Everyone who’s anyone starting out in the entrepreneurial world wants to know the secrets of small business success.
For me the answers dawned on me late last year after I read a really interesting piece of research form Xero, the cloud computing software people.
They had recently completed a survey of over 2,000 entrepreneurs in the United States and United Kingdom in an effort to uncover what separates successful small businesses from unsuccessful ones.
Now obviously they are trying to sell their own software, but the findings were pretty amazing.
Xero was looking into what separates successful small business owners form unsuccessful ones.
This is a really important area because in Australia 60 per cent of all small businesses close their doors within three years of launching – and small businesses account for half of all non-financial sector jobs in Australia.
What they found was that businesses on the path to success are more likely to:
1. Learn from their mistakes and try again
2. Invest in technology – six in ten of the survivors were using software to manage their finances versus just one in ten failures
3. Value family time
4. Have excellent relationships with business mentors, accountants and financial advisers.
For those that survive, other trends included:
1. Selling services was more profitable than selling products – twice as many businesses who sold products failed as those who sold services
2. Survivors started lean – 51 per cent of successful small businesses invested less than $7,500 in their start up
3. They used technology to grow.
And specific to Xero, this stat is pretty amazing… After five years, 85 per cent of Xero users in the United States were still up and running versus 50 per cent of their peers and in the United Kingdom, 88 per cent of Xero users survived versus 45 per cent of the industry.
Im a big believer in knowing your numbers, and my clients know how much I encourage them to use of Xero Cashbook for staying on top of your personal profit and loss and balance sheet.
Saving for your goals is far more likely if you use software to manage your finances too!