To run a successful small business today, you need more than a million-dollar idea. You generally also need to have excellent planning and organizational skills, financial know-how, and marketing savvy, along with a good sense of what you can do yourself and what you may need to delegate.
To help make sure your business venture not only survives but thrives, read on. What follows are common mistakes many entrepreneurs make, along with nine smart steps that can help put your small business on the road to financial success.
Why Small Businesses Tend to Fail
While there are myriad reasons why a business might fail, these are among the most common.
Financial Problems
A major culprit behind small business failure is a lack of funding or working capital. This can result from underestimating how much money is needed to start and operate the business and/or overestimating how much revenue will be generated by sales of products or services.
Either (or, worse, both) can lead to funding shortfalls that can quickly put a small business out of operation.
Ignoring Legal Requirements
Running a small business often has certain requirements like applying for business licenses or permits, getting certifications, or adhering to other local, state, or federal regulations.Business owners who don’t bother to do their research before opening run the risk of being considered noncompliant and then could face fines or even a shutdown.
Inadequate Business Planning
One of the most important steps to starting a small business is to create a business plan that lays out your operations for the next few years and the steps you need to take to achieve your goals.
However, writing a comprehensive business plan can be a time-consuming and tedious task that many entrepreneurs decide to skip. This can lead to lack of clarity about what their mission is, who their competition is, and who their client is (as well as how to reach them). All of these problems can create a speedy path toward small business failure.
Poor Management
While business owners may be great at creating and selling a product or service, they may not have the skills it takes to be a good manager and to effectively oversee employees. Without a dedicated manager or management team, an owner can run a high risk of mismanaging certain parts of their business, such as marketing or hiring, which can ultimately bring a company down.
Tips for Running a Successful Small Business
If you’re ready to do what it takes to put your business on a profitable path, consider trying these small business tips for success.
1. Have a Clear Business Plan
Creating a well-thought-out business plan can be a crucial step in starting a small business. It doesn’t have to be a 25-page document, but it should contain the basics to help you (and potential lenders, if you decide to apply for financing) see the big and small picture for company growth.
Ideally, your business plan should identify who your company is, as well as you as the business owner and any other executive leaders. You’ll also want to detail what you plan to sell and who your audience is, as well as what marketing and sales channels you’ll use to reach them. It’s also a good idea to detail your small business budget, including operations, marketing, and staffing.
You may want to think of your business plan as a living, breathing document and review it frequently to make sure it’s still aligned with where your business is headed.
2. Decide How to Structure Your Business
When starting a new business, you’ll need to decide what type of business structure you want to operate as. Your options include: sole proprietorship, partnership, limited liability company (LLC), C corp, and S corp.
This is a key decision — your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.
You’ll need to choose a business structure before you register your business with the state. Most businesses will also need to get a tax ID number and file for the appropriate licenses and permits.
3. Keep Proper Records
Successful businesses tend to keep detailed records. This allows you to always know where your business stands financially and can expose any potential problems early on so you can come up with strategies to fix them.
Keeping records and receipts of all your purchases can also help you with monthly cash management, and make it easier to tally up and deduct qualified business expenses come tax time.
It’s also a good idea to create contracts if you provide services to clients and keep all client files organized so they’re easy to access when you need them.
4. Understand the Competition
What does your industry look like? Who are the major players? Most successful businesses know which competitors offer what products or services. They study and learn from their rivals’ successes, while also finding weaknesses or gaps they can fill.
If a competitor offers lower-priced products but poor customer service, for example, you may be able to keep your prices where they are, but provide stellar service to steal some of their market share.
5. Create Processes
When you first start a new business, your goal may be to get things done by any means necessary. But even if you’re a solopreneur, it can be a smart idea to create processes for everything you do, from onboarding new customers to updating your business’s social media.
That way, if you one day bring on someone to help you, they can follow these processes step by step and free you up to focus on other aspects of running your business.
6. Provide Exceptional Service
As a small business, you will likely have to compete with the big guys. One advantage you have over them? You have a smaller customer base, which allows you to provide your clients with extra attention — the kind that will keep them satisfied and loyal to you for several years.
When customers have a positive experience with a business, they’re also likely to tell other people about it. This can translate into word-of-mouth advertising, which is not only free but can be one of the most effective forms of marketing.
7. Know Your Niche
It’s common to try to be all things to all customers, but you can end up spreading yourself thin and offering products or services you don’t excel in.
Instead, it can be a better idea to narrow your niche to just a few things you’re really good at delivering. Become known for those, and you’ll likely attract more business.
8. Employ the Right People
One secret to running a successful small business is to hire people who are smarter (at least in some things) than you. Solopreneurs often feel like no one can run their business as well as them, but this attitude could keep you from growing.
While you may be an expert at running your business, you may not be all that skilled at creating logos or balancing the books. Hiring professionals in those areas can help ensure the job gets done right and you have more time to focus on growing your business.You don’t have to hire full-time employees if you don’t have the need or budget. You can also look at part-time help or contractors.
9. Get the Financing You Need
Another key to starting and running a successful venture is to make sure you have enough funding for your small business. Ideally, you want to have enough capital to cover your operations and overhead, as well as grow your company. Whether you have an opportunity to purchase a competitor or you need to make it through a slow sales period, small business financing can be key to your business’s long-term success.
The Takeaway
Starting and running a successful business requires meticulous planning, excellent organization, and detailed record-keeping. It’s also important to carve out your niche, provide great customer service, and bring in employees or contractors who have expertise in areas that aren’t your strengths.
In addition, you’ll want to make sure you have enough cash on hand to be able to invest in new technologies and equipment as they become available so you can continue to grow your business.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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15 expert secrets on how to grow your small business
When you’re serious about growing your small business it makes sense to get the best advice possible. You can do that even if money is tight by tapping the expertise of Small Business Development Center (SBDC) advisors and consultants. SBDCs are funded in part by the United States Congress through a partnership with the U.S. Small Business Administration.
SBDC Centers offer free consulting and free or low-cost training. (Find yours here.) Their results speak for themselves: SBDC clients grow sales by an average 18.1%, which is 4.3 times the national average. March 20th is SBDC Day, and to celebrate, we assembled some tips from their experts.
Here 15 SBDC pros share strategies for taking your business to the next level.
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Make a list of your competitor’s strengths and weaknesses. Thoroughly research them so you are able to take their weakness and make them your strengths. You don’t want to compete with them on their strengths when you can target their weaknesses and excel there. That’s your competitive advantage!
Tamela Darnell, management consultant, KY SBDC at Murray State University
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It’s as simple as it sounds, but sending a handwritten note to customers is one of the best ways to keep customers and get new referrals. Anyone can send an email, but when customers receive a handwritten letter, they know that you took the time to think about them, write the note, and mail it. (Who even has stamps anymore?!) Those notes become treasures for small business owners who many not otherwise receive much deserved accolades and you’ll be top of mind next time they or a friend is in need of your product or service!
Gina Woodward, regional director, America’s SBDC at WTAMU
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Disruptive customer service is a desired level of service that is delivering a customer experience that is so exemplary that it literally creates brand ambassadors for your business and blows the competition away. That begins with declaring exemplary customer service as a core value in your company and supporting that declaration with ongoing training and tools for every member of the organization from the top down.
Mark Collier, business consultant, Georgia’s SBDC
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Start looking now for a potential person to purchase your business to keep it thriving and growing long after you exit. One of the best places to look is at your own employees. If you find an employee that shows interest and potential start grooming them now. It may take a couple of years for you to sell (or be willing to sell) and in the meantime you have the opportunity to foster and mentor a great employee to become the next owner.
Susan G Desgrosseilliers, business advisor, Maine SBDC at the University of Southern Maine
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If you have a bricks and mortar business located next to other businesses, collaborate and promote as a city or neighborhood. The more ways that you can find to work and promote your businesses together, the more ways you will create a friendly and warm environment that your customers will love.
Here in Cleveland Heights, Ohio, several independent restaurants joined up to market together. And CLE Urban Winery had an event where it offered the product of another local small business, Brewnuts. They are both advertising for each other, and making more sales.
Katie A. Van Dyke, director, Ohio SBC at Cleveland Heights Library
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One of the biggest missteps that a company can make is thinking that they know who their customers are. Research shows us that most businesses have not taken the time to truly understand their customers. The easiest thing to do is to survey your customers, let them tell you what you are doing right— and believe me they will tell you what you are doing wrong.
You also need to look at demographics, geographics, and psychographics to obtain the full picture of who your customers truly are. If you master this concept, you will be better at catering to their needs and making them your customers.
Carleen Dotson, training specialist/business consultant, Ohio University SBDC
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Sell yourself, not just your product or service. Face-to-face contact, as well as a phone call, are powerful ways to establish trust and maintain that confidential relationship. Email has become the sad standard of sales in 2019; although important, it lacks the personal touch. Don’t fall into that trap!
Mary Kay Della Camera, microenterprise business advisor, Connecticut SBDC at UConn School of Business
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Revamp your website if it is more than five years old. Website design has evolved, internet users are more savvy and you don’t want to be considered “obsolete” in a glance. Simple changes like placing your logo and call-to-action in the upper left corner; using concise, keyword-rich content that is understood easily; and the addition of hyper-linked buttons to your product or service page placed above the “fold” or “scroll” line can make a big impact in user experience and bounce rates.
Laura D. Katz, area director, Athens, University of Georgia SBDC
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It’s a commonly accepted business fact that it is easier and less expensive to keep an existing customer than it is to get a new one. As small business owners we have to make a concerted effort not to take the customers we have for granted. Small simple things can make a big impact, so do what you said you would do, go the extra mile and follow up, asking for feedback. Start with these things and loyal customers will follow.
Bill Burnham, growth acceleration specialist, Florida SBDC at USF
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The reality of running your own business is that you can work 24/7 and there’s still more to do! When helping clients prepare an operating plan, I always recommend scheduling at least two weeks for vacations. I also recommend taking breaks during the day – for a short walk or meditation – for rest and renewal.
Ann Garbarino, NYS certified senior business advisor, SBDC at Stony Brook University
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Look around for key partnerships in all aspects of your business. Are there ways to partner with supplies, distributors, wholesalers or retailers that would cut your cost of goods sold (COGS) or marketing? For instance, your organic dog treats require vegetable pulp, is there a juice bar that regularly throws out pounds of pulp?
Kim Sherman-Labrum, associate business consultant/training coordinator, Idaho SBDC in Boise
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Map out your cash flow for six to twelve months. As your sales increase, it’s even more important to do this, since your inventory and payroll expenses will probably occur before your customers’ money hits your bank account.
Karen Goldner, managing director, Illinois SBDC at Women’s Business Development Centers
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Businesses need to explore all options when looking for financing. Usually the front line of financing sources are the banks and rightfully so. That is what they do best. There are some who use the SBA guarantee programs and others who don’t.
But there are other entities involved in that universe. Starting at the neighborhood level, there are the Community Development Corporations (CDCs). Their mission is to improve their own business districts and have funding to do that from tax abatements to grants. Then there are municipalities. They also have an economic development component helping businesses located within their jurisdictions. Then you have the counties which have the economic development officers and then state programs.
Honeycomb and non-profit Kiva have crowdfunding options. There are also online lenders. Business owners need to explore as much as possible in their quest to get financing.
Brent G. Rondon, certified global business professional (CGBP) manager, Duquesne University SBDC
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Whether you have employees, subcontractors or family pitching in, learning how to delegate effectively can be the difference between reaching new heights and burning out. Many small business owners are accustomed to doing a variety of things themselves instead of enlisting the help of others, so it can be challenging to identify the tasks you don’t need to do yourself and assign the work to someone else. Once you overcome the challenge, though, you will have more time to dedicate to what you do best — grow your business.
Denise Whitford, business advisor at the Connecticut SBDC
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These “smile makers” are four categories of target-audience products almost guaranteed to be a selling success. Add products for children, grandchildren, family and pets, the fastest growing purchasing categories.
Rita A. Mitchell, certified counselor, USM SBDC and Penny Bolton, business consultant, Murfreesboro, Tennessee.
This article originally appeared on Nav.com and was syndicated by MediaFeed.org.
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Featured Image Credit: FreshSplash/istockphoto.
