5 Tips for Being a Successful Small Business Owner
Did you know that over 50% of the working population works in small business here in this country? How do we classify small business here in America? Sadly, only half of these businesses will remain afloat by their 5-year mark. Well, the SBA defines small business as an enterprise having fewer than 500 employees. Are you the owner of one of these many small businesses??? Well, we hope you make it passed the 5-year mark. We want to see you make it passed the 20-year mark! And we’ve got some tips to help you get there!
You become a jack of all trades.
Being the founder of a startup means playing different roles that you don’t concern yourself with when somebody else is running the show. You need to learn all the skills involved in the various tasks that make your business work.
For example, Mike is a master electrician. Does that make him qualified to market his business? To price his services adequately? Does it make him a master at placing orders on equipment or hiring, paying and overall managing a staff of employees? No, but in order to create his own business, he will need to learn.
So, be prepared to do some studying and self-teaching, while still being able to provide great service to your existing clients. Be prepared for late nights and long days. Starting a business is not easy, but if you pull it off correctly, it will pay off for you in the end.
Available capital is a necessity.
Businesses fail all the time for lack of positive cash flow. It’s actually the most common cause of a business not making it. You can give yourself a big advantage by cutting down your overhead.
Everything costs money; therefore, when you start a business, money is going to be in short supply. Which means you need to have a value mindset when making purchasing decisions and it probably means you are going to have to let go of the things you don’t absolutely need. Sacrifices are going to need to be made.
The bright side is, if you make it into your first year, some marketplaces like Sprout can get you some funding that banks never would in order to help with the unexpected expenses or expansion your business may need in order to grow.
Put things down in writing.
Anytime you start a business, even if you are the sole proprietor, you are involved in all kinds of informal partnerships. One bad relationship is all it takes to sabotage your entire business. So make sure you choose your deals and partners wisely and always sign formal agreements.
Partnerships don’t always work out. That’s why you have written procedures on how to run the business, how to settle disputes, and if it gets this far, how to handle the departure of a partner. The same thing applies to other business related relationships such as suppliers, vendors, contractors or even clients.
Focus on what makes you money.
The most important key to running any business successfully is having the ability to concentrate on the activities that bring in the most money. This is particularly important for new startups. Building cash flow has to be your top priority. That means you have to minimize the time spent on routine functions. Being able to identify the tasks that are going to be repetitious from the very beginning and immediately streamline them to maximize efficiency.
Doing paperwork and administrative tasks for example is a pain for a lot of new business owners. So create a system that makes doing those things as simple as possible. Whatever that means you need to do. Do it. Make it work so that you can focus on bringing in revenue for your growing business.
Make sure you have some paying customers before you start.
This may be the single best piece of advice you will ever get. If you already have a client base prior to starting up your business, at least half of your business risk is gone. Having clients that will come along with you, like in the example of Mike the electrician, is a game changer.
If Mike had not been impressive, and did not leave a lasting impact on his customers over the years to the point where they kept calling him for their electrical needs, he’d be starting at ground zero. He’d start his business and have no income. He’d have to rely strictly on marketing to get his business running. He couldn’t hire other electricians who had their own clients because he couldn’t afford to. He needed that steady cash flow so that he could hire more electricians who had THEIR own clients to bring in money to his business. Then he could afford to shell out some money for marketing, and he was able to increase his clientele base even more. Soon enough, he flourished into a long lasting electrical business. Had he started with nothing, he would have struggled to get clients without money to spend on marketing or a track record to go by. It would have been a disaster.
So finally, after all these tips, I’ve got one more for you. Test the waters. Before you jump right into starting a business, keep it on the side. Develop it slowly while you still have income from your day job. Once you feel your business has roots, and that you are ready to take the plunge, then go all in. Just be prepared for the preparation and money it’s going to cost to keep a new business afloat.
Working With Sprout
Sprout is an online marketplace where businesses come to compare and save on small business loans. You go to www.SproutLending.com and simply fill out a profile or call us at 800-865-6057. Based on that information you provided, Sprout suggests the best matches depending on the amount and purpose of the business loan you are seeking. Last year, Sprout and it’s staff was responsible for over $100 million in loan approvals.