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Financial Foothold: Navigating Small Business Fiscal Cliffs
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Molly Beyer took us on a journey through a foreign land in the last episode but in this episode, we’re going to climb a mountain with her. She shares eight basic steps that are necessary in starting to build a successful business. And the steps are remarkably similar to preparing to climb a mountain. Both endeavours require careful thought and planning, as Molly explains.
The eight steps set us up for business success. Step one, build up the basics. Step two, pick a target. Step three, get some training. Step four, build a solid plan. Step five, outfit your operation. Step six, prepare for complications. Step seven, plan, plan, plan. And step eight, build slowly. What do these mean for a business? How do we apply them? What sorts of documentation and knowledge do we need?
Join Molly to learn the answers to every question that comes to mind about the steps. She explores the meaning behind each one and how it affects the foundation of a business. Ensuring that preparations are made with forethought and in a specific order will give our businesses a better chance at success. And they allow us to pour resources into the right places and not drain funds and energy on things that aren’t needed until our business is off and running.
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Transcript
Molly Beyer: Hello, hello, I am Molly Beyer, host of The Ambiguous &: Business Basics and Beyond, a podcast where we have frank discussions on the basics of business with a holistic focus on everything that helps business owners define and find success. There are so many ands that impact being your own boss. Join us as we explore all these ands and more. Like, subscribe or follow wherever you get your podcasts and let's explore these ambiguous ands.
Molly Beyer: Hello and welcome to The Ambiguous &: Business Basics and Beyond. I'm your host, Molly Beyer, and I'm here to lead you through frank and holistic conversations on the basics of business. Last episode, we took a journey through a foreign land. This episode, we're going to climb a mountain. But not just any mountain. We are going to climb a money mountain. Now, I myself am not a mountain climber. My asthma would never allow me to reach those heights. Though I do love a good hike. But I do have a couple of mountain climbers in my world and I love hearing about it. The thing that is amazing to me about mountain climbing is the preparation, skill and mindset involved.
Molly Beyer: Saying one day I want to climb a mountain is amazing, but you cannot just set out and climb the mountain. Starting in building a successful business is much the same. You can wake up one day and say, I want to start a business and believe me, just like mountain climbing, that is a great goal. But there are steps you need to take to make sure that you start successfully. Or in the case of mountain climbing, to be sure you don't actually die trying. Though the words we use in business are different from those in mountain climbing, the steps we take are essentially the same. Step one, build up the basics. Step two, pick a target. Step three, get some training. Step four, build a solid plan. Step five, outfit your operation. Step six, prepare for complications. Step seven, plan, plan, plan. And step eight, build slowly.
Molly Beyer: So why is all of this preparation important for a business? Well, because the reality is that most businesses will fail. Statistically, about 20% of all businesses started will fail within their first year. By three years, an additional 54% will fail, and by year five, only about 20% total will remain. Of those that do fail, 82% do so because of financial issues. But even established businesses can stagnate for many of the same reasons. So whether you're just starting out or you've been in business for years, not knowing and understanding your business financials will be the difference between owning a business and being a successful business owner. And unfortunately, more often than not, the difference between owning a business and losing a business.
Molly Beyer: So how can we best prepare to climb our money mountain and actually make it to the top to be in that 20% that gets to reach the peak? Well, let's take a good look at each of the steps. Our step one was build up the basics. Now in mountain climbing this means getting physically prepared, building strength and endurance, and practicing with heavy packs and safer, more controlled climbs. In business, this means spending time asking and answering yourself questions about the what's, whys, and hows of your potential business venture. These are many of the questions we talked through in the last episode on business plans as a roadmap to success, but here we need to go deeper, delving into the financial aspects of the business plan as well.
Molly Beyer: Step two, pick a target. In mountain climbing, this means deciding what type of climb you want, including terrain and height. In business, this means deciding on a specific product, service or offering and what market to introduce it to. Here is your first opportunity to look at the current market as well, both for your offering and for spending in general. Is your offering something that people need and are they willing and able to pay for it now?
Molly Beyer: Step three, get some training. In mountain climbing this may mean taking a course on a specific terrain, or just general skills training in the field with an experienced instructor. In business, this may mean getting a degree or certification in your desired offering, taking a general course or 1 to 1 mentorship either in your field or from an organization like the Small Business Administration, or even getting a coach or consultant to guide and assist. This is also the time to start learning the financial jargon of business, so you're better prepared to write your business plan and answer the questions that will come from investors and financiers.
Molly Beyer: Step four, build a solid plan. In mountain climbing, this means becoming a master of maps and all the tools needed to plot, navigate, triangulate, and pace. In other words, you need to know where you're going, the landmarks along the way, how fast you move on the terrain, and how to get back when you get lost. In business, this means bringing together all of the pieces of your business plan in whatever form works best for you to make sure you know your goal, the landmarks on the way, and the financial resources required.
Molly Beyer: Step five, outfit your operation. In mountain climbing, this means most literally the clothes you will need for the climates you'll be traversing, as well as the gear you'll need to camp and eat along the way. A general rule I've heard is that you lay out everything you think you'll need, and then you remove items until you have the essentials, but your pack is not too heavy. In business, this is much the same. Getting the gear that will get&nbs...
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