Every entrepreneur wants to create a successful and profitable business – a basic and obvious statement. However, what doesn’t seem very obvious to most small business owners is how to turn your idea into a successful small business.
Statistics state that 65% of new businesses in our country fail within the first five years and only 25% manage to survive for 15 years or more. So how can an entrepreneur become part of a successful small business? Let’s find out how you can get your business into the Small Business Hall of Fame. Here are 10 keys to small business success.
Keep things organized
This point cannot be stressed enough. From a physical filing cabinet to an organized structure of digital folders on your computer, quick and efficient access to information will be of paramount importance in the day-to-day running of your small business.
It is recommended that you keep dedicated folders for each aspect of your business, appropriately labeled and organized in a way that makes sense to you and is intuitive enough for anyone in the business to access when needed. Backing up digital information is also essential, especially for financial data. It is important to keep it in a secure location to prevent potential chaotic situations in the future.
Provide an excellent product or service
While marketing is essential for creating buzz and attracting traffic to a business, it can only knock a company out up to a point. Products and services need to be good enough to meet or exceed your customers’ expectations once they come to you. In this way, you can gain regular customers who, in return, will help your company by generating feedback about it.
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Turning customers into brand ambassadors is one of the best and most cost-effective ways to put a small business on the map. However, this can only be achieved if the offering is top-notch and, above all, an excellent solution to a real problem that meets a need in the market.
Many entrepreneurs develop great and innovative products that go nowhere, while others take over the market space with a simple idea – why? Perhaps the first group was so focused on the end product that they simply forgot to solve a problem; while the second group found a solution to a common problem that many potential customers can identify with.
Do your research
Business is never just business, it also needs to be very personal. However, this does not mean that entrepreneurs should throw caution to the wind and set up businesses based solely on personal opinions. For example, you may think that walking your cat on a lead is a great idea, but will a cat leash shop be successful?
It is good to have hunches, but they are not the same as information. Information comes from data, and data comes from research. How large is the potential consumer base and what are the characteristics of these people? It is crucial to understand what drives and motivates buyers in order to reach them effectively. Research is one of the main keys to small business success.
Keep detailed records
Proper bookkeeping gives you an insight into the financial situation of your business and what might be a problem in the future. This can determine whether the company is successful or not. At the same time, it can also create a picture to visualize future projections and help with business planning. ‘Know your numbers’ is a phrase that Marcus Lemonis will repeat again and again. You need to be able to understand how much the business earns and how much it sells. And while many entrepreneurs only think of hiring an accountant to take care of their taxes when needed, knowing your numbers is much more than that.
For example, you should always know what the company’s bank balance is, how much the company is invoicing and how much it is spending, what the final production results were last year, what the gross and net profits were in the previous quarter and much more. It is essential to review the profit and loss account on a monthly basis, to be familiar with the general ledger and to understand all the figures that appear in it. Knowing how receivables and payables affect your company’s cash flow will help you make better decisions when you need to, rather than when it’s too late.
Focus and be patient
When starting a new business venture, it is important to have a set goal in mind to measure success. You should set an overall goal and set smaller milestones along the way. A highly recommended practice is to make a ‘to-do list’ each evening before going to bed and tackle it first thing in the morning, which will help you stick to your plan and avoid distractions. However, it is important that the to-do list is realistic so as not to set yourself up for failure.
That being said, it is important to have resilience not only in terms of the day-to-day challenges, but also patience when it comes to overall business performance expectations. Most successful businesses are not created overnight. It is important to remember that it can take years for a business to reach its full potential and become a successful small business.
Be prepared to make tough decisions
Every business owner has to make sacrifices for the good of the organization. However, there may come a time when the toughest decision is to put your own ego aside. Pride can kill a business and not all decisions will always be in line with your opinions and beliefs. And while a small business owner should have deep personal and emotional connections to the business, these cannot guide every choice they make every day.
It is important to recognise when you need help and accept that there are people who may know more than you about certain aspects of your business. There is nothing wrong with asking for help. You should be prepared to push your ego away from the door and listen to what others are saying – especially if it is from a consumer. It’s not easy to approach a situation with humility and an open mind, but it’s the best way to make a sound business decision.
Know your operational needs
You need to know everything about your business, and this knowledge should not be limited to numbers. It is essential to understand what your business needs to operate effectively. This includes employees, equipment, materials and anything else that is necessary. However, the intangible aspect should also be taken into account.
Efficient processes and inventory management can seriously affect operating costs. Researching industry best practice and testing to implement what works best for your business – by trial and error – can be a long and arduous process. However, it will make your business much more profitable and successful.
Keep overheads to a minimum
“Cash is king” is an oft-used saying and it is not incorrect; cash is one of the keys to small business success. Most business owners understand that liquidity is essential as the first line of defense against any unforeseen challenges. However, not all small businesses can have large enough reserves to cover sudden losses in revenue or increases in expenses.
Hire the right people and treat them well
This is one of those categories that could fall into the category of making tough decisions, but having A+ team players in the company is essential. All efficient small businesses have something in common: founders know that the people they hire become key to their success.
In a small company more so than in large corporations, every employee must be trusted to carry out their daily duties with as little supervision as possible. The company structure needs to be as lean as possible to keep overheads to a minimum. Therefore, no small company can afford to waste a position by hiring someone who is not suited to the role. Conversely, the same applies in the reverse situation. No small business can afford to lose an employee who is the best at something. Build your team and treat them well. Listen to your employees and help them develop.
Always look for improvement
Avoid complacency and ignorance about innovation. When things start to go well and the business finds its rhythm, it’s time to start looking for ways to make improvements. It could be automating a manual part of the process, adding a new offering, creating a unique flavour or extending opening hours. Whatever it may be, remember that there is always room for improvement in any business.
To avoid stagnation, you have to move forward, innovation is essential to succeed in a small business. Even giants such as Blockbuster Video, Kodak and Borders bookshop – which have enormous liquidity – have been seriously affected by resistance to change. As soon as a company becomes too comfortable, competitors will take advantage and find a way to take the lead. Through consumer research, problems can be found that we did not know existed; perhaps a customer suggestion can become the company’s next success story. New ways to improve your business will emerge naturally – you just need to be observant, open-minded and listen to your team and customers.
Summary
Running your own business requires consistency, diligence and creativity. However, despite having all these qualities, things can still go wrong. That’s why relentlessness and a drive to achieve will be what you need. Many small businesses fail within the first year of operation due to wrong assumptions even before the business is established itself. Don’t let poor preparation affect your brand and use the tips above!
