As if starting a small business wasn’t stressful enough, the Bureau of Labor Statistics’ Business Employment Dynamics has found that around 50 percent of businesses with employees will survive their fifth year in business. That number drops to just 30 percent by their 10th year. Yikes. That doesn’t bode well for the success of your small business.
Does this really mean that you should give-up on your dreams of starting your own small business? Not necessarily. If you follow these thirteen tips, you’re increasing those chances of survival.
1. Create brand personality.
Unlike enterprise-level businesses, you don’t have the resources to have a “face” of your small business. You actually have something better…you.
I know what you’re thinking. How can you compete with charismatic and well-known personalities? Well, just be yourself. That what your customers want.
They want someone they can connect and engage with because you’re real. Your authenticity, heart, values, and vision are what separates you from other small business owners. That can actually be the greater resource that you possess.
Simply put, build your brand’s personality by putting more “you” into your business. The easiest way to do this is just to be yourself when you write a blog post, film an instructional video, or speak at an industry event. Share your vision and values in your “About Page” or write an editorial that explains why you started your business.
2. Develop a strategic business plan, organizational structure, and operational support systems.
Compared to building your brand, this isn’t as exciting. But, these procedures can make or break your small business.
- As explained by Robert A. Norman on Business Know-How, a strategic business plan is the blueprint of your business that describes your business concept, philosophy, and mission.
- An Organizational Structure is the policies and procedures that ensure your business is a well-oiled machine, such as job responsibilities and discipline.
- Operational Support Systems can relieve management from day to day routine activities, like scheduling meetings or tracking cash flow. This allows you to focus on tasks that can grow your small business.
These three factors will provide you with a clear understanding of your company’s processes and making sure you have the right systems in place. As Dr. W. Edwards Deming said, “85 percent of the reasons for failure to meet customer expectations are related to deficiencies in systems and processes — rather than the employee.”
3. Avoid common mistakes.
One of the best ways to increase your chances of succeeding is by learning from other’s mistakes. And, here are five of the more common mistakes small business owners makes:
- You overestimate demand for your product or service. Let’s say that you still receive DVD’s in the mail from Netflix. Just because you can’t let go of this now-outdated technology, doesn’t mean that starting a DVD rental business will work. Between Redbox and streaming services your chances of survival would be slim-to-none. Vet your ideas to your friends and family or conduct some primarily market research.
- Entering a competitive market. On one hand, at least you know there’s a demand. On the other hand, the market may be oversaturated. The only way this works is if you have a distinct competitive edge.
- Not taking into account overlooked costs. Expenses like your salary and purchasing an office and equipment are obvious. But there are plenty of overlooked costs when starting a business, such as these 25. Not factoring these expenses could lead to not utilizing your resources or throwing your budget out-of-whack buying things you don’t need.
- Not planning for profitability. If you want to succeed, then you have to know your profit model. This means being aware of your gross margin on sales, net margin, and how much you need to make to break even. These numbers based on KPIs will let you know how your business is actually performing.
4. Become connected to the community.
Customers love supporting local businesses. After all, when they support a local small business they receive benefits like improving the local economy. Knowing the people behind the product or service leads to better customer service, and a more personalized experience. Furthermore, supporting local businesses keeps the community unique.
As a small business owner, you should look for opportunities to give back through volunteerism, hosting a fundraising drive, or sponsoring a non-profit organization. Attend local events and just engage community by soliciting feedback or highlighting your loyal customers. In other words, get involved with the community and watch your business thrive.
5. Put your employees first.
“Your employees are important, because it is their skills that keep your machine running,” says Gary Vaynerchuk. By putting employee happiness and well-being before anything, Vaynerchuk has been able to scale up his businesses and “build committed teams as we continue to innovate.”
Gary, like most excellent leaders, builds real relationships with his employees, as well as encourages a work-life balance. For my businesses, I only have remote teams. This provides them with autonomy and flexibility. Also I motivate them by congratulating them on jobs well executed, trust building, and showing my team that there’s a great purpose to the work that they contribute.
Regardless of how you put your employees first, they’ll be your biggest advocates, while also growing your business at a faster rate.
6. Don’t just acquire customers, retain them.
Your customers are the lifeblood of your business. As such, you need to acquire and retain them by:
- Advertising your goods or services to your target audience via local newspapers, TV/radio, ads, direct mail, trade publications, directory ads, internet listings, event or charity events, or co-op ads with suppliers.
- Promotions and premiums like discount coupons, free trials, or promotional swag.
- Referral programs where existing receive an incentive for referring your business to someone else.
- Providing top-notch customer service.
- Building a brand that customers want to support — think Apple.
7. Get organized.
By being organized you’re more likely to complete tasks and stay on-top of everything that needs to be done. A great place to start is by creating a daily to-do-list. These are your most important tasks that you cross-off once they are completed. It’s a simple and effective way to stay focused and ensure that you aren’t forgetting anything.
8. Carve out a niche.
Want to get ahead of the competition? Then become an expert on a specialized topic and target a niche within an established industry. Sound complicated? You can get started by:
- Defining your industry or knowledge base.
- Breaking a broad market into a more specific niche.
- Put your speciality to the test by using the SPAN method (Subtopics, Pain, Attainable, Numbers).
- Becoming an educator and advocate in your niche through content.
- Get your content in front of new people, like writing guests posts.
9. Analyze your competitors.
This isn’t a shady business practice. It’s actually used by most businesses in order to improve your small business. This is because studying your competitors gives you a chance to see where their weaknesses are and what they’re doing better than you.
With this knowledge you can focus more on your strengths or how to improve the market or industry.
10. Protect your cash flow.
According to findings from “In Search of Solid Ground: Understanding the Financial Vulnerabilities of Microbusiness Owners,” the real-secret to small business success is “the owners’ discipline in managing their personal finances and business cash flow.
If you want to ensure that your business has a positive cash flow, take the following measures:
- Adjust your expenses.
- Accelerate receivables collections.
- Extend your payables schedule.
- Adjust inventory levels.
- Obtain a bridge loan when you need immediate cash flow.
Generate a cash flow plan for the next six-to eight weeks so that you can address any cash flow issues before they become an issue.
11. Obtain credit availability and management.
In a perfect world, you wouldn’t want to take out a line of credit. However, there will be times when you will need obtain a line of credit for your small business, like when you need to bridge a short-term gap between receivables and payables because of seasonality, inventory enlargement, or business growth. Sometimes there’s an emergency, such as equipment breaking, where you don’t have the cash-on-hand to replace it.
Whatever the situation, it’s imperative that you are able to obtain credit when you need it. Additionally, when you have a good credit you can receive more favorable payment terms, provide a payables float, and get set up with new vendors.
12. Get street cred.
The success of your small business goes back to being a part of the community. After all, when you enter a new geographic market it’s had to win-over established businesses in the area. On top of becoming active in the community, also use tactics like testimonials, word-of-recommendations, certifications, and professional presentations to earn credibility.
13. Know what you stand for.
Blake Mycoskie, the founder of TOMS, once said, “The easier it is for someone to understand who you are and what you stand for, the easier it will be for that person to spread the word to others.”
Take TOMS as an example. The idea is incredibly simple. Whenever you make a purchase, the company will help someone in need. You know who they are, what they stand for, and what they do.
From the get-go figure out what you stand for and tell your story so that it’s easy for you customers to remember and share. Again, this all goes back to building your brand.