At the risk of sounding flippant, why would anyone choose to start a business? Sure, it’s a rewarding experience and it offers autonomy, freedom and many other benefits. But hands down it has to be one of the most trying ways to earn a living…
Those that make it through the tricky start-up years simply have-to-have spades of persistence, agility and a mental toughness to weather the many and various challenges. Kudos to those of you who have. And kudos to those of you currently contending with the challenges of the first few years.
1. 58% per cent of businesses that started in 2010, ceased operation by 2015
2. 326,000 (70%) New Zealand businesses are sole operators
3. A total change in lifestyle is the leading reason Kiwis start their own business
According to the Ministry of Business, Innovation and Employment (MBIE) Small Business Sector Report 2014, 97 per cent of New Zealand businesses are small, employing less than 20 employees. But despite their size, small business in New Zealand contributes an estimated 26 per cent of GDP and employs 29 per cent of the workforce.
To put that into context – 97 per cent equates to 459,300 New Zealand businesses, of which 326,000 are sole operators, with no staff. That’s a huge number of Kiwis deciding to go it alone and give business ownership their best shot.
Survival of the fittest?
It is never plain sailing for Kiwi entrepreneurs, as the graph below highlights. Thinking that business ownership will be straight-forward is simply a recipe for distress. Until you get into the detail of running your own business, it’s hard to comprehend the personal and financial demands, in particular the absolute necessity of becoming an exceptional problem solver and juggler.
According to MBIE’s Small Business Factsheet 2016, 58 per cent of small businesses with no employees that were born in 2010, were no longer operating in 2015. The survival rates are similar for those with 1 to 19 employees.
So what makes business ownership best suited to the bold?
According to MYOB’s Business Monitor, Mind Your Own Business 2013, the leading reason Kiwis decide to go into business ownership is a total change in lifestyle. Which, is a good thing, because that’s exactly what it entails.
Being able to cope with the accounting aspects of running a business; the many IRD requirements; employing the right staff – not just any staff; managing costs and cash flow; marketing your business; putting an appropriate value on your time; not to mention how you fund your business… The responsibilities and different skills needed are many and intense, and while a change in lifestyle is guaranteed, what that lifestyle actually looks like can be a bit of a shock. In fact, when you look at what it takes to make it, it is no great surprise that so many businesses fail in the first couple of years.
What it takes to make it
There are plenty of articles that wax lyrical about the joys of business ownership. And yes, there are many. But those who have put in the hard yards know that the rewards only come from battling through tough times.
Success is derived from all sorts of factors, unique to different businesses. But at a personal level – it’s about having a mental toughness to overcome the many challenges. Some of the key things we’ve been told by business owners over the years are:
You have to enjoy the tough times – there will be plenty: There’s no throwing the towel in on a difficult day and leaving a challenge to someone else in business ownership. The buck stops with you. You simply have to get comfortable with the fact that business ownership will always feel like a 10,000-piece puzzle with constantly changing pieces. Sometimes the pieces fit; sometimes they don’t. It’s up to you to rearrange them.
Be your own worst critic: Everyone can always do things better. Resting on your laurels and thinking you’ve cracked it is the first step to irrelevance. Not everyone wants to be the next Sir Richard Branson, but whatever the scale of your business and reasons for doing it, casting a critical eye over your business everyday is essential.
Forget the lifestyle – at least for the short and medium term: Sure, you can enjoy the autonomy and freedom of business ownership from the outset. But they are luxuries that come with a price. Long hours; new challenges never before experienced; an entirely new level of financial worry… It takes a lot longer to get to grips with all the aspects of running a business than originally anticipated.
As we said earlier, kudos to those who have made it through the first tricky years and have achieved a degree of security in the ever shifting world of business ownership. It’s a huge achievement built on incremental wins. If you’re ever referred to as stubborn, take it as a compliment. A stubborn refusal to fail is more than likely a key reason for your success.
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