Many of us are familiar with the story about the person that comes to the sunny Okanagan for the lifestyle and decides to buy a business or start one from scratch. Dreams of running your own business in this paradise is often met with a shocking realization that it is not all that you thought it would be. The “build it and they will come” theory is often short in delivering. Statistically, small businesses struggle to stay open and many shut their doors in under 5 years.

This trend is often explained by the weak economy, the seasonal nature of many businesses or even the frugal nature of local spending patterns.  While these factors definitely play a role, another factor to consider is the lack of knowledge and experience possessed by many new business owners.

A high percentage of businesses are purchased by individuals who have never operated a business before. They make the decision solely out of necessity (slow job market) or are driven by excitement of the novelty of the idea. Certain that they know enough and that it really can’t be that difficult to run a small business they dive in.

When an existing business is purchased,  the new owner often counts on the perceived momentum, reputation, and sales of the current business. This often falls short on two counts:
First, if the due diligence prior to purchase was not thorough, the perception of success can be extremely inaccurate. Second, if the business is doing well, the new owner may assume that this is guaranteed to continue even if they do not have past business experience and understanding of the core business systems. Both of these pitfalls can result in an overwhelmed new owner and a business destined to struggle….

Soon after the excitement of their recent purchase wears off, the reality of what they do not know becomes apparent.

No matter what the industry or nature of the business, it is well established that some universal, key elements must be present to help ensure a business can keep its doors open not to mention the highly sought after dream of the business becoming a long-term success.

The purpose of this four part article is to explore the key components that exist within the 3 core business systems – finance, operations and marketing.  Each of these systems plays a crucial role in any business and ensuring that all areas are given the proper (and balanced) attention is something that is often overlooked by new business owners.

The subsequent articles in this series will explore the financing, marketing and operational questions that any new business owner should consider when operating a new business. Many of the pitfalls of owing a new business can be avoided with wide-eyed awareness and a basic understanding of the systems and how they interrelate. Future obstacles or opportunities can be mitigated with a good strategy and a talent support team.