How Can I Failure-Proof My Business? (Short Answer…..You Can’t!)
As a college-level business entrepreneur instructor and Small Business Development Center counselor, I actually get asked this question a lot: “How can I failure-proof my business?” People who start businesses always seem to be looking for some kind of guarantee to make sure their ventures will not fail. To my knowledge, such a guarantee does not exist. Even if the business owner does everything right, his or her business could still fail through any number of outside influences. Let me give you a few examples.
All of us remember the terrible consequences of 9/11. After the horror of watching the towers go down, most people quit investing and for a period of time just sat and reflected on what had happened. For a year or more, we all lived in a state of shock. During this time, a bunch of businesses went under because investors held back capital while consumers stopped buying, having made the conscious choice to hold onto their money. The failed business owners didn’t do anything wrong. There was absolutely no way they could anticipate what happened on September 11, 2001.
Here’s another example: During the current economic downturn, many real estate firms and mortgage companies went out of business because the real estate market tanked. For more than 35 years, the homes I’ve owned always appreciated in value. Today, my home is worth a lot less than it was worth three years ago. Who could have anticipated such a trend? Real estate was never supposed to depreciate in value. This fact was something I had always been taught. Never in my wildest dreams would I have believed my home could be worth less than what it had been worth the previous year! Yet, that’s what happened—and businesses went under because of it.
Lastly, look at the oil spill crisis in the Gulf of Mexico. Who knows how much this disaster is going to damage British Petroleum? More to the point, how many business owners that rely on clean water and clean beaches for their livelihood are going to be put out of business by the spill? These small business owners could never have anticipated a catastrophe of this magnitude.
Because we can’t control or anticipate every factor that can adversely affect our business ventures, we are stuck with the knowledge that there is no iron-clad guarantee our business will never fail. What can we do to give our enterprises the best possible chance of succeeding? I believe that by following four simple rules, we can stack the odds in our favor and become highly successful business owners.
Four Simple Rules for a Successful Business
- ALWAYS be honest in your business dealings!
People will naturally do business with someone they believe is honest with them. Honesty builds a great reputation and great reputations give businesses a big competitive advantage in tough economic times. Honesty increases your chances of success.
- ALWAYS provide the best products or services!
If you provide the best products or services, you will automatically stand out from the crowd. Offering something better than your competition will get you the word-of-mouth marketing that will keep you going in tough times. Having customers say great things about you is a solid way to boost your business.
- ALWAYS treat your customers as you would like to be treated!
The Golden Rule is not just for church: It also works great at keeping your customers from straying to your competitors. If you treat your customers with respect, they will be far less susceptible to low-price competition, a tactic a lot of companies employ to “buy” business in tough times. Treating your customers the way you would like other businesses to treat you is just good business.
- ALWAYS save for a rainy day!
This last rule—saving for a rainy day as in economic downturns or acts of God or man—is almost never talked about, written about, or discussed. You read a lot about continuing to invest in your business for continued growth, but you rarely, if ever, hear someone say you should be putting at least some of your profit into a nest egg to make sure you have something to fall back on. If the last few years of our roller-coaster economy have taught us anything, it is that no one can predict the future—and having something in reserve when times get tough is probably the surest way to keep your business in the black.
If you would like to learn more about how to failure-proof your business, or get the inside scoop on business entrepreneurship, please feel free to e-mail me at email@example.com