No one sets out to start a business that will fail. Yet too often, new business owners make fatal mistakes that could have been avoided.
Take the couple I met when I owned an inn in Bar Harbor. They had retired to Maine with the dream of owning a bed and breakfast inn. They purchased a Victorian home next to mine and invested their retirement savings into renovating the property.
After several years, they opened their doors to welcome their guests to their beautiful guest rooms. It was their first season in business. It was also their last.
They had plenty of business, but there was one major problem. They came to the realization that they really didn’t like “people.” (Especially people who put their drinks down on their fine antique furniture.) They quickly discovered that inn keeping was not for them. They went out of business.
Jane Searles, who counsels small businesses in her work as Regional Manager and Microenterprise Trainer for the Maine Centers for Women, Work and Community in Bangor, stresses that if you’re thinking about going into business, you should have some experience in it and be sure you love what you do.
“Owning a business is a 24/7 commitment, so be sure it’s something you enjoy,” she says.
I spent several years working for another inn before I purchased my own. I went into my business knowing that I would be spending my summers tending to guests, cleaning toilets, changing beds and getting up early to serve breakfast. I loved the work and the people I met — most of the time.
Not having enough cash is another common mistake new business owners make. According to Tom Gallant, Director of the Maine Small Business Development Center in Bangor, “Many businesses fail because the owners don’t have enough capital to start the business. But they start it anyway — hoping for the best.
Gallant adds,”Sometimes a business fails due to circumstances beyond the owner’s control, so don’t start a business unless you can afford to fail. In other words – don’t risk everything you have.”
Searles agrees that having enough capital and understanding cash flow is critical. “To really understand the numbers you need a well thought out business plan,” she says.
Gallant concurs. “You need to manage and understand your numbers,” he says. “They tell you where you’ve been and where you’re going so you can make adjustments along the way to better manage your business.”
Another way to avoid business failure is to reach out to others for assistance, guidance and feedback, as too often we fall in love with the “idea” of a business. My innkeeper friends admitted they had this romanticized notion of owning a B&B in New England but were not prepared for the realities of the business.
You can avoid this mistake by taking advantage of the many resources available to help you develop a business plan. Part of that process involves asking tough questions to come to a complete understanding about what it will be like and what it will take to be successful in your business.
“Sometimes people decide not to go into business after working on their business plan. That’s a good thing. It’s better to figure out that a business is not for you – before you invest your time and money,” says Searles.
There are many free resources in Maine that can help you develop your business plan, such as the Maine Centers for Women, Work and Community and the Maine Small Business Development Centers.
In addition to reaching out to organizations for assistance and support, Searles and Gallant recommend building a team for your business to include an accountant, attorney, insurance agent, business counselor and mentors.
As Searles says, “You can’t possibly know everything you need to know to be successful in your business.”
So if you’re thinking about going into business, you can greatly reduce your chances for failure and improve your chances for success simply by taking time to be sure you know what you’re getting “inn-to”.