What Keeps a Business from Achieving Sustainability?

Share on Facebook4Share on LinkedIn2Tweet about this on TwitterEmail this to someone

May is Small Business Month and the first week, 4/30-5/6, is National Small Business Week.

And small businesses are a major economic generator in Detroit and beyond.

According to the 2012 U.S. census, there are nearly 152k and 62k small businesses in Michigan and Detroit, respectively. The economic impact, as it relates to job and income creation, is significant. For example, assuming a Detroit business hires one-to-three people potentially translates into approximately 60k – 180k incremental jobs.

As a sign of this entrepreneurial strength in Detroit, there are many incubator and accelerator programs supporting small business growth.

For example, Lori McColl, Founder, Whim Detroit, just launched her business in January and believes Detroit is supportive for those wanting to start a business.

“Start-ups and small businesses are so lucky to have an expanding set of resources and workshops in Detroit,” she said.  “There are so many critical decisions that are made in the first year that leveraging every opportunity to learn and expand your network will only help build a strong strategy for success.”

Another strength within the city’s small business ecosystem is the opportunity for new business owners to learn from more established business.

McColl continues, “From my perspective, there is nothing more valuable than learning from other established business owners and entrepreneurs in our city.”

There are many examples of programs focused on aiding startups.  For example, on a quarterly basis, Motor City Match makes a $500,000 in grant funding and offers valuable technical assistance available to businesses starting or expanding in Detroit. It can also assist an individual in transforming an idea into a business plan, find the right space for a business and help with renovation plans done while assisting in getting funding to help a business open.

Jill Ford, Detroit’s Head of Innovation and Entrepreneurship, says the Motor City Match program, which started in July, 2015, has helped start fifteen business with nearly $3M in grant funding.  The next round of the Motor City Match will be available beginning June 1 at http://www.motorcitymatch.com.

While there are many accelerator and incubator programs, a significant challenge is in the area of business sustainability.  Candidly, most entrepreneurs grapple with building, growing and sustaining their business daily.

To wit, the SBA has reported about 50% will make it to its first-year anniversary while nearly 80% will not make to eighteen (18) months, according to Bloomberg. Therefore, the challenge is to improve survival rates while providing resources to help a business, not only to have a successful launch, but also have an opportunity for long-term growth.

And one of the critical factors preventing sustainability is access to capital.

Tawyna Rose, AVP, Fifth Third Bank, emphatically says, “Capital, capital, capital.  Many times, entrepreneurs have excellent ideas and products. Too many times they aren’t prepared financially for growth, sustainability or to weather downturns,”  she continues, “Obtaining capital can be difficult, for sure.  With proper capitalization, a company can expand, grow and remain viable during economic declines and unforeseen events.”

While many people have a good business idea, many are not prepared financially for growth which ultimately, leads to business sustainability.

Since its inception, the Michigan Women’s Foundation (MWF) has offered assistance to nearly 4700 businesses which has ultimately resulted in nearly $14 million in revenue to the state’s economy while generating 206 jobs.  The organization offers advice in the areas of starting, growing a business and capital opportunities.

MWF CEO, Carolyn Cassin states, “Many entrepreneurs simply don’t effectively manage financial resources.  It’s always a challenge to be sure your company has enough revenue and cash flow to operate. The entrepreneur has to focus on growth and reducing expenses so that the company can remain profitable.”

And after a business opens, the reality of running a business daily awaits.

“Starting a business is easy compared to sustaining it, day after day, year after year, ” Cassin said. “It’s hard, tedious work and there is never really any let up. I think that surprises entrepreneurs.”

What are some of the keys for sustainable growth?

Rose cautions against rapid growth, but suggests managed expansion is a feasible approach.  She believes you run the risk of damaging the business’ reputation if you can’t handle potential business demands.

“If you cannot keep up with the growth the potential of doing damage to your reputation is greater,”  she continues,  “With more modest growth it is easier to make the necessary adjustments to the operations gradually and with the necessary thought behind any decisions/changes.”

While focusing on managed growth, the MWF’s Cassin suggests it is essential customers are satisfied, products are flawless and ultimately, business sustainability is tied directly into overall profitability.

The 2017 Small Business Workshop, presented by Fifth Third Bank and the Michigan Women’s Foundation in conjunction with The LEE Group, is scheduled for Wednesday, May 3rd, at TechTown Detroit and is another opportunity for entrepreneurs to learn and network with business experts. This year’s theme is focused on Business Sustainability.  The workshop’s mission is to provide practical advice and counsel to aspiring and existing small businesses experiencing start-up and growth challenges.  It will feature keynote speakers, business experts and panelists who will share their expertise and offer ideas and resources with respect to building a business model focused on longer-term profitability and growth.

Four critical areas essential to business longevity will be addressed:

  • Customers: Do you really know your customers and potential customers?
  • Leadership: Do you have the required skills to get to the next level?
  • Financials: Managing your numbers and understanding your business model.
  • Effective communications: Are you amplifying your messages in a cost-efficient manner?

As Cassin aptly states, “It’s never easy juggling everything, and that is why this conference topic is so important.  The Small Business Workshop is going to help entrepreneurs become expert jugglers and understand how it all works together to make sure the company withstands the many challenges to long-term sustainability.”

For details and to register, please click here.

 

Leave a Reply

Your email address will not be published. Required fields are marked *