Increasing Your Business’s Resiliency
By Marshall Doak
Director of the Southern Oregon University Small Business Development Center

The coach is in
Statistics regarding the failure rate of businesses remain stubbornly consistent. Approximately half of new business starts are not operating five years later. Iconic businesses are all familiar with having difficulty remaining open, and a number of those in the retail sector have closed or are in the process of closing. With all the information regarding operating businesses efficiently and productively readily available, why do so many continue to have such problems?

While there are as many reasons for business closure as there are businesses that stay in operation, several reasons seem to stand out. Avoiding these common problems will greatly increase your business’s resiliency.
Underestimating how hard it will be to go into business. Going into business is almost always more costly, more time consuming, and typically fraught with problems not even conceived in advance. Once in operation, business volumes oftentimes lag expectations and projections. Remember, going into business is a statement that the revenues generated by all businesses will need to be split with a new entrant in the marketplace. Don’t expect existing businesses to be willing to share their livelihoods with a new entrant. Businesses which lack plans are more fragile than those with plans. Plans are organization and communications tools. They help businesses be efficient and productive. Plans include goals and metrics to communicate expectations, products and services, and for defining what success means to an operation, its employees, and customers. Failing to execute the plans developed. If your business does have a plan, then the failure to achieve the posted benchmarks gives you an idea on where to work harder to strengthen your weaknesses. Changes in partners over time. Partnerships, whether formal or as a LLC for example, are dynamic relationships. The best businesses have methods for one partner to assume the ownership of the other partner’s assets, should the desire or need arise in the future.   Failure to use financial statements to manage the business. If you are involved with ownership of a business, it is essential that you understand the financial condition of the business and to be able to project future expected income and expenses. Many future problems are avoided in advance through analyzing the financial conditions a business operates in.
About the Author:
Marshall Doak is an entrepreneur, manager, risk-taker and lifelong small business supporter who advises businesses in the Southern Oregon region as Director of the Southern Oregon University Small Business Development Center. He brings extensive production management, organizational development and non-profit management experience to help develop the entrepreneurial community within the region.  He and his wife Virginia live in Medford.

Tomorrow will be the same as yesterday and today.
We all talk about the pace of change in today’s world, recognizing that consumer preferences, technologies, markets, transportation and delivery systems are all changing around us minute by minute. Assuming that your customers of today will be yours tomorrow, or that the products you sell will remain the same as today is a misconception. Resilient businesses are constantly improving through planning, marketing, and financial reviews to guide future success.
Failing to manage risks.
Having secure systems in place, such as cash management policies and procedures, control over financial instruments, and maintaining a safe and orderly workplace are all risk management techniques that have prevented business failure by maintaining standards over time. Small investments to build systems and train employees pay huge dividends through reduced business losses.
Disaster strikes.
What will you do to save your business if disaster strikes? Do you have a plan in place to inform everyone who needs to know on what to expect? Will you be able to assist your employees, your customers, and emergency responders to mitigate losses? Having a plan in place will help you reopen if a disaster causes closure. Having the resources set aside and data backed up will greatly accelerate your recovery if the unthinkable happens.
Waiting too long to transition your business once retirement age approaches.
It is not a great time to start transitioning a business to new management or ownership right when the entrepreneur is ready to relinquish the helm. Business transitioning, or succession, is a process of identifying new leadership, training the necessary skills to the new leader, and introducing the identified leader to business decision-making skills. This takes time, patience, and is an investment into the retiring owner’s future cash flows as the business is gradually purchased by the new owners. Transitioning a business can be a delicate issue with its own set of risks to manage, but potentially one of the most rewarding if done well.
April: National Small Business Month
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