Managing to go the long haul in small business may be one of the most difficult things to accomplish. The number of small business start-ups that don’t make it past the first five years is astounding.
In the last few weeks, I have noted the retail and manufacturing locations of a small start-up for lease indicating they didn’t make it. That’s unfortunate.
This particular start-up was like many others. A guy had an idea. He saw a niche that he didn’t think was being filled and he thought he could make it work.
Unfortunately, if the niche isn’t being filled, there’s a good chance that there is a reason for the void. That’s not always the case, but it is an important one to consider.
I talked with this business entrepreneur many times. He wanted to partner with us in a few areas, but we never found a way to make it work. He had some creative approaches that could have worked. One thing he attempted to do was to give customers a discount for allowing him to add his logo to everything he produced for them. His idea was that getting exposure was important. I don’t know all the details, but the exposure-for-discount tradeoff is one thing that couldn’t be sustained.
While getting exposure is critically important, controlling cost of goods may be even more critical. And that is something small business owners frequently overlook.
If cost of goods is too high, there never will be cash flow to cover operating costs.
Making the long haul requires a consistent approach to marketing and exposure that must make sense for your particular business. Screaming advertising can’t be maintained over the long haul. And, discounts that undermine cost of goods ratios eventually erode the business model.
Going the distance requires consistent customer service and quality product. It may not always provide the lowest price but will provide the best value. Making small business sustainable is a lot more complicated than it appears.
