*Editor’s Note: CC Biz Buzz is a monthly column series that features insightful commentary from a member of the Columbia College Robert W. Plaster School of Business faculty.
By Dr. Dave Hickman
“How’s business?” That’s a question I often ask of small-business owners, compelled by my love of talking shop with anyone who will oblige. The answer is usually coated in generic optimism. It is more likely that the answer should be, “Things aren’t going so well.” You’ve probably heard a statistic claiming something like, “Half of all businesses fail.” More accurately, Forbes states 20% of businesses will fail during the first year and 50% will be gone by the fifth year.
But why? Is maintaining a business really that hard? Perhaps it is. Almost half of business failures occur because there is no demand for the product or service being offered, cites Forbes. It might seem like a no-brainer to make sure you offer a product that people truly want, but reading consumer minds is not easy. None of us have the natural ability to know the thoughts of others. The only way we can find out is to ask, and it’s not feasible to ask everyone. After lack of demand, Forbes says more than a third of business failures happen because the capital runs out. Anticipating costs in business is difficult, for there will always be unexpected expenses. Most of us can empathize with a lack of cashflow. Also consider the American Customer Satisfaction Index, an economic measure of the quality of goods and services experienced by consumers. Measured on a scale of 0 to 100, the index has never crested 80, suggesting there is plenty of room for improvement in consumer satisfaction. Anyone who has worked in customer service knows how hard it is to please everyone.
This issue matters because the success of small businesses impacts everyone. Our country boasts more than 33 million small businesses, accounting for over 99% of all business entities, according to the U.S. Small Business Administration. Collectively, those businesses carry almost half of all employees in the United States. Furthermore, 80% of small businesses consist of just one person. These figures demonstrate just how close small business is to each of us. Chances are we are employed by one of these fragile enterprises, or we care about someone who is. The good news is we have the power to help these businesses.
Think about all the skills you need in life that you didn’t learn in school. Maintaining your credit score, changing a tire and cooking meals are all things many of us had to learn on our own. Managing a business is often the same. Many small-business owners work for themselves because there is an opportunity to leverage their unique skills. What the restauranteurs, plumbers and retail-shop owners typically don’t learn much about in their training is how to run a business. Fueled by passion, most will take a trial-by-fire approach, hoping to learn enough about operating a business to keep it alive. We as consumers should be empathetic to these challenges based on our own experiences navigating everyday life.
Management textbooks like to discuss the traits managers should possess. In my opinion, the most important trait of a good manager is often omitted: humility. Good business owners know they aren’t perfect. They want to improve, and the successful ones are hungry for feedback. The trouble is the desire for continuous improvement is often one-sided. Consumers typically don’t give feedback on their experience with regularity, whether good or bad. Maybe it’s time to change that practice.
I suggest we work to be involved as consumers and offer feedback on our experiences more frequently. If you received great service or if your product experience exceeded expectations, comment on it. Knowing what has been done well can help businesses continue on a good path. If you notice ways your experience could have been improved, share it. Sometimes businesses will not realize customers are dissatisfied until someone mentions it. Doing so ensures an opportunity to correct and get better. In either scenario, our contribution as a consumer could strengthen the local economy we rely on.
The nature of business is imperfect. Embracing the notion that good business takes a little help just might be good for all of us.
Dr. Dave Hickman is an assistant professor of Management in the Columbia College Robert W. Plaster School of Business.