Why do most small businesses fail and how can you make sure that your startup isn’t one of them?
That was the topic of conversation during the latest This Week With Sabir episode, in which I spoke with micro business growth expert Danna Olivo.
Olivo understands what it takes to grow a micro business and avoid the disastrous pitfalls that these companies face, and she was happy to offer some of her priceless words of wisdom.
Here’s a snippet of what we discussed:
- Look to Customers For Direction: Customers are critical and honest, loved ones are not. Always take advice from your customers and don’t pay attention to the sycophants.
- Embrace The Challenges: You will encounter roadblocks, there’s no doubt about it. What defines you is how you deal with them.
- Find Opportunity in Chaos: As we saw during the pandemic, the most successful entrepreneurs are the ones who see opportunity in times of difficulty.
- Understand Your Demographic: There is not a single business that appeals to everyone. The sooner you realize this and find your demographics, the smoother your journey will be.
At the end of our 60-minute discussion, I asked Danna Olivo for her most valuable insight, one that could potentially earn micro businesses over $100,000. Be sure to watch to the end of the video to see her answer.
How To Avoid Failure As A Small Business Owner
“Most small businesses fail”.
It’s a quote that every founder hears at some point in their journey and it’s one that ostensibly “helpful” friends will often remind you of when you’re taking those first steps.
Unfortunately, it’s true. Fortunately, it’s not quite as dire as those statements suggest (20% fail in the first year, but 35% are still standing after year 10) and if you take the right steps and acquire the right knowledge, you’ll be ready to buck that trend and become one of the lucky ones.
That’s where Danna Olivo comes in. Olivo is an expert in all things related to micro-businesses. She is a marketer, entrepreneur, and business expert who helps micro business startups to excel in the competitive and saturated e-commerce climate.
Over the course of a 60-minute podcast (embedded below), she discussed some of the ways that a startup company can navigate the many obstacles that threaten their existence, ensuring their journey is a profitable one.
Getting Through Roadblocks
The path to success is riddled with obstacles, difficulties, mishaps, and mistakes. Business owners are not experts at avoiding obstacles and ensuring that things run smoothly. They are experts at dealing with those obstacles as and when they appear. If they experience a setback, they find a way to deal with it and get back on track.
In the words of Rocky Balboa, “It ain’t about how hard you hit, it’s about how you can get hit and keep moving forward.”
Danna Olivo knows this better than anyone. She admits that her route to success was far from smooth and problem-free. In fact, she has more than one failed business in her history. But rather than letting those failures define her and defeat her, she learned from them and continued.
Ultimately, that’s what defines a successful entrepreneur. It’s about overcoming adversity and finding opportunity in chaos.
The pandemic is a great example of this. It served as motivation for entrepreneurs that were willing to take risks and saw the potential that lockdown brought. For others, it caused them to retreat, stall their marketing, and wait for everything to blow over.
It was a catastrophic event that will define generations, one that we’ll still be talking about many years from now. But some entrepreneurs saw potential in that chaos and used it to launch businesses that catered for the sudden changes in consumer trends, including the increased demand for toilet paper, pantry staples, hand sanitizer, and home fitness products.
Some of the best entrepreneur advice I’ve ever heard was to always look for the opportunity in chaos, the order in anarchy.
Of course, there is a fine line between “profitable venture” and “egregious act”. Before the first 2020 lockdowns, there were stories of people buying all the hand sanitizer and toilet paper for miles around and then selling it off the back of a truck for a 20x markup.
That might sound like a smart business move, but you’re just profiting from fear and desperation by depriving a small town of essentials. That’s never a smart thing to do, nor is it ethical.
On the flip side, there were eco-friendly toilet paper suppliers who used those lockdowns to entice more people to their product, as well as manufacturers who began making hand sanitizer and other essentials following a quick pivot and renovation.
That’s smart, and it’s also ethical and helpful.
Knowing What You Don’t Know
Aristotle said, “The more you know, the more you realize you don’t know.”
It doesn’t matter who you are and what you think you know, there will always be more to know and there will always be people who are better than you at certain tasks.
You can’t do everything. You can’t wear all of the hats, so stick with what you do best and hire experts to do the rest.
It’s important to push your ego to the side here.
Sure, you could learn how to write, design, and develop, but even if you devote the next 2 years to your studies, you’ll never be as good as a writer who has been doing it for 20 years, a designer who went through 5 years of full-time study, or a developer who has been creating games and apps since they were a child.
Of course, there’s nothing wrong with learning gradually. You might not be much of a coder now, but if you expect that you will benefit from having those skills, you can start learning while hiring someone else to do the initial work.
Learn from them. Study the craft. Let your contractor be your mentor.
After several years, those coding skills could give you greater insights into your business and allow you to expand, improve, and even venture into new areas.
Take Bryan Clayton as an example. He wanted to launch an “Uber for gardening” business with a few co-founders, but none of them had the skills to code such a complicated app. They also didn’t have the funds or desire to pay a coder, understanding that the coder would essentially be doing all of the work and leaving them powerless to help and ignorant of their own progress.
And so, they went back to school. Clayton spent the next few years of his life learning how to code while steadily putting the pieces of his business together. Eventually, he was able to build the app and in doing so, he didn’t invest as much in the launch and could assume greater control of the business throughout its journey.
Of course, small business owners don’t have time for college and they might not have much money, either. But that’s what online courses and mentors are for. If you need to hone your skills, use these courses to your advantage. Learn as you grow; keep improving your skills.
Even if you never need to put those skills to use, it always helps to have them.
As I have noted many times on this blog, some of the most successful people in the world have the greatest hunger for learning and possess a wealth of skills that you don’t even know about. They keep their minds sharp by reading and learning, and those skills—along with the extraneous knowledge they acquire on the way—help them with their careers.
Entrepreneurship is as much about delegating as it is about working. The sooner you realize that the sooner you can build and grow your business.
Customers And Not Family
Not building with the customer in mind is one of the main reasons that businesses fail and this is true for all stages of the growth process.
Entrepreneurs often look to their family and friends for support, but they’re not looking for genuine criticism and advice, they’re looking for baseless praise, a form of business motivation that confirms their beliefs, boosts their ego, and gives them a little more confidence.
But loved ones are biased and they won’t give you the assistance that you need. They will either be hypercritical or quick to praise.
Microbusinesses need support from loved ones and you shouldn’t turn your back on them. They can be your first investors and even your first customers, but it’s important to take their advice and warnings with a grain of salt.
Half a dozen customers that you don’t know are worth more to you than a hundred friends that you do know.
The X Factor is a great example of why family and friends don’t represent the average person.
People go on that show thinking they will be the next Justin Bieber or Lady Gaga. They have sung in front of friends and family many times, and because their loved ones don’t want to trash their feelings by telling them the truth, they placate them instead. “That was great!” “You’re a star in the making”.
It boosts their confidence, but it also gives them false hope and doesn’t tell them what they need to know, which is that they either need lots of singing lessons or should find another career path.
If they had taken the time to record themselves and post that recording for neutral people to review, they would have learned the truth.
That’s essentially what you need to do as a micro business. Don’t wait until you’re standing under the spotlight with millions of people watching before you finally learn the truth.
Look for genuine customers and listen to what they have to say. Encourage them to leave reviews and remind them that you don’t just want them to blow smoke up your ass.
It can be hard to hear that your products are not as perfect as you thought they were and that your business is flawed, but it’s better to learn that now than several years in the future. If you make those discoveries now, you can do something about them.
You can fix flaws in your products and strengthen weak areas of your business.
In many ways, the criticism that you receive before you launch is worth as much as any startup funding because it could generate millions in value over the lifetime of your business.
It could also be the difference between success and failure.
Know Your Exact Demographic
Companies often insist that their target demographic is “everyone”. I hear it all of the time from startups and it’s one of the biggest mistakes they make.
If someone asks you what your target market is, and your response begins with the words, “Everyone who…” then you’re wrong.
You can’t target everyone in the country, nor can you target every woman, man, or child. Target demographics are never that wide and you’re deluding yourself and risking the demise of your company if that’s your goal.
As an example, let’s look at some of the biggest brands in the world.
Coca-Cola has an incredible market share that any brand in any industry would be envious of, but does it target everyone? Not quite.
Sure, it’s a drink that can be consumed by everyone, but what about the millions of people in developing countries who can’t afford luxuries such as soft drinks? What about people who are allergic to the ingredients, can’t consume sugar, don’t like sweeteners, or just want to adopt a healthy lifestyle?
Every company has a demographic, and it’s usually a lot smaller than they think, but that’s okay. You can still build a business with that demographic and those customers. You don’t need to reach every single person.
One of the reasons founders make these claims is that they want to impress investors. But as any Shark Tank fan will tell you, nothing deters an investor more than a sweeping statement like, “Our products can be used by anyone”.
You’re not trying to get investments from ignorant people with more money than sense. You’re dealing with people who understand the ins and outs of the business. Investors have heard the same nonsense from hundreds of other founders and it’s more likely to elicit an eye-roll than a gasp of anticipation.
They will be more impressed if you can narrow your demographic down to a million or so people, telling them the exact age range, sex, wage bracket, and personality type of your target customers.
Not only is it more realistic, allowing them to gauge exactly what your business offers and where its focus will be, but it also proves that you’ve done your research.
More importantly, it will help you when marketing your services.
If you try to market your company to “everyone” on Facebook, you’re going to spend an obscene amount of money and see very little return. If you know exactly what your typical customer looks like and target people in those groups, your return on advertising spend will be much higher and your business will be more likely to succeed.
The $100,000 Question
You can’t do it in a vacuum.
Those were Danna Olivo’s words when I asked for her $100,000 insight.
Her point is that you can’t do it alone and should seek help and support when you can.
Inexperienced founders expecting rapid growth should look to mentors and coaches to get the assistance they need, while startups should try to get investment wherever they can.
These things will make your life much easier and greatly increase your chances of success.
If you don’t have the means, money, or desire to get help, then at least acknowledge that you can’t put all of the pieces together without losing too much money, time, or sanity.
Look to freelancers to help you build websites, write blogs, design logos, and ensure your copy is 100% professional. Work with bookkeepers or bookkeeping software to keep your accounts in check and upgrade to an accountant as soon as your earnings increase.
Talk to lawyers about trademarks, copyrights, and other legal issues, and keep at least 1 virtual assistant on hand to help with all of those niggling tasks that entrepreneurs face on a daily basis.
Last but not least, attend as many webinars, seminars, and events as you can and consume all of the free content that is available to you.
Think of startup success in the context of a lottery. If you throw your money at a half-assed idea, apply minimal effort, ignore criticism, and don’t try to improve, your odds of winning a prize are slim to none.
You still have a ticket, but you don’t have much of a chance.
But for every book that you read, every podcast you watch, and every course you attend, you’re acquiring additional tickets. Get a mentor, and you’ve just earned another 100 tickets. Get some funding, and that’s another 1,000. In the end, there’s still no guarantee that you’ll win, but your chances of success are much greater.
Danna Olivo’s advice could be the difference between success and failure, and her expertise has helped many entrepreneurs over the years. To learn more, I recommended checking out her no-bid webinar, which was mentioned briefly during our discussion.
I also recommended checking out the Amanda Brinkman show “Small Business Revolution” on Hulu and reading books written by expert investors, marketers, and startup entrepreneurs, including Robert Herjavec, Peter Thiel, Tim Ash, and Lindsay Pedersen.
As noted above, the journey of a successful small business owner is often rooted in education and there are many books, podcasts, webinars, and other educational materials to help you with small biz growth.
About Danna Olivo
Danna is a Business Growth Strategist and CEO of MarketAtomy, LLC. Her passion is working with small first-stage entrepreneurs to ensure that they start out on the right foot and stay on the path to financial freedom. Known as the Business Birthing Specialist, Danna understands the intricacies involved in starting and running a successful business. Her efforts extend beyond the initial strategic planning process into the implementation and monitoring phase. She has recently launched the first eLearning environment specifically targeting small micro-businesses called MarketAtomy.Academy.
A graduate of the University of Central Florida’s College of Business, Danna holds degrees in both Marketing and Management Information Systems (MIS). She brings more than 40 years of strategic planning experience in business structures, marketing, and business development both nationally and internationally.
Danna is not only a professional business growth strategist but is a public speaker and best-selling author on Amazon. She has published 5 books, the latest “Social or Sociopathic” dropped May 17th of this year.
Danna Olivo Contact Info: