The Small Business Administration is one of the first resources that come to mind for many small business owners looking for guidance or help. And for good reason, since the promise of government-backed loans and free advice sounds like a pretty good deal.
Having run multiple startups and grown them to become multi-million dollar entities, however, I can tell you that the guidance provided by the SBA just barely scratches the surface of what business owners and entrepreneurs need to know to be successful. To add insult to injury, most small businesses are denied SBA loans, and according to data published earlier this month, the SBA is continuing to cut back on their government-backed loans to small businesses. In other words, the SBA means well, but the resources they provide leave much to be desired.
So how are small business owners and aspiring entrepreneurs like us supposed to carry on? The good news is that there is a wealth of information and lessons to be learned from entrepreneurs that have actually been in the trenches and run their own businesses. Below are five things that the SBA was never able to teach me, but are critical lessons for any entrepreneur:
Most small businesses don’t fail due to lack of money. No, that is not a typo. While it is true that most small businesses fail, it is not true that lack of money is the root cause of most failures. Instead, running out of cash is typically a symptom of deeper problems. I started my last companies with literally $0 down, no business loans, and no outside investors, but I was able to turn it into a company that generates tens of millions of dollars per year. While securing a loan to start up your company would be nice, the reality is that it is more important to develop a viable product or service, market it effectively, and establish tight financial controls that ensure you won’t prematurely run out of money along the way.
Starting a small business is easy, but growing a small business is hard. SBA and other small business consultants tend to focus on the steps required to start a business, but rarely do they outline the problems and approaches required to manage growth. In each of my startups, I found that growing the companies was multiple times harder than the initial startup. Even finding that first round of customers willing to pay for my products and services was much easier than the pains and headaches that come with growing my companies. Stay tuned to this blog for more advice on managing small business growth.
Building your operational processes and procedures may be the most important thing you do. No matter how great the idea is or how much cash you have on hand, clearly defining how you want your business to run may be the most important thing you ever do as a business owner. Without it, you won’t be able to effectively grow your business and offload the day-to-day work to others. While running functions such as customer service or delivery of your product or service may be second nature to you, you need to clearly define and document those processes for everyone else that may eventually perform those functions for you in the future.
Small business CEOs need to hang tough and keep a strong stomach. No amount of high-level advice or loan applications can prepare you for the challenges and curveballs that you face as a small business owner. Market resistance, disgruntled employees, lawsuits, financial strains, and a host of other obstacles can crush the faint at heart – even for the best run small businesses. It’s important to have perseverance and consistency to power through those challenges. The good news? Entrepreneurship and small business ownership can be extremely rewarding at the same time.
There are better small business training courses out there. Even though the SBA provides high-level small business training courses that don’t adequately prepare you for all the things you need to know to run your business, the good news is that there are other options out there. Whether you are looking for small business marketing and sales advice, tips to manage your finance and accounting, or proven methods for managing employees, look for training courses that are proven, practical, and provide an actionable framework that you can apply to your small business right away.
To be fair, the SBA isn’t the only organization that falls short of its goal of helping small business owners. Small business coaches, flavor of the month startup tips, and even mass media magazine articles do little to provide tangible and actionable steps to help people like you to successfully start, manage, and grow your small business.
Interested in more information like this? Learn more about some of the more in-depth action-items and frameworks created by actual and successful entrepreneurs by registering for our free upcoming Small Business Boot Camp.