How Entrepreneurs Can Beat the Odds: 7 Strategies for Business Success
There are enough statistics available to scare any would-be entrepreneur from going into business. Although over 99 percent of all businesses with employees in the United States are considered to be small, according to the SBA, the staggering statistic is the expected lifespan of a new business. It is estimated that only 70 percent of new businesses will still be operating in two years, and only 50 percent will still be operating in five years. That’s pretty disheartening if you’re thinking about opening a business or already own a fairly new business.
Rather than simply operating day to day hoping for better results tomorrow, successful small business owners and entrepreneurs practice many of the same principles. There’s no need to be a statistic of failure when you can be a statistic of success by implementing the following seven strategies:
1. Have a Plan
All businesses regardless of size must plan for the future. Realistically, planning the future of a small business encompasses a shorter period of time than planning the future of a large business. Nevertheless, a small business needs to plan for short and intermediate periods of time.
What does the business want to accomplish within the next 6 to 12 months or 12 to 24 months, and how is it going to accomplish its objectives? What type of marketing strategy will be needed? How will growth and expansion be financed? How will employees be hired and trained? What new products or services will be offered?
Questions must be asked and answered with well-thought-out strategies. A plan is simply a road map to get from point A to point B, but without a reasonable road map, point B most likely will never be reached.
2. Understand Cash Flow
Nothing kills a small business faster than running out of cash. The saying “Cash is king in a small business” rings true. Without sufficient cash, bills don’t get paid, payroll isn’t met, marketing slows to a halt, and soon the business is in the dire straits of possibly having to cease operations.
Too often, small business owners operate on a shoestring budget not forecasting the amount of cash inflows and outflows for the foreseeable future. If revenues are not sufficient to sustain current business operations, then additional financing is necessary to operate, which comes from either additional investments or borrowing. The bottom line is to understand not only the business, but also how and when cash will be generated.
3. Start Slow and Be Conservative
Small business owners are by nature optimistic; otherwise, they would never take the risk of business ownership. While always believing the glass is half full rather than half empty is an admirable quality, too much optimism can have negative consequences. Although owners might believe they have the best product or service to sell, conducted the necessary amount of market research, and obtained advice from trusted professionals, the real proof of success is after operations begin.
Just in case all the preliminary predictions do not turn out to be exactly on target, it is best to start slow and be conservative. There is ample time to expand, but expanding too fast at the beginning can lead to cash flow problems and mistakes that are difficult to correct. Throw a pebble and make a ripple, then throw a rock and make a splash!
4. Know Your Customers
As simple as it sounds, businesses must know their customers. After a business has been established, this principle becomes easier. However, during the early life cycle of a business, the owner must know who and where the bulk of customers are, so the right decisions can be made during the early stages.
Surveys, questionnaires, focus groups, and customer data are important in refining exactly what customers a business attracts. It is rare to find a business that can cater to all demographics. The sooner a business can narrow its scope identifying its best customers, the sooner revenues and profits will increase.
5. Make Marketing Dollars Work
Small businesses normally do not have the luxury of wasted marketing dollars. Every dollar is important and must make an impact on the business; money invested should hit the mark every time.
A marketing campaign might be too broad, which makes part of the investment ineffective, or it might be too narrow, not focusing on the entire target market. Neither is a good strategy. Marketing campaigns should be constantly reviewed for effectiveness, changing one variable at a time to see what positive or negative impact the variable has on the business.
6. Be Flexible
Small business owners cannot be rigid in their thinking. The environment can change quickly for a small business, necessitating instant changes. Owners must be flexible and ready to make necessary changes. A wonderful business idea one day might be worthless the next day. One thing that is certain in business is change. Business owners who remain inflexible are a danger to their own businesses.
7. Set Objectives
Set an objective and accomplish it. Set another objective and accomplish that one, too. Being successful in business is a pattern of accomplishing one objective after another. Objectives are narrow, precise, and very specific tasks that a business or person wants to accomplish versus goals that are broad, general, and abstract. A business should have long-term goals but short-term objectives to keep it headed in the desired direction. A growing, successful business will have set reasonable objectives and will constantly achieve those objectives.
Understand the Difference
A business owner who understands the factors that make a difference between success and failure is much more inclined to be successful. The easy part of owning a business is developing an idea and “opening the doors”; the difficult part of owning a business is understanding how to “keep the doors open.”
