You’ve no doubt heard of the book, what to expect when you’re expecting. It’s been around forever and it’s what all new parents-to-be devour voraciously before their baby arrives. But almost no-one seriously reads a book on how to start a business (congrats if you did). And probably even more importantly, no-one reads anything on how to keep running a business once you’ve started.
Terrifyingly, there’s a lot of truly awful advice out there. So many stories abound of overnight business success that results in its owner ‘flipping’ the business for billions, propagated by the media and the internet. We’ve all seen it.
So I’m calling it for what it is. Rubbish. Total rubbish.
Not only isn’t it true, it sets us all up to fail. When we don’t measure up to the overnight success and sale for billions image that ‘everyone is achieving’ (read our post on small business realities)
The sweet spot – after the first five years in business
There’s a sweet spot in business – but it’s not in year one or even in year three. In fact, the sweet spot for SMEs where everything starts feeling like it’s ‘going right’? It’s the five-year mark (sometimes 10 for more complex businesses).
Now that’s not to say you won’t have many things to get excited about or celebrate well before that – absolutely you will. It might be your first sale, your first return client, the first really big project, your first piece of referral business, your first office or your first hire. The five-year mark represents the point at which you’ve enough experience of running your own small business that you become comfortable enough with it that you can really start to predict what will happen, when and what you can do to make things better along the way.
Of course, if this isn’t your first time running your own business, you might push through that learning curve and timing much quicker. But, every business is different, has unique customers, offerings, etc. And every economic period you work within adds different things to the table. So if it’s been a while since you were at the small business rodeo, you might want to check to see what legislation has changed between your last ride and now.
What do the first five years in business really look like?
Well in a nutshell the first five years are likely to roll out as follows;
- 1. The start – it’s exciting, hard, clunky and possibly more costly than you would like. The learning curve is as steep as and you wonder when it will get easier. More cash is likely to be exiting the business than coming in. But by year-end, you’ve got a proof of concept, and some business coming through the door.
- 2. (and 3) – the ‘make it work’ period – whilst the learning curve is still definitely trending upwards, it’s not quite so steep. You’re developing systems and processes to make things work a bit more easily. You’re probably getting some repeat business, which means you’ve worked out what your customers are truly after.
- 4. The epiphany year – You can see what works, what doesn’t and make course corrections where and when you need to. It’s like a light bulb comes on. And it makes running a business a whole lot easier.
- 5. Life as ‘normal’ – this is the year that a lot of SME owners feel like they’ve ‘made it’. Things mostly just run. You’re mostly in the groove and you’re looking at growth, improvements and what comes next. Or streamlining if it’s a lifestyle business. But you’re feeling like you’re across everything and far less frantic than you’ve been in the past.
Of course there are ways to get things flowing a bit quicker in the first five years in business along the way.
- Implementing cloud accounting/book-keeping with Xero will save you a bucketload of time and angst, especially around BAS. And time saved means that’s time for ticking something else of your to-do list.
- Having an arm’s-length mentor with years of experience in running a small business that you can discuss different things with can save your sanity (and sometimes your business).
- A great accountant who can help with forecasting and financial reports that can tell you a lot about your business’ health. You’ll know if you’re ready to move into that new premises, hire that new staff member or invest in new technology/equipment.
And that’s where we can help. If you’d like help getting your business on track for longevity, we’d be delighted to talk to you. You can give us a call on 02 6023 1700 or you can drop us a note via the form below.
Got a question? Get in touch
If you've got financial or business questions, or you just want to run something by us, we'd be delighted to really talk to you – in person, over the phone - call us on 02 6023 1700 - or you can use the form below and we'll get back to you.