Roughly 50 percent of all new businesses fail within the first five years, according to the Small Business Administration. Or as the CEO of Provident Loan Society will tell you — 50 percent of all new businesses succeed in the first five years.
CEO Isaac Rodriguez says starting a business is all about the way you look at it.
“Money doesn’t solve the problems to your business,” Rodriguez told a group of entrepreneurs and business owners, gathered at the monthly SPEAKeasy series in Manhattan. “Many entrepreneurs wrongly think a certain amount of funding will help their business survive. You have to continually reflect on what do you need to survive.”
Rodriguez has seen a lot of businesses come and go over the years.
As Vice President with GE Finance and VP with several regional banks, Rodriguez has worked closely with business owners, helping them find new ways to stay in business – or to grow their business. Now, as CEO of Provident Loan Society, Rodriguez helps small business owners in need of alternative financing.
Here are 5-rules Rodriguez shared with entrepreneurs attending the February SPEAKeasy event on how they can grow their business.
Many start-ups forget this initial step, but Rodriguez says a business plan allows entrepreneurs to continually re-evaluate and update their business goals, which will inevitably change. Rodriguez says a creating a business plan allows business owners to grow and adapt as their needs change, but only if the continually review and adapt the business plan.
2. Your Team is Not You
Rodriguez advises business owners to set realistic expectations for their staff. He says many business owners make the mistake of expecting a level of work from their employees that is similar to their own. Rodriguez reminds managers and entrepreneurs that every employee is different than you, so don’t expect them to do work like you. He says it’s also important to clearly define their roles and responsibilities to ensure that each task is completed, while maintaining open communication. (More advice on building a team for startups).
Rodriguez compares financial statements to the three-legged stool. He says it’s important to 1) monitor financial statements, 2) manage cash flow and 3) compare estimated projections with actual figures. If any of these three financials are ignored, Rodriguez says the three-legged stool risks falling over.
4. Establish Your Network
Rodriguez says every business needs a CPA, attorney and banker close by because these three experts will be needed for growth. Rodriguez says business leaders should also consider hiring in areas where they need to improve. And don’t forget those former colleagues, current, former and prospective clients. Rodriguez says they are a part of your network and should be leveraged.
“Pick up the phone and call them,” Rodriguez said. “I’d even recommend creating a Top-10 list of clients who have referred the most recent clients to you. Reach out to them. Find out what they like, what they do for fun and where they shop. You want to establish a relationship with them.”
5. Create A Realistic Timeline
Rome wasn’t built in a day and neither will your business. Rodriguez reminds entrepreneurs to focus on the journey and not the destination. Things take longer than we think. And when you become restless and want to give up or move on, Rodriguez says reflect and review the ways your company has survived.