840,529 applications (a 3.93% year-over-year fall).
Q2 2020: 907,714 new business applications—a 7.99% rise from Q1 and 4.27% increase year-over-year.
Q3 2020:1.46 million new applications were filed—a 60.9% quarterly increase and a 69.9% year-over-year increase.
Q4 2020: 1.1 million applications
Q1 2021: 1.37 million applications
Q2 2021: 1.44 million applications
I think this is absolutely incredible considering the statistics out there on small business survival. I don’t mean this in a discouraging way. In fact, quite the opposite!
The fact is: statistics are a luxury consideration when you need to survive. I lived in Mexico for a good amount of time during the pandemic. No matter what the politicians said or wrote down, the reality is, too much of that country lives day-to-day. To shut anything down would have condemned them to death by poverty.
That understanding was and still is clearly reflected in their halfhearted efforts to enforce any pandemic related measures out there.
The statistical claims of COVID were utterly irrelevant to those who live day-to-day. The more pressing reality was they needed to eat and feed their families.
The same behavior is happening with entrepreneurship. Here are the grim stats of failure:
20% fail in their first year
30% fail in their second year
50% fail by their fifth year
70% will fail by their tenth anniversary
The mortality rate of small businesses is higher and at higher risk than any of us are of dying from COVID, and yet people took the plunge!
This is great! It restores hope because it shows defiance and resilience; ethics I thought died in the early 2000s to be honest.
I want everyone to succeed, though, and it is certainly possible. Failure isn’t arbitrary. In fact, it’s widely chronicled, so there are ways to navigate your business successfully.
With a proper business plan, you can avoid the common pitfalls entrepreneurs have:
Define success and define failure based on each of your goal thresholds. All those failure statistics don’t give the full picture of what “failure” is. Those numbers include people who sell off their businesses and retire, too. That’s not failure at all, but their doors technically closed so it gets lumped into it. Likewise, these statistics don’t define success. Hanging by a thread isn’t success, either. Is success a revenue goal, a profit goal, or even building out your website under budget? What is your key performance indicator for each interval of goals? Another major factor to consider is the industry you are getting into. If it’s based on a fleeting trend, your business might follow suit.
Deeply understand your competitive landscape. What are they doing right? What are they doing wrong? Where are they doing it? And most of all, how saturated is the market? Timing is everything, and so is learning what sets you apart from everyone else. A proper analysis of your opportunities and threats in the market can inform how you can then define your competitive advantage.
One of the biggest challenges is balancing the plan. The plan is there for a reason: so you don’t make erratic decisions. Rather, everything you do is calculated and accounted for. Likewise, if the winds change and you need to optimize, you have to give yourself the space to have that conversation and explore your options. Finding the right amount of wiggle room is one of the most difficult struggles of owning a business because it’s literally different for everyone. Remember: you have no obligation to continue making a mistake a moment longer than it took you to realize it. If what you planned turns out to be wrong, pivot. If you can do better at your plan, do better.
Management and Marketing are two very vulnerable areas in businesses where the trade has nothing to do with either. It turns out you can be a total wizard at making widgets, but have absolutely no business sense or marketing savvy. This is where you need trusted partners who are strong in these areas to help you. Someone who will help you stick to and ride out the business plan, and someone else who understands the efficacy and nuances in marketing. In both cases there are a lot of distractions and temptations that can derail a business. It’s important to invest in the brain trust that keeps you on the straight and narrow.
Most of all it requires your objective honesty. These are things small businesses lie to themselves about regularly. If you’re thinking about starting a business of your own, let’s talk! We can discuss how best to set you up for success.
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