Business isn’t easy and we have all heard the statistics, estimates are that one in three new small businesses in Australia fails in their first year of operation, two out of four by the end of the second year, and three out of four by the fifth year.
With odds like that why on earth would anyone attempt it? When I propose that very question in workshops around the country, I invariably get the following responses. “I started my business because I wanted more money, more time, more freedom, more control, more autonomy…”
Then comes my next question, “what are your greatest challenges in business?” and the answers are ironically, “I don’t have enough money, enough time, enough freedom, enough control and I am a slave to everybody.”
This is the great paradox of the small business journey and there is a clear reason why it occurs so often. In the overwhelming majority of cases, a small business is started by someone that is proficient at performing the work that delivers the product. In our industry that means that most salons, spas and clinics are started by a qualified therapist. That therapist has usually undergone several years of training to master their craft and it’s likely that they’re quite good at what they do.
But running a small business isn’t only about delivering a product or service to a paying customer, you also need to be equally proficient at how to successfully create a point of difference and a competitive advantage in the marketplace, you need to understand how to manage money, you need to be a trainer, coach and leader as well as a salesperson that also knows how to do marketing to attract new customers.
If you think about the half dozen or more areas of running a small business that requires understanding and proficiency, it would make sense that you should perhaps have studied marketing, sales, business administration, finance and leadership for several years each. My guess is that not 1 in 1,000 has done so and that’s why we see so many small businesses fail.
Sometimes I have workshop participants tell me that they know people in business that haven’t studied in those areas, but they still have a thriving business that is growing, and I agree it is possible, but it is often when everything is going to plan. The economy is good, there isn’t too much competition, the product or service is popular, and timing is great. The real challenges arise when conditions change overnight.
I use a pilot flying a plane as analogous to running a small business. If your flying on a clear day in great weather your need to understand what every dial and switch in the cockpit is for may not be 100% necessary, but how well will you fly at night during a storm? You need to know everything about that plane and its capabilities.
COVID19 has been like a thunderstorm for small businesses and the owners that lead their teams and shifted their focus, marketed their businesses differently and managed their money well are the ones that didn’t just survive the lockdown, but they bounced back quickly and thrived. More importantly, they are ready for round two, if and when it occurs.
So how do you overcome this and arm yourself with the skills to build a profitable and predictable small business? You need to get educated in all aspects of running a successful small business. If that sounds daunting, don’t despair, there are some great coaches and courses that can assist yowu and plenty of free advice in our PBS Profit Advantage Facebook group as well as other groups that offer fantastic support.
For now, here is where I would start.
1. Every successful business needs to have a clear competitive advantage, so
start by asking the question, “What do we do better than anyone else?” or “What can we say about our products or services that nobody else in our areas can say?” These questions direct your focus to what you do different and better than your competitors and that’s what you want to be known for. If you’re offering the same treatments, products and services as everyone else, you are just a commodity and customers will go to whomever is cheaper. If you offer something that no one else can, you will never be in a price war with your competitors.
2. You have to make sure you have a profitable business model and that
simply means that your business generates enough money to pay all of your expenses each week with enough profit left over after paying yourself for the hours you put into your business. Most salon owners fail here because they haven’t priced their treatments sufficiently. Our Business Development managers at PBS are trained to review our client’s treatment menus to ensure that each service is making money for the business. If you would like any assistance with this contact matt@probeautysolutions. com.au. Note: that if you have developed a real competitive advantage (step 1) you are in a far better position to be able to charge more for treatments which will satisfy (step 2).
3. Build an amazing engaged team that are passionate about their roles and the business. Too often business owners that are struggling put their focus on marketing to attract more customers but imagine for a moment how big your business would be if you had never lost a customer. The issue is rarely how do we attract new customers, it
is more frequently what can we do to keep our existing customers coming back over and over again. The key to that is having a well-trained, passionate and engaged team that love what they do. My best advice here is to put your focus on understanding and meeting your team needs for meaning, purpose, professional growth and development.
4. Your next step is only possible if you have the first three steps in order. Marketing and Sales mastery is difficult without a clear competitive advantage and not of much value without a profitable business model. It certainly won’t help you long term either if you don’t have an engaged team. However, with those other areas covered your next step is to get really proficient at attracting new customers and turning them into raving fans. To do this you need systems that cover everything from how you take the initial enquiry to how you greet your clients, consult with them, deliver your promises, provide them with everything they need to meet their needs and attract them back as frequently as possible. There is so much that you can learn about sales and marketing, so my brief advice is to measure everything you do! You will already have a marketing tool that outperforms the rest, a team member that retails the most and one that gets more rebooking’s, break down what works and what doesn’t and develop a new standard for operating.
5. Finally, you must always continue to innovate and improve in everything you do. This brings us back to step one – creating a competitive advantage. The only way
to remain competitive is to continually evolve through constant innovation.
I will go through how to take each of these steps and scale your business in more detail in a future article. In the meantime, start working on these steps in the above order and watch your business start to make more sense and feel a little less challenging.
This article first appeared in the September/October issue of Professional Beauty magazine. Download the issue here.
Visit the #BEAUTYSTRONG hub at https://professionalbeauty.go-vip.net/beautystrong/
For more news and updates, subscribe to our weekly newsletter.