If you’re looking up information on mentoring, chances are you’re trying to work out whether you need one, and how to find a good one… To help you out, let’s delve into the world of small business, mentoring and survival rates. Hopefully, when we’re done, you’ll be ready to make an informed decision!
Small Business Survival Rates for Australia
Let’s start with some stats. These can be hard to come by, but we’re pleased to say we have some reliable ones for you. Before we can survey the stats though, we need to identify what we’re calling a ‘small business.’ You may think this is a moot point, however, as it turns out the Australian Taxation Office (ATO) and the Australian Bureaux of Statistics (ABS) have a different definition of a small business.
According to the ATO, a small business is a business that has a turnover of less than $2 million per year.
According to ABS, a small business is a business that has less than 20 employees. In fact, a business with less than 5 employees is often classified as a micro-business.
Thanks to Indeed.com and the ABS, we have a useful summary of what the state of small business looked like in early 2018. Based on data from the ABS (we did say the data could be hard to come by if we specifically wanted Australian data).
Australia has around 2.1 million small businesses. Of these, around two-thirds are sole entrepreneurs (that’s 62.1% of businesses were non-employing), while around a quarter employ between one and four employees. Half of the sole entrepreneurs fail within three years (and according to the ABS 15.2% ‘exited’ business in 2017-2018 alone), while around 30-40% of the remaining small businesses will fail. That’s a small business failing every two minutes. That’s pretty staggering! Sadly, those that get past this three-year hurdle still aren’t safe. The data indicates that around 43% of one-person businesses that existed in 2011–12 were gone by 2015–16.
Starting and succeeding in a small business can be tough. The challenges you could face include;
- Financing difficulties
- Higher costs
- Volatile cash flow
- Vulnerability to local economic conditions
- Lower wages
Understanding Mentoring
So the stats aren’t great, but there is room to succeed. So how do you ensure your small business or startup is in the survival statistics? By making sure you have the support and skills you need to combat the pitfalls would be a great answer. However, many of the skills and experience needed to do so take years of experience to develop (or a rather large study budget; and theory is often quite different in practice).
Mentoring vs Coaching
A lot of people get this one wrong. Mentoring and Coaching are in fact two different things that are often confused.
Mentoring is a long-term process involving advice, teaching, and support with direction and decision-making. Coaching, on the other hand, is short-term focussed and involves assisting, challenging and encouraging you. While the skill sets and approach of a coach or mentor can be similar, the mentor will become a well-respected, long-term and less formal business support. A business coach will use a fairly formal and structured approach to help you through specific short-term challenges.
Why Choose Mentoring?
It’s not hard to see that having a long-term connection with a respected mentor. Someone who has done the hard yards and has years of experience in small business could be of great benefit to you. Especially if you’re aiming to be in the batch of small businesses that make it past five years (and do so well!)
The right mentor will understand your industry, your challenges and the pitfalls of small business. They will be able to guide you through these challenges and pitfalls as they come your way. They’ll also be able to bring objectivity to the table, and this can be invaluable.
Sadly, there’s not a lot of Australian research to lean on to see whether mentoring can have a positive impact on small business survival rates. We’re going to turn to some statistics from the US (please forgive us). The UPS store in the US conducted research on mentoring in 2013 and found that small businesses who receive mentoring
Additional Benefits of Mentoring
Over and above increasing your chances of being in business beyond 12 months, three years or even five, a mentor can support you throughout your small business journey.
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You can benefit from their first-hand experience
As a startup or small business, you’ll experience many challenges in setting up and running your business. These can range from setting up meaningful systems and processes to finances and even understanding and navigating your industry. For example if you’re setting up a food startup in the FMCG sector, having someone at hand with firsthand experience could be very beneficial. While there are books, reports and white papers aplenty, they do not compensate for the first-hand experience and knowledge gained from years of being in business. Your mentor will be able to share their experiences with you, their insights and their learnings as no book ever could. -
A mentor can offer you networking opportunities
Thanks to years in business, a mentor will often have a range of useful business contacts and aquaintances that can greatly benefit your business and your opportunities. A good mentor will help you connect with the right people to help you grow and develop your business to where it needs to be to succeed. -
A mentor can offer reassurance and encouragement
A mentor that understands the highs and lows of starting and running your business can offer encouragement and advice, reassuring you when you make decisions. Often, as a small business, we don’t have many colleagues to lean on when tough decisions need to be made, or when we worry that we’re doing the right things. Having a business mentor gives us that shoulder to lean on that we wouldn’t otherwise have. They can use their experience to help guide you through the tough decisions and can help boost your self-confidence as they can see your talents and skills objectively. Research has proven that self-confidence is an incredibly important factor in success. -
A mentor can help you develop your emotional intelligence (EQ)
Being young in business or being new to self-employment can be a challenge in and of itself. Inexperience can lead to increased fear, worry and high emotions. In turn, making emotive decisions can be detrimental to the success of your business. Maturity and confidence often come with experience. Having the right mentor can help you remove your emotions from the decision-making process. They can help you look at things objectively, whilst also assisting you to cope with and manage the stress and strain that comes with small business. As you learn to separate your emotions from crucial decisions, your emotional intelligence will grow stronger. -
The right mentor can help you navigate industry-specific challenges
There’s no arguing that each industry has its own pitfalls and challenges. Connecting with the right mentor, that can bring specific industry knowledge and experience to the table can be invaluable. They may be able to pinpoint legalities you were unaware of while being able to help you comply with them. They may understand the market and be able to share insights that help you break through the noise. There’s no doubt that being able to lean on an individual who understands the mechanisms of your industry. They can offer advice and support can be incredibly beneficial. For example, the challenges faced within an FMCG startup could be quite different from running a service-based business such as an accountant.
Choosing a Mentor
When choosing your mentor, you need to make sure there’s a good fit between you and him/her. Here are six things to consider in choosing the right mentor for you.
Compatibility
You’ll be working with your mentor a lot. You need to get along. If your mentor is not compatible with you, the relationship will not succeed and it certainly won’t be reassuring. The last thing you need when trying to manage a startup or small business is a personality clash with your support group.
Contrast
Your mentor should be someone quite different to yourself. You want to be challenged by them, learn from them and have their objective opinion. Having someone too similar to yourself will not deliver the same benefits. Diversity can bring a whole new perspective.
Expertise
Looking for someone with 50 years in the business is not always the answer. A mentor could be someone quite unexpected, such as a younger person. What you need to look for is their expertise in the areas you seek guidance. A successful entrepreneur a decade younger than you could easily have learnt enough to get you started. Sound out their experience before using demographics such as age or gender as a decision-making factor.
Trust
Mutual trust is imperative if you want a successful mentoring
Values
For a mentorship to work really well, you need to have shared values with your mentor. If you value family, and your mentor believes in
Expectations
In order to make sure you get the most out of your mentorship and don’t go away feeling cheated, identify your expectations upfront. Discuss these with your mentor and create an agreed set of outcomes. This way you will both know what is expected from the relationship.
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