… A cautionary tale for small businesses
I was recently privileged to spend a weekend in the Pilanesberg National Park with my family. We were treated to some fantastic wildlife sightings, but the cherry on the cake was witnessing a cheetah on an unsuccessful hunt.
While I was secretly relieved that the impala got away, I also felt rather sorry for the cheetah, especially when I overheard a guide say that 50% of their chases fail. Those are not good odds for an animal that is facing extinction. One would assume that the fastest land animal in the world would not only fare better in hunting but also in survival, especially given that they have been around for 4 million years!
Cheetahs are built for speed, agility, and focus. Slight of build and muscular, they can accelerate from 0 to 100km/h in just 3 seconds. Their super flexible spine allows them to turn in mid-air while sprinting and their semi-retractable claws grip the ground for traction to help increase speed. The distinctive black tears serve the same purpose as a rifle scope, helping them to focus on their prey.
They are small, they are quick and they are focused…So how did they become endangered?
There are three main threats to cheetahs: habitat loss, human-wildlife conflict, and the illegal wildlife trade. Loss of habitat and the resulting increased competition from larger predators is the main problem. They are simply too lightweight to take on the big boys. Even when they have a successful hunt, cheetahs are vulnerable to losing their meal to a larger cat.
A major advantage of small business is that they are small and therefore quick to change. They are streamlined and lean and they can turn around very quickly unlike larger competitors. However, in a market that is under increasing pressure from global competition and shrinking economies, the small business is perhaps as vulnerable as the cheetah.
Although statistics vary, on average about 50% of all start-up businesses in South Africa fail within two years due to the inexperience and poor competencies of their owners. The advantages of being a small need to be harnessed and the disadvantages circumvented with creativity and strategic competence.
Many business owners have little or no business and management training or expertise and they fail to put in place the basics such as a detailed and well-executed business plan and later on, a disciplined approach to administration and finances. While passion and bravery is attractive, it is not a recession-repellent. Is the business model sound? Are the financial plans valid and is there access to sufficient finance to whether the costs of setting up and running costs in the early years? Trial and error are very expensive teachers and like the cheetah faces a 50% failure rate in the hunt, it’s interesting that the same statistic applies to small businesses.
Even when the business has been successful at attracting customers, poor stock control and cash flow management can be crippling. Many businesses fail when they have the custom they have been dreaming of, because they do not have the correct controls, planning and record keeping in place. Much like the cheetah can lose its prey to a bigger cat, customer loyalty takes a long time to build and it can be erased in a moment with bad service. The temptation to hire staff who are cheap as opposed to experienced and competent may be the difference between retaining and losing a customer.
A small business cannot afford the luxury of complacency or “learn-as-we-go”. The owner needs to be equipped with the knowledge to plan and budget and manage the business, in addition to harnessing the passion and adaptability that are the key advantages of small businesses.
Be quick like a cheetah but remember this is a long distance race!
Author: Janet Askew