Hooman Nissani Highlights 3 Mistakes to Avoid When Starting a Small Local Business
More people than ever before are choosing to exit the corporate jungles or factory floor and launch a small local business. However, about half of these fledgling enterprises will have their wings clipped within the first five years — and only about a third will make it to their tenth anniversary.
Naturally, there are some factors that drive success — or prevent it — that small business owners cannot anticipate or control. For example, the Great Recession that erupted in 2007/2008 sideswiped thousands of small businesses that suddenly found themselves cut-off from essential working capital to keep their operation afloat. And of course, even the best laid small business plans can be laid to waste by Mother Nature or, increasingly, by cyber criminals. Research shows that 40% of small businesses don’t re-open after a natural disaster such as a hurricane, and 60% of small businesses fold within six months of a major cyber attack.
Yet, there are many things that small businesses owners can — and frankly, should and must — avoid in order to give themselves the best possible chance of long-term success. According to car dealership mogul Hooman Nissani, here are three preventable mistakes that many entrepreneurs make when starting a small local business:
1. Neglecting to Perform Market Research.
Among the most common — and usually the most costly — mistake that many small business owners make, is that they neglect to perform market research to assess three critically important things: whether there is sufficient and sustained demand for their products or services; whether the current level of marketplace competition would allow for a profitable new entrant; and, how they will respond if their success attracts aggressive and deep-pocketed new competitors into the marketplace. Unless all three of these areas have a green light instead of a stop sign, then entrepreneurs should postpone their plans or face what will likely be a miserable future. Market research should never be anecdotal or superficial. Hooman Nissani explains that the research needs to be objective and rigorous and be completely free of any confirmation bias. In other words, entrepreneurs must discover what they need to know, not what they want to know, and integrate that data into their comprehensive business plan.
2. Underestimating the Commitment.
Launching and leading a small local business can be incredibly rewarding, both professionally and personally. And it can be even more gratifying if it comes on the heels of years of working in difficult — or just plain miserable — work environments. Yet, entrepreneurs who underestimate the time, effort and money commitment of launching a small business are invariably setting themselves up for failure and stress.
Hooman Nissani states that: “Launching a small business requires making constant, sometimes daily adjustments while always staying focused on the business plan and overall vision. Some days are exhilarating, and some days are terrifying. Entrepreneurs who survive and thrive treasure the good days and persist through the bad ones. Forget the notion of overnight success. There’s no such thing. It’s a lot of hard work, sacrifice and sleepless nights. But the rewards are tremendous, and the only regret that successful entrepreneurs have is that they didn’t start sooner.”
3. Not Hiring Talent or Outsourcing.
Virtually all small business owners need to get used to wearing multiple hats. In the morning, they may be selling products or services. In the afternoon, they may be negotiating with vendors and suppliers. In the evening, they may be figuring our supply chain logistics. However, there comes a point — and in some businesses, it can be days, weeks or months after opening day — when it’s either profitable or essential to expand the roster, either by hiring new talent or outsourcing key functions. Unfortunately, some small business owners get so accustomed to running the show, that they end up undermining
their own success. Contrary to what it can look like from the outside, small business owners that refuse to let go of the reigns aren’t necessarily control freaks. Hooman Nissani notes that they’re usually just hyper-concerned about misallocating capital and heading down the wrong path. Working with a credible business coach can be quite helpful. Sometimes an outside perspective is invaluable.
The Bottom Line
There is no magic wand or secret formula to small business success. It takes a mix of doing the right things at the right time (and with the right people), and as highlighted by Hooman Nissani, avoiding costly and potentially catastrophic mistakes along the way.