11 Things Every Small Business Owner Should Know
If you look at statistics, it’s clear what anybody starting or running a small business can do with some input on tried and tested practices on how to make a business undertaking successful. According to the U.S. Bureau of Labor Statistics, around one-fifth of small businesses fail within the first year, and by the end of five years, about half have faltered. After ten years, only around a third of companies are still operating.
Here are some things for all small business owners to keep in mind to ensure business success.
1. Start with a business plan
If you are planning to start your own business, don’t attempt it without a business plan in place. If you are already running a business and you don’t have a business plan, consider taking the time to develop one. Creating a business plan forces you to think through every aspect of your business idea and will show flaws in your initial ideas.
Having a business plan will help you make critical business decisions, like whether you can afford to hire new employees and how many, or whether you can afford a major purchase.
Studies have shown planning in the form of formulating a business plan pays off. These companies grow faster and have a better chance of success.
Besides, if you ever want to scale your business and need some financial support, any prospective investors or bank you approach will insist on seeing a business plan.
2. Choose the right people to work with
With any new hire, take your time to find the right person for the role. Look for someone that will fit into your company culture or the culture you want to build. Hiring the right people is crucial for the success of any business, even more so for a small business as every new hire will have a disproportionate impact on the business.
As part of the hiring process, consider making time for the candidate to spend time with your other employees. Introduce potential hires to different work situations with different people in different roles and give them a task to perform. This approach teaches you things you won’t learn from a resume and an interview.
It helps you see how the person interacts with different characters. You can benefit from the feedback of those who interacted with the candidate, which could open your eyes to things you may have missed during the interview.
Hiring people is costly; hiring the wrong people can be even more costly. With each new hire take your time to find the right person.
3. Prioritize customer service
You only have to think of yourself as a customer, what kind of service you expect, and what you are likely to do if you are at the receiving end of bad service to know how crucial good customer service is.
Statistically, only one in five consumers will go back to a company after a bad customer service experience, while nearly 80 percent would forgive a bad experience if they rate the service team as “very good.”
Not only must every employee understand that customer service comes first, they must be in a position to deliver excellent service every time. They will be able to do this if they:
- Are well-trained and know your products and services inside out
- Understand how their role contributes to the company’s success
- Believe in what the company stands for
Keep in mind that excellent customer service leads to loyal customers, and it’s easier and more cost-effective to retain existing customers than to obtain new ones. Excellent customer service directly contributes to your bottom line.
4. Provide reliable customer support
In the absence of a brick-and-mortar store, customers are dependent on emails, text messages, and responses from online chatbots. It can be extremely frustrating to wait for an answer to a query or problem to come from the ether. Fast email and social media responses are critical to building brand trust and loyalty in a world where a computer screen is the platform of interaction with a business.
If your team can continually respond in a timely manner, you can be there for the customer and resolve their issue. The aim should be to answer emails within 12 hours and social media and chat communications even faster.
With customer interactions happening increasingly online, it’s essential to plan for and deliver a sterling online experience for customers.
5. Learn to delegate and trust the process
For small-business owners, delegating to others can feel like a leap into the unknown. It requires faith and trust. After all, your company’s future will be impacted by the actions of the person you delegate important tasks to. However, it’s impossible to do everything yourself, especially if you want to grow your business.
This is where the value of hiring the right people really comes in. If you were diligent in your hiring process and hired great people, delegating tasks to them would not be a problem.
Many small business owners come to a point where they simply need to hand over some responsibilities. They often discover that they were not doing such a great job themselves. Hiring people who are great at what they do is a smart move. That is the motto of Sir Richard Branson, one of the most successful self-made billionaires.
He recalls the first time he decided to hire an accountant: ‘’My friends and I wouldn’t have gotten our business off the ground without Jack. He shared our vision, and in some areas he knew better than we did how to make it a reality. From our experience working with him, we learned that if we really wanted to grow our business, we’d have to delegate.’’
6. Focus on a specific niche
Don’t try to appeal to everyone. Identify what your core competency is, who your target customers are, and put all your effort into that rather than chasing every opportunity. This focus will help you to build brand identity and customer trust.
Customers come to you because they need a product or service that works. If you can show that you are an expert in what they are looking for, they are more likely to trust your business than one that provides many different services. A business that claims to provide many expert services creates doubt in the minds of customers, as it is simply not possible to be an expert in many matters or subjects. The moment you claim to be, you come across as inauthentic.
Businesses that focus on doing one thing really well tend to build a good reputation and a loyal customer base.
7. Sort out your billing
Making a sale is only half the job done; getting paid is the other important part. While invoicing is simple, actually getting paid can be a challenge. Small business owners often struggle with this aspect of the business, especially if they are not trained accountants and don’t have the resources to employ one.
Typically, small business owners are too busy to pay attention to this aspect of the business, so invoices don’t get sent out on time. If they don’t have time to send out invoices, they have even less time to follow up on unpaid and overdue invoices and make sure that every service provided or product sold has been paid for.
To ensure that the cash comes in, you need a billing system that sends out professional invoices and provides data on what has been sent and paid and what is outstanding.
Fortunately, there are many online billing software options that will take care of this task for you. Shop around and find the best option for your business.
8. Create a contingency plan
The pandemic has reminded us that unforeseen events can have a devastating impact on our plans and that business leaders should have a contingency plan in place to minimize risks. A contingency plan identifies potential risks like a data breach, a natural disaster, or the loss of a key employee and sets out a course of action to be taken in case it happens.
To come up with a contingency plan, compile and prioritize a list of potential risks. Come up with a plan for each risk. Knowing your business, you will know what your most immediate risks are. Here is a list that can help your team think more broadly about what could go wrong:
- A major client doesn’t pay
- A fire breaks out
- A natural disaster strikes (or even a global pandemic)
- A server goes down, or other technical issue crops up
- There’s a data breach
- A key employee quits
- Utility provision is disrupted
- Your only supplier goes out of business
- Equipment breaks down or gets stolen
A contingency plan will give employees direction in case of an emergency, minimize financial loss, and enable timely resumption of business operations. In today’s uncertain economic climate, it is not wise to leave things to chance.
9. Take the possibility of a data breach seriously
Data breaches affect businesses of all sizes across all industries, not just the ones that you read about in the news. Small and medium-sized businesses are being targeted at the same rate as large enterprises.
According to the 2019 Verizon Data Breach Investigations Report, as many as 43% of all breaches occurred at small businesses. And according to a 2019 research report on the Global State of Cybersecurity in Small and Medium-Sized Businesses, the number of small and medium-sized businesses experiencing data breaches increased to 63% in 2019.
If you consider that small businesses are easy pickings for hackers, you’ll realize that cyber security best practices are of paramount importance to your business. This includes cybersecurity awareness training for everyone right from the outset of your business, as research shows that most data breaches originate from employees.
10. Don’t neglect marketing
The best product and the most innovative service will not make your name or bring in the bucks if you don’t do any marketing. Far too many great business ideas die an early death because an individual knows nothing about marketing, never considered the business’s target audience or simply is too focused on other aspects of the business.
A marketing strategy is basic to business success. Fortunately, there are so many resources and great ideas online these days that no one needs to feel intimidated by having to develop a marketing strategy. If you don’t have the time or interest to do it yourself, make sure that, when you put your team together, you hire someone that buys into your business idea wholeheartedly and has a proven marketing record.
11. Focus on customer experience
The importance of positive customer experience cannot be overestimated. Customers who have a great experience with your brand will stay with you and likely spread the word on social media.
What constitutes good customer experience? Speedy service, convenience, reliability, and friendly service. To understand the importance of positive customer experience, consider these statistics from PWC’s Future of CX report: customers are willing to pay up to a 16 percent price premium on products and services, plus increased loyalty when they have a positive experience. Conversely, one in three consumers says they will abandon a brand they love after just one bad experience.
The ability of a small business to deliver outstanding customer experience is a significant competitive advantage.
For many people, the rewards of running a business far outweigh the many challenges. You can circumvent many potential difficulties and risks if you pay heed to the tips discussed in this article – they come from the trials and tribulations of thousands of experienced business owners.
If you are looking to start your own business, a perfect starting point is Entrepreneur Rx or listening to this podcast.