I often see emails from readers asking for advice on establishing and managing a small business.
Although the whole of the Management Skills Courses site is focused on advice for business, I do appreciate that starting a small business is a very different proposition from being part of a large corporation.
I have done both, so I can speak from experience. I worked for a major blue chip company, based at its head office in Liverpool, then I moved to a small company where everything was down to me.
In the first instance, if I wanted advice on shipping, or a legal point, or taxation, I just needed to pick up the phone and speak to our expert on the topic.
In the second instance, I would think “Who looks after that -oh wait, it’s me!! “
Then I had to find someone who could offer the advice and support that I needed. Preferably free of charge!!
So, I have decided to write some modules aimed at people establishing and managing a small business, working in a small company, perhaps as sole traders.
Duncan Bannatyne, a well-known Dragons Den investor and serial entrepreneur said in his autobiography that in the early days he spent one third of his time raising money, one third dealing with regulation and compliance administration, and one third running the business. I can relate to that, running a small business is definitely not easy, and running the business is not the only call on your time!
So what are the skills you need as an entrepreneur?
I have covered this on a sister website, which you are welcome to visit. It is free to enrol. The site offers advice on career management, including cv writing, job search and interview skills. In this module, we look at the skills entrepreneurs need, their characteristics and attributes, and offer tips for starting a new business.
I won’t repeat all of that here, but I do urge you to read all these lessons
Please bear in mind that this has to be generic advice I offer here. Whatever country or region you are operating in, it will almost certainly have its own local taxation, regulatory and compliance regime. I can’t cover them all -we literally have readers in every single country in the world. So I won’t go into detail about these things. You will be able to find advice locally on those issues.
Small business failure rate
According to the US Small Business Administration Office of Advocacy, it used to be said that 50% of new businesses fail in the first year, with 95% failing in the first 5 years. Figures no longer bear this out.
Latest figures show that 79.9% of establishments started in 2014 survived until 2015, the highest share since 2005. From 2004 to 2014, an average of 78.5% of new establishments survived one year.
They also say that in 2013 there were 28.8 million small businesses in the USA, of which 80%, or 23 million, had no employees.
According to smallbusiness.co.uk, small business survival rates are as high as 91 per cent after one year of trading, but after five years just four in ten small businesses will still be trading, research finds.
You can see from these figures that a large proportion, around 80%, of small businesses are sole traders with no employees.