How your small business can prevent a sudden closure — Alan Weiss

There has been a record number of new businesses opening in the U.S., yet a number are suddenly closing as well, and that is something no business owner wants to think about or experience. On today’s The Small Business Show, we’re joined again by Alan Weiss, business coach, speaker, and New York Times best-selling author, who discusses his latest book, Sentient Strategy, and walks us through why some businesses suddenly fail.

The most significant hazard for most small-to-medium-sized enterprises is the genuine risk of sudden closures after they launch. According to data, 60% of new businesses fail within the first five to six years, and 60% of the surviving companies fail within the next ten years. However, Weiss believes there is a dramatic difference in growth stages for small businesses before they stabilize. They may start with a good idea, get family support, and then draw people in. But “For the most part, that’s not enough.” 

For example, Weiss explains, “In Rhode Island, a hot restaurant will open, and maybe because of the demand, you won’t be able to get in. So, say you try again the next month, well by then, they’re out of business.” Typically, people will start a business with a good growth mentality, but it also has to be profitable. According to Weiss, “You can’t afford to grow without profit.” Typically, what happens is people will get addicted to the popularity of opening their first establishment that they ignore certain things which end up costing them in the long run. 

Leadership roles

Weiss says, “Leadership is everything.” The critical aspect of leadership relies on the tendency to overlook the financial issues for small to medium size businesses. For example, they’ll get enthusiastic and possibly over-hire. “They’ll hire an excess in demand, but they should wait for the demand and then hire,” notes Weiss. Additionally, Weiss believes small businesses will miss small details. He explains, “When you’re running a small business, whether new or mature, responsiveness is everything.” It’s about how quickly you can get back to people. He also asserts, “If people improve by one percent daily, in 70 days, you’ll be twice as good.”

People in small firms prioritize their own capabilities over the needs of the clientele. So they frequently turn their passion into a business, but they need to consider the value they will provide and the characteristics of their ideal client. Weiss contends that you shouldn’t open a business if you can’t explain how to connect with your clients or attract them to it.

Key takeaways

If you’re a small business owner and you want to avoid a sudden closure of your business, then you need to remember:

• You need to be able to identify your value
• Identify your customer
• And ask yourself: How do you stand out from the crowd?

If you can’t answer any of those questions, it’s time to reevaluate and grab your copy of Sentient Strategy.