The Hard Part of the Small Business Climb

A successful entrepreneur I know made an observation that got me thinking about success in entrepreneurship.

Weeks after most responsible people had swapped out their winter tires, I went in to change mine. Everyone has their quirks. My quirk is remembering that one year it snowed in June and believing since that it always just might snow in June.

I’ve been going to the same place, off and on, for almost 25 years. The two owners started from a small location and grew their tire and auto repair shop into a bustling, well-regarded business, with a large commercial building and tenants of their own.

They brought their sons in to learn the ropes many years back. And, though the young men appear to have taken over most of the day-to-day, I’m still more likely than not to see one or the other (or both) of the owners behind the counter whenever I take my vehicle in for service.

I went back a week later to get my tires torqued. One of the owners came out and, as I was talking to his son, took the torque wrench from his son’s hands, walked around the car, and tightened all the lug nuts. We shook hands. I asked him about retirement. He laughed and said not for him. He told me that he loves coming into his store, loves working with his customers and his staff, loves the business. Why would he leave? He angled his hand upward, said the hard part was done; the store runs smoothly now, it’s there to enjoy. He thanked me for my business and went back in to help another customer.

This has to be success by anyone’s entrepreneurial standard. Financial independence. A valuable asset to be sold or handed down to the next generation. Still involved in the business you created because you still love it, not because it still needs you. Sure, there are other versions of success: some people prefer to build something up, sell and move on to the next thing; others want massive wealth. But it’s hard to argue against owning a business that runs itself and provides you with lots of cash as a solid motive and end result for starting a business in the first place.

I misread the owner’s upward hand gesture. I thought he was referring to growth, that growth was the hard part. I realized later that what he most likely meant was that he had to climb to get where he wanted to go. The climb was the hard part. It’s everything he had to learn and do and go through to get to where he wanted. His journey. The journey was uphill he was telling me.

The effort and endurance required make the uphill journey difficult. But it’s also the uncertainty. Everyone climbs their own hill, every summit is the first. There’s no map telling you how to get to the top of your hill. There’s no manual explaining how to assemble a successful small business.

When we were talking about this, Darren pointed out that a large majority of undergraduate students ultimately receive a degree from Canadian universities. They graduate, that is, in the university context, they succeed. At the same time, a large majority of small businesses fail outright or fail to live up to their owners’ expectations. They don’t succeed. Why is that? They’re different systems, sure, but what aspects of each contribute to their different outcomes?

Well, for one thing, school is on rails. Once a student chooses a program, the path to success (as defined by graduation) is clearly laid out. There’s a map. With a clearly marked path from where the student is to where the student needs to go. The hazards are also marked. Staying on the clearly marked path is the sure bet.

Students hate uncertainty. They do everything they can to eliminate it. They try to pin professors down on what’s going to be on the test, coaxing them to narrow the possibilities down as much as possible. Professors who respond by saying any of the materials and any of the concepts they’ve covered from the beginning of the year to now are the most hated professors and their exams are the most dreaded exams.

Now, as an entrepreneur, you don’t know you’re taking a test (you are). You don’t know the questions you’re being asked. And you’re not even aware of the concepts you were supposed to know or understand to prepare for the test. Uncertainty is baked in to the entrepreneurial experience. You can’t get rid of it (but you can reduce it).

A second aspect of school being on rails is the structure. There’s a course syllabus, course schedule, assignments, due dates, midterms, final exam. All of these function to hold students accountable and on track with their own learning. There’s still the question of time management and the dangers of procrastination, but a sufficiently motivated student will be well aware of the next thing they have to do to navigate their course load from day to day. The system is always cracking the whip.

Knowing the next thing to do is, in my experience, one of the hardest things a small business owner has to get right. In the early stages, the launch and survival period, it’s not so bad. You can’t wake up the morning you’ve invited 20 people over for dinner wondering what you’re going to make. You have a plan. You work the plan.

It’s after this stage, when your business has some breathing room (but not much), that you come to a kind of misty, foggy area of your uphill climb. The path disappears a few feet in front of you. There’s no map. There’s no one to ask for directions. There’s no one to tell you which path to follow or to keep you on that path. A few wrong steps and you could go over an edge. You’re alone. What do you do next?

This is the hard part of your upward journey, the part that makes the difference between getting to the top, getting lost, and free falling. Climbing all the way to the top takes endurance. It also requires knowing which way to climb. I think that entrepreneurs in this situation can benefit from creating the same conditions that help students succeed in postsecondary education: less uncertainty and more structure.

The biggest thing an entrepreneur can do to improve their decision making in their business is to develop a clearer understanding of their financial statements. The financial statements are part map (they tell you where you’ve been) and part story (they suggest other places where you could go). Start by asking simple questions. Am I making or losing money? How much? Why are sales up but profit down? What level of sales do I need to cover my fixed costs? What level of sales do I need to pay myself a higher salary? Do I need to raise prices? Why don’t I have more cash in the business bank account? Do I need more financing? How much? By when? The entrepreneur should ask these questions in order to figure out what they need to know in their business, how they’re going to be graded on their test. The financial statements are the equivalent of the student’s transcripts. They both keep score. Every possible next action that an entrepreneur can take should have some measurable and predictable effect on the financial results: We’re taking action X in order to improve financial result Y.

Postsecondary institutions structure their programs to keep students focused on a sequence of tasks that, once successfully completed, results in graduation. Not the same setup for entrepreneurs.

Entrepreneurs don’t have a calendar that tells them they have a class at 9:30, an assignment due on Thursday, an exam next week. They don’t have friends, also going through it, to remind them of these things. Like students, they know they need to get better at something, but it’s more open-ended what that something is.

Entrepreneurs can choose what they do in a day. They can make plans one day, make new plans the next. They can not quite finish one project, move on to not quite finish another project. Management by improvisation, with nothing adding up, no results or improved financials. The entrepreneur is often the worker and the boss in these business improvement projects, meaning there’s no accountability. With most people, a failing grade they give themselves in something no one else knows about or tracks is, at best, an unofficial grade.

I don’t have a well-tested answer here. I procrastinate and get distracted with the best of them. Working steadily toward goals is a goal I can work more steadily toward.

The option I can recommend for entrepreneurs is to involve someone else in their running up their hill, someone to keep them narrowly focused on reaching their chosen summit. I told Darren I was going to post here every week. He said he would hold me to it. It’s been four weeks and I’ve managed four posts. So here we are.