No graduate business school fully prepares you for the real work of entrepreneurship and small business ownership. Studying theory, managing numbers, and examining quality processes can only give you the background necessary for what the real world dishes out.

So, while there are good arguments for continuing education, most business and management schools do not have a small business focus. They neither appreciate nor share the daily pressures that we know as small business life. Here are three areas many business and management schools fall short:

  1. Your skill set must be broad and deep.

Despite what you read and have been told, it takes more than hard work. Think about it: when you are an employee, you are responsible for one area of thought and operation, but as a business owner, you have to know about each and every corner and aspect of the company and its operation.

You must have practical skills, like the operating of office machines, phones, word processing, and spreadsheets. You need to know software, such as office, accounting, and tax software. You must master the ins and outs of your production, shipping/receiving, and customer service. You have to be on top of purchasing, supply chains, and billing. You’ll want to know personnel and payroll laws as well as risk management. Even if you delegate some functions, you need to know costs, overhead, compliance, accounting, and so on.

Solution: Be your own best critic. Know what you can do and can’t. Hire the advice you need and study as you grow. The “need-to-knows” can be daunting, but you are better off going into the business with a full awareness of what you don’t know.

  1. The marketplace is not friendly.

The free enterprise system puts you into market competition. You’re entering a world where other businesses want your customers and may not be friendly about it. It may be one thing if you are the only candy store on the county square, but most businesses competitors would rather you were not in the picture.

 

Be prepared for price wars, false claims, and downright personal attacks. With some stamina and character, you can weather shady practices. You are well advised to avoid the dogfights and foul play, and to focus on your quality and customer service.

Solution: Customers can be selfish. They will shop for price and move their business at a whim. You need to determine their purchasing motivation and be there to meet them with what they want. Structure customer loyalty by frequent contact, promotion advantage, and response to feedback. Build partnerships with your customers, so that their self-interest is in your interest as well.

  1. Small businesses cannot afford debt.

Income does not begin the day you open the doors. From before the doors open to well after, money is scarce and start-up costs are high. You have to pay to get it running, and you have to expense the search for new customers. So, you find yourself hurting more than your competition all the while you are bringing in less.

Add, as I would suspect, the necessary costs of supporting your family and household, and debt can be tempting. Trouble is that debt is another expense – interest as well as principal payments. In fact, debt is usually collateralized with something you cannot afford to lose.

Solution: Don’t borrow to start a business – without fully understanding the implications. The more you borrow, the more you reduce your chance for success.

Now, you may find such things discouraging, but I hope not. I am more anxious to see people enter into business ownership with their eyes wide open. Too many small businesses fail despite the hard work of their owners. Proceed with eyes wide open: hard work is not enough!

 

by Steven Schlagel