Why 45% Of Small Business Starting Today Won’t Last 3 Years And What They Can Do About It

Written by Nathan Watt

It's a staggering statistic isn’t it?

Almost every 2nd business that starts this year, won’t exist in just 3 years. If you dig deeper into the data set (which you can find here),  you also find that 20% of business fail in the first year! Not even 12 months in, and the business (and the dreams of the founders) are dashed.

What’s even more troubling is that these numbers have not improved over time. If you compare the statistics over the last 10-15 years, they barely budge. So with all our social medias, “thought leaders”, Vlogs, and business guru’s businesses aren’t getting better at business.

Why Aren't More Businesses Succeeding?

I believe it comes down to their systems and processes. I've written previously how we help businesses structure for growth, and I wanted to continue down that track and get you the granular detail of HOW to do this, because it’s easy to say;

  • systemise things,
  • “work on your business” (that phrase really makes me want to vomit FYI),

But it’s another to actually give you the step by step instructions.

So lucky you, dear reader. Lucky. You.

Because you're going to get this if you keeping reading.

But before we do, indulge me, because I really want you to understand how processes and procedures (aka business systems) can make dramatic changes to your business.

Why the businesses who survive spend more time developing, implementing and managing systems and processes and why businesses who turnover more than $2,000,000 fail 30% less than business with turnover less than $2,000,000.

Why do Bigger Businesses have a lower Exit Rate?

Q: Does more turnover mean more financial stability?

A: MAYBE (plenty of bigger businesses go belly up too)

Q: Does a bigger business mean you can't do everything yourself and have to delegate to people?

A: YES

Q: Does effective delegation require a standard way of doing everything, that's written down and everyone knows about it?

A: YES

Q: Does a standard way of doing things breed efficiency allowing you to produce more with the same resources?

A:YES

Q: Does a standard way of doing things create consistency in outcomes for customers?

A: YES

Q: Do happy customers buy more from you and refer other customers to buy from you?

A:YES

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You see, systems and processes are the key.

They not only allow you to delegate well freeing you up to do what it is you're best at for the business, but they also provide quality and consistency that your customers want.

Having a standard way of doing things also results in the business being efficient aka doing more with the same resources.

All of this results in a more stable, financially secure business that is growing.

Now when I talk about a standard way of doing things. I mean doing everything.

From your sales scripts, to your branding, to the way that widget is made, how you choose your suppliers, how you invoice and collect payment, how you ask for referrals, how you find, hire and train your staff and everything in between. You can literally standardise everything you do in your business.

This means at any time anyone can find out "how do we do X" without waiting for someone to come back from leave, or for you to get out of a meeting.

Everything is documented, and everyone knows where to find it. This means they aren't asking you a million questions a day.

How good would that be?

How To Start Creating Systems and Processes

Please don’t think I’m advocating building bureaucracy, and documents no one ever reads (or follows).

What I am advocating is that you start documenting what you do. Next time you start to do Job/Task XYZ, start keeping notes on what you do.

Just fire up Word and start typing (or dictating), bullet points are fine, grab screen shots of your screen, or record the whole thing with something like Loom.  Whatever works to make it easy to document and easy to follow.

Don’t waste time trying to map out all the processes and procedures and departments and whose responsibility it is. Just get on with it and start documenting.

If each staff member who does XYZ does this, you can then get together in 1 week for 30mins to compare what you have each written and work out the commonality and what isn’t.

From there, refine it and agree on a draft version. Everyone then follows the draft version for 2 weeks and makes notes on what is and isn’t working well or where they can see room for improvement. Then get together for another 30mins and agree on the changes to the draft. Test that for another 2 weeks. Review. Revise. Rinse. Repeat.

Use Collective Wisdom (and don't be a dictator)

It’s important in the process that everyone who does the task is included. Why?

Because people don’t like dictators, and you’re also not trying to create more work for yourself.


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The people on the front lines, are the best ones to tell you how to create a better process and they need to feel like they are being listened to and have had a hand in creating the process. Otherwise they won’t follow it! They’ll just go back to the way they always did things (Go on tell me I’m wrong).

Of course you don’t just want to do this for XYZ, but start with a common job, not the biggest, hardest one to get agreement on, but something common but fairly straight forward (you want to get use to the process and get some quick wins. Starting with a hard job and butting heads over the best way is not setting you up for success). Then once you’ve got that underway, start on ABC, then DEF, and on and on you go until you’ve done this process for everything, and I mean everything.

A New Level of Sales and Efficiency

Imagine if every new enquiry or customer was asked the same questions in the same order, giving your sales people the opportunities to gather more information about your customers (that is written down in your customer relationship management system) and to introduce products and services at the same time in the sales process (you want fries with that?), so you can measure the effectiveness of the process! All of a sudden all your sales people are as good as your best sales person. Sorcery!

As you write each draft process, put a date at the top it was last updated, save it in a folder where everyone has access. Link it into the new employee onboarding process (you’ll be writing that too eventually). 

So now, every new employee has access to the “way you do things”. So instead of sitting there with the new person showing them what you do for a week, or someone screwing up your job (or not doing it at all) while you’re sick or on leave, they follow along with the step by step instructions you have written and are productive and efficient from day 1.

(BONUS: Having instructions for everything decreases risk. Decreased risk INCREASES BUSINESS VALUE)

Make the Process Creating Process Easy

Now sometimes writing is long and boring (obviously not this blog), so sometimes it’s way quicker and you get a better learning experience if you record a video of your computer screen while you’re doing whatever.  You can use services like Loom to do this really easily. Embed the video’s into your processes and procedures, start a Private YouTube channel or just save it in a central location (where you decide to save it and disseminate is again, another part of your policies and procedures you need to write. Ironic right?).

And that is literally it. You keep adding (and refining the current processes) to your library as you go and in a few months you’ll have a bunch of agreed ways to do everything, that everyone has access to and less “how do you do that again” questions, more consistency, and more productivity, and that lucky reader is how you’ll beat the stats and be here for much longer than 3 years.  Check out our business consulting for more on how we help people grow their business.


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