“Have patience. All things are difficult before they become easy.” -- Persian poet Saadi
Small businesses are important ventures. They are the initiatives that help create new jobs globally, yet most of them fail to sustain beyond the fifth year. But it is very important for small businesses to survive and flourish. They contribute to the economy by launching new products and services and giving local communities economic opportunity and security against unemployment, poverty, and even crime. But several small businesses fail to come up with solid strategies to overcome the initial challenges. It is key to uphold the significance that renowned Austrian political economist Joseph Schumpeter had attached to the innovator who considers the role of an entrepreneur as a determining factor of economic growth. In his absence, that rate is bound to slow down. The more an entrepreneur survives and thrives, the better the economic growth becomes.
Speaking about the survival and success of a small business, is it a time-bound factor? Schumpeter had mentioned the concept of ‘creative destruction’ which refers to endless innovation in product and process by which new production units replace the old ones. But to achieve that creative destruction, the new units of ventures need to be successful. And to see them turning successful, it is key to break down their journey into a four-year timeline.
Here we take a look at the year-wise breakdown of a small business success story and as an entrepreneur, you can check whether this journey is in alignment with your story so far:
Year One: The start when things look very promising
Launching a company doesn’t take much time but turning it into an effective one takes a lot of hard work. This is a story with almost all business ventures. The launching time of the business sees the first set of successes and they make you feel elated. For example, incorporating your company, starting a website, and getting some early pat on the back to take the initiative. The starting time or the honeymoon period is all about a positive emotion even though the expenses largely run from your own pocket for setting up things. The first year is nothing else other than a start, something like getting admission in an institution of your choice. Reaching the destination, i.e., getting certified as a top product of that institution, is still a far cry.
Year Two: Getting the finances in order
This is a key phase of your journey as an entrepreneur.
By the time you enter your second year, the thoughts about the financial viability become big. You keep on thinking that it’s a matter of time before the finances to turn around as the business stands on his own knees. You need not spend more from your capital. But till that turnaround moment arrives and you keep on touching your depleting money reserve, the worry starts taking a serious shape. You suddenly start believing that stabilizing a business is not the same as launching one. Getting those initial customers is a great thing but a temporary thing. Retaining them is the biggest challenge. If your business doesn’t see enough footfall, then you have every reason to believe whether it was a worthy decision to start your business. Before the negative feedback starts taking a toll on your mind, work towards achieving small targets. You may console yourself that everything will soon become fine but the reality of the second year of your entrepreneurial endeavor is that it is only about grinding. You have to hang in there, trying whatever you can to attract more customers through better marketing. In a nutshell, the second year is all about hard work.
Year Three: Time for Validation
The third year too is not a great one, generally speaking. The excitement of the first year turns into a deep worry, and more questions are now in your mind than answers. It is a situation where you cannot feel too hopeless either for you have already invested a good amount of time and money. It’s like swimming in the middle of an ocean. You are uncertain about the remaining journey but going back is not a wise option either. You need to take a strong call at this point on reassessing your entrepreneurial venture. The good times that you were hopeful about all this time might be around the corner which you can’t see. Or maybe they are far off. You need to ask at this stage whether you are ready to undertake the pain for another few years if the situation so arises. The commitment level can’t go down even while you are feeling mentally exhausted. And one important thing to do at this stage is to ignore people’s advice most of which is bound to be negative.
Year Four: The good times start showing
Finally, after the dark night, the morning arrives. For most companies -- irrespective of their size -- this is generally the pattern of their journey. We do not always see the hardships businesses face in their initial years (three could be five or seven depending on each venture) till that golden morning dawns. Yes, there are also stories of business leaders discovering a magic wand and tasting success overnight. That is more of an exception. Miracles are not normal stories to gain confidence from. Instead, they create reasons to feel disappointed. One basic reason why businesses take time to get into shape in their fourth year or beyond is that they need a minimum time to get in shape. There are several aspects that the businessperson needs to address, even more in case of a small-sized one, and integrating the entire thing into one is a time-consuming process. Rome, afterall, was not built in a day.