As of Thursday, February 8, 2018
Several weeks ago, there was an interview on television featuring billionaire Warren Buffett. When asked his opinion as to why a business might fail, Mr. Buffett -- the 6th richest man in the world -- had a simple response: fear and greed. During the interview, Mr. Buffett was referring to major corporations but the fear and greed theory can also be applied to small business as well.
When I was a business owner, I rarely experienced fellow business owners being greedy. On the contrary, it was my experience that local shop owners wanted to do what was best for their customers and conduct their business in a fair and honest manner. But while greed is rarely an issue for local business leaders, Mr. Buffett’s other downfall – fear -- can often play a major role in an owner’s decision-making process.
What are some of the fears that can have a negative effect on a business? And more importantly, how can someone overcome these fears to help assure success. There are two things that can prevent fear making decision making: planning and information. Below is a list of common fears and ways to help control them.
Fear of Failure: The fear of failure is an emotion most people have felt. It can also be one of the easier fears to overcome. By having a thorough and complete knowledge of all aspects of your business, problems and issues do not escalate. If fear of failure becomes an issue, enlist the advice of your accountant, insurance agent, lawyer or the Small Business Development Center. The knowledge an expert can provide is invaluable to overcoming this fear. It is important to remember that planning and information can overcome the fear of failure.
Fear of Financially Overextending: This is a delicate fear to address because it can affect an individual so personally. Operating a business can be financially rewarding but there are situations where a profit is not seen for one to two years. It is important that a person starting a business recognize this and plan accordingly to overcome the fear of being overextended. It would be wise to have access to at least six months of working capital as a baseline, but this is an individual decision.
Fear of Making the Wrong Decision: One of the best ways to overcome the fear of making the wrong decision is to study and analyze your market and your market trends. If all things are equal, what happened in your business last year at a certain time will happen again this year at that same time. A business owner can overcome this fear by maintaining good financial records and reporting records. Referring to reports and sales numbers from last year will help a business prepare for the present.
Fear of Admitting Lack of Business Knowledge: The IRS reported that the majority of audits are conducted on businesses with 50 or less employees. The IRS is not targeting small businesses, but owners often have to be a “jack of all trades” within their business resulting in reporting errors and late payments. One can overcome the fear of admitting lack of business knowledge by enlisting the expertise of professionals.
Fears are a common emotion that can protect us from harm in our everyday life. But we do not want fear to prevent us from making profitable decisions in our business life. Think about your business fears and how to conquer them.
Rose Mays is a program specialist at the Small Business Development Center at the Columbia Gorge Community College. She can be reached at (541) 506-6120.