Keys to Success
There is no single path to starting a successful small business. Many small and micro companies don’t survive their first few years. Business owners can’t control everything, but you can set yourself up for success by learning what distinguishes profitable businesses from those that fail.
What do you need for success?
Small business owners play a particularly important role in their business as they often have to take on multiple roles and their decisions can determine the success of the company.
An action-oriented approach. Research is essential to starting a business, and you may need to continually invest in your own knowledge as you run and grow your business. However, some people may miss their opportunity to become business owners because they spend too much time dreaming about it and not moving forward. Successful business owners understand the risk and potential rewards of starting a business. They put their knowledge into practice and continually learn from their successes and failures.
Product-market fit. If customers want and can afford what you’re selling, then you may have found a good product-market fit: your product fits your target market. Whether you’re selling a physical product, teaching a course online, opening a restaurant or providing a service, finding the best way to market your offering is essential to success.
You may need to change your products or services over time to account for new competitors or changing customer preferences. For example, you may see a shift in customers’ growing preference for eco-friendly products and have to shift to using environmentally friendly resources. To keep your sales numbers growing, you need to market your product effectively to reach new buyers and grow your customer base.
The right people. Most small businesses rely on teamwork. As the business owner, you’ll need to determine who to hire and who to fire. Try to hire employees who have the skills for the job and reflect your company’s mission and values.
Your team also includes the consultants and experts you hire, such as an accountant or a business attorney. Consider whether these individuals have experience working with similar types of businesses or in your industry before hiring them.
Additionally, you could find ways to meet other business owners and learn from their experiences, or find a mentor. Learning from others’ experiences, and sharing your own business successes or failures, is valuable regardless of the type of business you run.
A well-researched business plan. Your business plan can help keep you organized and focused. You’ll refine your business idea as you create your business plan, and you’ll have a roadmap that you can refer to before making major decisions.
Financial knowledge. Even with a great idea, team and plan, your business’s success depends on how well you can manage your business’s finances.
Try to learn the basics of creating a budget, saving money and financing a business. You can hire a bookkeeper or accountant to help, but you may want to periodically review your own financial statements and have enough knowledge to understand what you’re seeing to make sure you are making money.
Knowing how much money is coming in and going out of your business each month (its cash flow) can also help you make strategic, fact-based decisions. Cash flow problems can cause otherwise successful small business to fail. For example, you might sell a large order to a major corporation and then have to wait 60 or 90 days to get paid. In the meantime, you have to figure out how to pay your employees and vendors.
In addition to cash flow management, financial know-how could include knowing which taxes you need to pay (and when they’re due), what types of business insurance you should have and how to effectively borrow money.
Effective processes. Small business owners sometimes feel like there isn’t enough time to do everything on their to-do list, and they might be right. Creating processes can help you streamline business activity.
For example, you could create step-by-step instructions for how to open your shop every morning. Or, how to pay your invoices each month. If you’re doing these tasks yourself, having a process can help you avoid mistakes and save you time.
When you can afford to hire help, it will be easier to pass these tasks on to someone else and turn your focus to more important work.
Targeted advertising. Customers can’t support your business if they don’t know it exists. Whether you’re running a physical store or e-commerce shop (or both), you’ll want to create a marketing plan to promote your business and figure out which types of advertising are most effective with your audience.
Customer loyalty. Building a loyal customer base can take time, but it’s also a sign of a successful business. Loyal customers provide two great benefits: recurring revenue and word-of-mouth referrals.
How do you build customer loyalty? Provide excellent customer service, tell the story of your company’s vision or mission, and explain the value of the products or services you sell. Some customers may even be loyal to small business owners who are outstanding members of their community. Many communities encourage people to “buy local” to support and grow the economy and help their community thrive.