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Salt Lake City Bookkeeping Blog

[Infographic] 4 Small Business Lessons from the School of Hard Knocks

Posted by Austin Walker on May 18, 2016 8:30:00 AM

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The American dream! That ideal story lived by many of our grandparents growing up that included military service, hard work, and making it just by dedicating yourself to working normal jobs in one place for a long time.

However, you'll always hear that it was "for the family." Hardly ever did you hear about them wanting to do better just for themselves. The American dream was all about taking care of those that you love.

One thing that Matt Roberge's grandfather spoke of was how he went to the "School of Hard Knocks." All the lessons he carried with him were from taking the tough road, making mistakes, and attempting to extract some sense from the lessons learned by making those mistakes in order to make adjustments.

Lessons learned in small business come from the same curriculum: difficult work. There aren't a lot of better ways to learn quickly than attempting to operate and grow a small business yourself.

Small Business Lessons

Scaling is Tough

The average failure rate of small businesses tends to stay around the 90% level, depending on which industry you review. People start a business because it's their American dream, but soon learn they don't have what it takes. Of course, market factors all come into play as well. Was it a good time for entry? Did they have enough cash? Were they squeezed out by competition?

Some others may just want to work for themselves because they think they'll make more money that way.

Most of the time, the small business owner isn't ready for the challenges they will have to face and don't understand that businesses that look solid on the outside sometimes deal with unimaginable internal struggles. 

Exit Plans Can Feel Impossible

It's never too soon for an exit plan. Not having one may leave an owner trapped. Every good business plan starts with the end in mind.

Some owners think the right solution is always to sell the company. But what if no one wants to buy it? There are plenty of other options: taking on a partner, moving into a new role, going public, passing the business onto family members, and so on.

Hiring and Firing Can Be a Nightmare

For businesses that are scaling beyond just the sole proprietor, hiring and firing are going to be necessary. Having to fire someone is one of the toughest downsides to an owner's mistake. Realizing that you made the wrong decision hiring someone and have put them in a poor situation due to your poor choice is a tough pill to swallow.

However, hiring can be just as tough. Some of the people who would like to work in a culture like yours aren't in your area. Other problems including finding and hiring really great workers who are OK with making a salary provided by a small business.

Having a culture that makes people happy instead of completely destroying their life with stress and an endless workload can foster great employees. The really smart ones will come from companies that took advantage of their work ethic, put them through hell, and they're willing to take a pay cut in the small business realm to get a better work-life balance in return. Check out our company culture as an example.

Making Tough Decisions

Which decisions are the toughest to make? Ones that have unhappy outcomes no matter what, right? Imagine making those every day. It's not to say that the business is running poorly. However, one problem may only give you the option to choose one of two solutions: allow the problem to continue, or fix it for a lot of money. Each answer is an uneasy one, but one decision has to be made.

A small business doesn't have to make an owner suffer though. Having a great mentor or someone you can trust to bounce options and ideas off—someone who will give you an honest and valuable opinion—is one of the best ways to get help handling these tough decisions.

But you are going to have to be prepared to make tough decisions.

The School of Hard Knocks is not the easiest way to learn, but the mistakes made and lessons learned will be the most valuable tools going forward. Keep a clear vision of where you want to go and make sure every decision you make supports that end goal.

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Topics: Small Business, Entrepreneurship