Midlands Business Profiles
Angelo Perri of SCORE - Why do so many start ups fail?
By Angelo Perri
All of us have read that Small Business produces more jobs for America than any other endeavor. While this is true, it is also true that small businesses have an 80% failure rate. Why do so many start ups fail?
The literature states that lack of a business plan, insufficient planning, inadequate financing, and lack of experience all contribute to small business failure. But a real analysis of failures finds that “inability to uncover a market niche” is the real reason. What do we mean by finding a niche?
For years I have told would be small business owners that they will never compete with the Wal-Mart’s of the world. Wal-Mart purchases inventory by the cargo container ship load. A small business will never be able to compete with their prices. So how do you compete?
By offering convenience, extra service, forming lasting relationships, and providing a service that the market is either not meeting, or not meeting well. A small hardware store that assembles and delivers its products, repairs products when they are broken, and instructs its customers on how to use its products – that is a company that should be able to compete with the “big box” retailers by finding a niche. Small pharmacies that develop relationships with their customers continue to be a part of the pharmacy scene. Small businesses may have to charge more, but a discerning customer will be willing to pay for personal service and advice.
Many times I have been asked by those wishing to start a small business in the Columbia area how they might ensure that they will succeed and find their niche. There is no “magic bullet”, but I often tell them to visit Atlanta of Charlotte and to see if the business they propose exists in those cities. Many small businesses are dependent on a large population. Startbucks and Ruth’s Chris steakhouse did not arrive here until Columbia passed the half million level in population. Some small businesses require a sufficient population to support it.
About 20 years ago, I visited a car wash in Atlanta that charged $18 for an ordinary car wash the costing about $8 in Columbia. How could they do it?
You were met by a young woman in a Charlie’s Angel jump suit who took your order. She then escorted you to the waiting room that looked like the lobby of the Summit Club, complete with tea, coffee, soft music and high end newspapers and magazines. When your car was ready, another young woman came and escorted you to your car.
Is Columbia ready for that yet? You need a population of over a million to have sufficient high end automobiles that those owners who have paid $60,000 for their car will think nothing of paying double the price for a car wash that pampers them and their vehicle.
New small businesses that save time and that provide convenience usually follow a pattern of starting in California, moving to Atlanta, to Charlotte, and eventually to Columbia. Think of the quick lube oil changes, windshield replacement, and car washes done at your home or your place of business. Anything that can save today’s 24/7 lifestyle time and provide a needed service will be the small business success of the future.
Lastly, in this hectic atmosphere, customers are still looking for a personal relationship with their vendors, be it a vegetable stand, car repair shop, pharmacist, hair stylist, shoe repair, seamstress, breakfast place, whatever.
Provide that and you will succeed.
Angelo Perri is the past state director of SCORE.
SCORE counselling services are free of charge.
For more information go to: www.scoremidlands.org
