The Democrat recently reported that five area organizations are coming together to support small business development in west-central Missouri, including Pettis County. The Small Business Development Center at State Fair Community College is participating in the project.
Small business startups need all the help they can get, for the survival statistics are pretty grim. Twenty percent are gone by the first year, half after five years, and only a third are left after 10 years.
Sedalia has had its share of business failures, and I can think of several that lasted only a short time. What accounts for such a high casualty rate?
It’s a subject that’s been extensively studied, and here are three of the main reasons:
• At the head of many lists is starting a business with inadequate capital reserves. New business owners need a financial cushion to see them through the often lean startup years.
• A faulty business model is another big factor. What product or service are you selling, and is there a market for it? How do you intend to promote your business? Several other questions need to be answered in the all-important planning stage.
• Poor management.
Based on my own observations, I’d add a few more musts — know your market is a big one. Just because a business is a success in Columbia or Lee’s Summit doesn’t mean it’s going to be one in Sedalia, as it’s a far different market. Statistics on average household income, disposable income, educational level, age, etc. are available for cities and counties, and need to be consulted early in the planning process.
Your competition (or lack thereof) should be another major consideration, and don’t ever forget location, location, location.
Having said all that, compiling lists of the potential problems in starting a small business can be overdone. One website examined “27 Small Business Mistakes.” If Bill Gates had read that he might not have started Microsoft. A strong determination to succeed may be the best thing a new business owner has going for him or her.
While Sedalia has had its share of business failures, it also has had its successes. Sedalia Downtown Development Inc. lists more than 50 businesses in the Sedalia Commercial Historic District. At some point, each one of those had a founder.
I commend those hardy souls with an entrepreneurial spirit — the spirit that built America — but it’s no place for flying by the seat of your pants, as starting a business today is more complicated than it used to be (the need to be technically savvy being just one example).
If I were 30 years younger and thinking about doing that, I’d make SFCC’s Small Business Development Center my first stop. Its services are free, or involve only a nominal charge.