It is a well known fact that most small businesses fail within the first year and many fail within the first 6 months of opening. I just read a book called The E Myth Revisted by Michael E. Gerber. I would recommend it to every new business. In fact, it should be required reading for every business. It outlines the reasons most small businesses fail and gives a plan which, if followed, will significantly decrease the probability of the businesses faltering.
The crux of Michael Gerber's argument is that small businesses literally need to think through every operation and ultimately set themselves up the way franchises do. He used McDonalds as his primary example. If a person does not really have a business mind, yet purchases a McDonalds franchise, the new owner should still succeed because McDonalds trains all new owners and they have nothing to plan. It's a "turn key" business so all they need to do is follow the business manual and the business will literally run itself.
What Michael Gerber said is that every small business needs to sit down and write out such an in depth plan, that if the originator of the business were to die today or tomorrow, someone could pick up the Operations Manual, read it, follow it to the letter, and succeed.
I'll end with this. I enjoy eating healthy meals and being in the company of people who are health conscious. So imagine my happiness when, approximately a year ago, a black-owned restaurant opened up in a small neighboring town called Mt. Rainier. That particular strip of Mt. Rainier has several black owned businesses and I often go down there simply to support them.The small, black owned restaurant took off quickly. The black and white community supported them and the house was always packed. But there were some issues:
a. It could easily take an hour and a half or more from the time you ordered to the time you got your meal. Why was this? It was partly because they made everything from scratch, fresh. When you got your meal, it was beyond delicious. However, they should have found a way to have the ingredients at least chopped up and ready to cut down on wait time. I'm positive there are things they could have done.
b. They were a "cash only" business. No credit cards or debit cards but people worked around that.
c. They went from being open 5 days per week to only opening on Fridays and Sundays. That was terribly disappointing and frustrating. They were over extended and apparently unwilling to hire and train new cooks. They were doing on the side catering which took time. And then they offered a few classes, some to teach people how to cook healthy meals and another health class. But the restaurant still was only open 2 days per week.
d. They started to experiment with and change recipes, yet not change the name of the meal being ordered. So, if I ordered lentil soup today, it would taste a particular way, but if I ordered it tomorrow, it would have a totally different taste. They did that often, in spite of complaints. Customers even advised them to simply add on other names, while keeping the variations. So, for example, there could be the base line lentil soup...and a person could elect to order lentil soup with "x" added to it.
e. They would take popular items off the menu for no known reason. They certainly did not adhere to the "if it ain't broke, don't fix it" rule.
f. Next, they started putting signs up on the door saying that they would only open one day a week, on Sundays and that families, etc. who wanted to eat there should call and make reservations.
It was at the point that I personally threw in the towel and gave up. Their vegetarian and vegan food was beyond delicious. The cooks were exceptionally clean. The place was spotless. The atmosphere there was heavenly. I loved it. But somebody did not know what they were doing. After several months, I was curious about them and called. Their phone was disconnected. I drove down there.
There was a huge sign on the door from town administrators saying that they had not updated their Use and Occupancy Permit and that they would need to renew before continuing to do business there (the permit costs about $135).
The place now looks like death valley. All the beautiful furniture and equipment is still there. The floors are as immaculately clean as they always have been. Yet, no one has been there in months and no one knows where they are. The rent in that place is at least $3,500 per month, maybe more. And I imagine they took out loans to buy all that expensive equipment in the kitchen. With no business coming in, they are lost.
What a sad, sad situation because they could have made it. The community loved them and supported them. Had they stayed open until 9:00 at night, they would have had customers to occupy the space. They simply did not know how to run a business.
I still hang on to their menu in hopes that a miracle will happen and that they will reemerge.I can't help but wonder how many other black businesses out there were "meant" to make it but did not because the owners simply had no clue as to how to run a business. Read The E Myth Revisited. Great book. Very inspirational. I highly recommend it, especially to small businesses that are in the process of failing.