How to ensure your business beats the statistics.
January 5th 2022 was the first day of my 8th year of trading. That's 7 full years in business, paddling my own canoe and in that time I've learned a lot about myself, being a business owner and what works and doesn't as an SME business services provider.
As follows are my initial reflections, thoughts and the areas I'll focus on, within my business, to ensure it's still around to serve my customers for at least another 7 years. But first some high level statistics from the Office of National Statistics (ONS).
Over the last 7 years in the UK; (link to ONS website)
- The number of registered businesses trading has increased by 330,000 however the annual pace of new businesses being established is slowing.
- On average, 10.5% of businesses stop trading per annum. "Business Deaths" is the term ONS use, which means they no longer exist, which may be for a number of reasons. This attrition rate has been steady for the period.
So, in 7 years a total of 73.5% of businesses that were started in early 2015 have already stopped trading!
At first glance, Wow that's a high figure! Does that mean my business is one of the 26.5% that started in 2015 that has survived over the last 7 years?
When you drill into the detail, based on the statistics, different industry sectors seem to be much more volatile than others, with higher business start-up rates and similarly failure rates; Professional, Scientific & Technical Services had the highest churn rate (% of business births and deaths), followed by Business Admin & Support, Construction, Transport & Storage and the Retail sector. It's not that these are weak business sectors, however my experience through delivering business advice and consultancy is, I've found these sectors do seem to have short business life cycles with many business owners, often sole directors, changing tack often, going back into employment, due to the highly competitiveness nature of these sectors along with the volatile external market factors which plays a big part too. But I'm sure there's other reasons too.
So what have I learned in the last 7 years and what's worked for my business?
Reviewing my live customer list, due to the business services I excel at, I've gravitated to business sectors which are less impacted by the varying external factors and also where there seems to be less volatility of business births and deaths. i.e. Health & Education, Finance & Insurance, Motor Trade, Wholesale, (B2B Products and associated Services) and the Property industry sector.
As I've focused over the last few years on sustaining a healthy monthly revenue, through delivery of business consultancy services and without having to deal with the high peaks and low troughs, I've focused on longer term customer relationships. This has meant, rather than going for volume and high churn transactional work with many different clients, I've focused on dealing with less of the right sort of customers,
However, like most new business owners, in the first couple of years trading I said "Yes" to most business opportunities, whereas now, I've learned to be much more selective in the type of work, type of client and always look at the longer term prospects, rather than just saying yes to any quick revenue earning opportunities.
Another learning and how I have adapted my services has been to expand and share further, my knowledge and experience to support clients beyond just formulating a Strategic Plan, which is often the easy bit, that many other consultants could and can deliver.
In most cases and to differentiate (USP), I work continually on a regular basis, supporting my clients through the implementation phase by;
- Helping put together Business Plans to access finance, funding and engage potential investors.
- Recruitment support, from assisting with scoping out the job specification, person fit, approaching potential candidates, personal profiling and supporting through facilitating the interview and selection process.
- Coaching and Mentoring not just the business owners, but also their senior leadership team, managers and future stars.
- Facilitating Staff Engagement Sessions and workshops.
- Carrying out Market Research and Strategic Planning
- Financial Planning, forecasting and scenario planning.
- And Exit Planning, In the last 12 months, I've been involved supporting an MBO, a transfer of business interest (main contract) to a 3rd party and assisted in the sale of a couple of businesses.
Therefore going forward I plan to continue to develop further complementary services and will tap into expertise through the many specialist business associates I have connected with over the years. At the same time I will observe and listen to my clients needs and challenges and continue to adapt to support many of my customers for the foreseeable future. It's my goal for my business to still be around to ultimately see my clients fulfil their visions and potential.
"If you stand still, there is only one way to go, and that's backwards" Peter Shilton.
As we enter 2022, there's still a lot of uncertainty causing the business market environment volatility, driven by the Covid-19 pandemic and here in the UK Brexit impact too, I believe as we reach mid to late spring, the future will be brighter with business opportunities for all.
However, now's the time to spend planning and getting your organisation and team match fit and being ready for the next phase in your business growth transition.
Chances are we have started the year, all busy, dealing with challenges such as;
- Shortage of people with the ideal skills and knowledge.
- The increasing day to day demands from our customers, staff and suppliers
- Short term inflation driven cost increases,
- Interest rates climbing
Therefore, if you are looking to have a more sustainable and enjoyable business along with gaining the time to pursue other interests, take some time out and do just get in touch with me. I'm more than happy to meet (face to face or virtually) over a coffee to listen and chat and share my thoughts on what the most appropriate plan would be for for you and your business during 2022 and beyond.
Happy New Year and I trust it is a prosperous one for all.
Peter Fleming -