How Small Businesses Become Successful

What’s the secret formula to small business success?

We know that might be a loaded question but we have a few strategies up our sleeve that we know work. The overnight success of Facebook and Uber isn’t the same way most small businesses experience success. It’s critical to keep in mind that everyone’s journey looks different. Let’s explore the various ways your business can become successful and continue to grow and thrive, and what counts as a successful business.

Success or failure? And the in-between. 

There are two main ingredients to American overall business outlook that are admired by the rest of the world. These are:

  • Enthusiasm for the future and making things better through a business
  • An openness and willingness to change and adapt to accomplish goals

We should hold on to these! And there are other elements that go into a successful small business, such as an owner with determined organization and detailed record-keeping and a commitment to delivering good, reliable services to customers that become loyal (to name a couple).

Small business owners are all different, but we all share common skills that help contribute to your success. Persistence, patience, and commitment are all attributes apparent in business owners. And let’s face it, it’s hard to survive in entrepreneurship without those three traits. A positive attitude toward your business, and life in general, contributes to resiliency. You know better than anyone that it requires sacrifices in your personal life when establishing a business (balance….what is balance??). But, good planning and organizational skills, with a dose of flexibility and strong analytical skills, will help direct you down the path to successful small business ownership.

Setting a strategic business plan that clearly describes your business concept, mission, and philosophy will absolutely ensure you start off on the right foot. And setting personal and business goals is important for motivation and measuring success. A proper business plan should detail specific strategies and timelines to attain goals. At the outset and for continued success, be aware of your competition and either appropriating or improving upon their successful tactics.

A well-developed organizational structure will help you work toward the same goals. Your organizational structure should inspire all employees to perform to their utmost capabilities and reward those who excel in their contribution to the business. Just the same, your structure should allow for corrective actions and discipline should employees deviate from acceptable behavior. As part of your organizational structure, business owners must define positions, tasks, duties, and responsibilities and routinely measure performance. *Key takeaway: Everyone preaches it, but you must also practice it: Employees are your most valuable asset!* Treat them as such with ongoing training, job enrichment programs and incentive compensation. Listen to the type of recognition they want – and follow through. It’s also important to understand their learning style and what communication model motivates them to succeed. This is made much easier at CEFO Advisors with the help of the CultureTalk Survey System, which unlocks the archetypal patterns in your organizational culture and the individuals who influence it. We like to call this our secret sauce!

Both financial and nonfinancial, and whether manual or automated, an operational support system makes activities of an organization efficient and relieves management of many day-to-day routine activities. A solid support system will allow small business owners to be strategic thinkers and track critical information on sales, cash flow and other financial performance data. Afterall, that’s why you’re in business! This ensures owners become aware of red flags before the problems become unmanageable.

How long will it take for a small business to become successful? (Spoiler: The 4th year is when “overnight successes” are discovered.) 

Most small businesses take 2 to 3 years to be profitable and 7 to 10 years to be “successful.” The truth lies in the statistics: approximately 20% of businesses fail in the first two years, 45% fail in the first 5 years, 65% fail in the first 10 years and only 25% of small businesses are successful after 15 years or more.

For patterns that may foreshadow success, read on.

  • Year 1: In the first year, there should be many small successes in getting the company off the ground. These may include starting a website, gaining social media attention, growing a client list, and being able to pay personal bills from early profits. Making it through the first year puts you in the 80% of successful businesses.
  • Year 2: Initial success may begin to wear and cash concerns or dwindling capital may lead owners to borrow money this year. Be sure to not allow the stress of debt to run your business though. Instead, realize early customers are not necessarily long term. You should start to see opportunities for expansion during this second year.
  • Year 3: This is the year that fine-tuning begins. Breaking even or making a profit shows you’re headed in the right direction and you can see the light at the end of a tunnel. Figuring out which areas of the business can grow and recruiting a solid team to help you get there should be part of your plan. Get more sophisticated by planning for risk, working on leadership, and analyzing the numbers (including where expenses can be cut and what customers are driving business).
  • Year 4: This is when overnight successes are actually “discovered.” You may still be plagued with small steps forward and sometimes steps backward, but you’re honing in on what is successful within the business. You’ll have sharper brand positioning and improve marketing that leads to a refined customer acquisition process. Your management team will be more efficient in operations and you’ll produce better products. You’re figuring out what customers really want.

You made it through the hard stuff. Now what?

 

To keep making forward progress and grow your business, try these pro tips to take it to the next level:

  • Build word of mouth for your business. Encourage advocates to share their experiences and honestly respond to negative reviews.
  • Focus on customer service. Simply put, it will set you apart. The way word travels, you don’t want to be on the wrong side of it.
  • Expand your marketing efforts. There are so many avenues to market (so it can be overwhelming), but the best way to expand your efforts is to test.
  • Build your online presence. It’s where business happens now. Even if you’re a brick-and-mortar retail store, consumers expect to be able to learn more about you without leaving home. (This is especially important in these pandemic times.)
  • Go mobile. Being digital is only the first step. Ensuring you can be found from a smartphone is the next – otherwise you’ll miss out on a huge customer segment.
  • Cut your business costs. In the same way added revenue contributes to more profits, so does decreasing your expenses. Take a good, hard look to see what you can eliminate.
  • Get in the cloud. Digitizing your business gives it a competitive edge and makes life easier for owners and operators.
  • Hire and retain the right employees. You’ve heard it before: Employees are your most valuable asset – this is especially important in small businesses. Don’t settle. Be sure they’re a good culture fit and someone who has an interest in contributing to your businesses’ future success.
  • Update your business plan. Just like people’s preferences change, so must your company. Start with amending your plan.
  • Stay balanced. It’s easy to get burnt out being a small business owner. You’re often wearing multiple hats. It’s important to take time away from the business to recharge.
  • Make this year your best year ever! Take time to re-energize and focus each year. Recommit to your business. Business ownership isn’t easy but renewed passion will get you through.

At CEFO advisors, we partner with our clients to help them become the successful small business owners they aspire to be. Through our business philosophy of strategy, finance, and culture, we have been able to better help our clients understand how our business works and how they can be successful using a similar strategy. Join us today.

 

 

FreshBooks. “How Long It Takes for a Small Business to Be Successful: A Year-By-Year Breakdown.” FreshBooks, FreshBooks, 23 Oct. 2019, www.freshbooks.com/hub/startup/how-long-does-it-take-business-to-be-successful.

Normand, Robert A. “4 Reasons Why Small Businesses Succeed.” Business Know-How, Business Know-How, 16 July 2019, www.businessknowhow.com/startup/succeed.htm.

Seabury, Chris. “9 Tips for Growing a Successful Business.” Investopedia, Investopedia, 16 Sept. 2020, www.investopedia.com/articles/pf/08/make-money-in-business.asp.

 Ward, Susan. “Here’s What to Do to Make Your Small Business More Successful.” The Balance Small Business, The Balance Small Business, 4 Dec. 2019, www.thebalancesmb.com/how-to-make-your-small-business-more-successful-4060804.

Pivotal Business Year

How Are You Dealing in This Pivotal Year for Small Business? 

For the rest of history, 2020 will likely be known as the year of the COVID-19 pandemic. Although outbreaks, like the 1918 Spanish flu and 2014 Ebola epidemic, are remembered in history books, we never really hear about the economic and social consequences that came along with them – or how society came together to rebuild. What do you think will be the story that goes along with this last year’s challenges?

I am so grateful to have such an inspiring and tight-knit team at CEFO Advisors, and even with all of the challenges 2020 threw at us, we emerged stronger than ever. With the ups and downs of the pandemic, clients pivoting and evolving and personal challenges, it was not an easy year but that doesn’t mean we didn’t move into 2021 with new lessons and a greater appreciation for what we have.

As the coronavirus pandemic rages on, business trends have changed greatly – from remote work and consumer shopping behavior to global advertising spend and essential industries (like food, medical, travel, and transportation).We even saw new businesses emerge and many businesses thrive during this time. Who else has taken full advantage of grocery delivery?? As a small business, how have you been affected? And who can you partner with to help keep your business thriving – or surviving?

Let’s talk about the economic consequences of the coronavirus pandemic. What resources are available to overcome this economic downturn? The repercussions may not yet fully be known, and long-term ripple effects may surprise us later on. But here are some actions we can take as small business owners to stay in business now and prepare for the future! 

How can small businesses fight back against the pandemic?

According to JPMorgan Chase, more than 99% of businesses in the U.S. are small businesses and these companies employ one-half of the population. Small businesses often operate with a lack of cash reserve so many can’t deal with a month-long interruption – and the pandemic has carried on for more than eight months at this point. This has resulted in job cuts, financial strain and failing businesses.

The initial outbreak in China in late 2019 disrupted the global supply chain and global economy. Then the week of March 14, 2020, saw 3.28 million Americans file for unemployment in panic that followed the spread of the virus. Companies that have been most affected are hospitality, travel, restaurants and bars, and construction. The fear heading into the future is a greater possibility for start-up depression as well: a lack of new companies being founded and growing the job market.

To combat the effects of the pandemic, here are some steps to keep you moving forward:

  • Assess your essential functions to best prepare for continued stressors.
  • Dedicate time to planning (the best you can) to make sound business decisions.
  • Accommodate changing consumer culture by adjusting your offerings and service as needed.
  • Continue providing a healthy work environment and supporting employees through the pandemic. Follow the Centers for Disease Control and Prevention (CDC) outline for employers and employees, including daily health checks, hazard assessments, facemask regulations, social distancing, and ventilation recommendations.
  • Consider outsourcing a chief financial officer (CFO) or certified public accountant (CPA) to do realistic accounting. CFOs/CPAs can provide access to new, recurring revenue and maintain free cash flow by creating a year-round paid relationship. Your business will no longer have to rely on the seasonality of tax filing. It will allow your business to become more profitable, promote growth, and achieve business and personal goals.

How can you secure funds to get through hard times?

Yelp estimates that more than 132,000 businesses on their platform have closed since the introduction of pandemic, and more than half will not reopen. Spikes in cases have caused the reclosure of many small businesses that did reopen. And most businesses that have reopened are just breaking even or are in “survival mode.” They are getting by on the bare necessities and have had to take on additional expenses, like personal protective equipment (e.g., air filters, hand sanitizer stations, gloves, plexiglass shields).

But there is some help! Government grants are available for small businesses, offered by federal, state, and local governments. A small business grant is free money given to a small business (with fewer than 500 faculty per location) to help launch, develop, or expand. Government grants are usually given in phases (typically three phases in two years) to support businesses in the long-term.

Federal government grants can be found online at:

  • gov
  • gov
  • gov (U.S. Small Business Administration)
  • gov (U.S. Economic Development Administration)

Part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which is the main stimulus for small businesses, is the Paycheck Protection Program (PPP). More than $659 billion has been funded under the Small Business Administration (SBA) for the CARES Act. Specifically, under the PPP falls the Business Loans Program Account, which provides business loans to cover up to eight weeks of payroll, as well as other costs to help small businesses stay afloat.

PPP resumed April 24, 2020, following approval for funding by the U.S. government. Loans under PPP are available for companies worth less than $10 million or 2.5 times a company’s average monthly payroll. Every cent of a PPP loan can be forgiven if specific spending guidelines are followed. The passage of the PPP Flexibility Act 2020 relaxes many previous PPP loan guidelines as well. Both PPP and economic injury disaster loans (EIDLs) are available for small businesses; you can apply for both directly through SBA-approved 7(a) lenders.

With the new wave of funding for the Paycheck Protection Program comes questions and uncertainties, but CEFO Advisors is here to help you and your business!

Sign up for your free consultation with CEFO Advisors for help with the second round of PPP for your business. We’ll help you with:⠀

– Identifying if you qualify for PPP⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Navigating the application process⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Educating you on what qualifies as an acceptable expense for PPP funds⠀⠀⠀⠀⠀⠀⠀⠀⠀

– Filing for forgiveness⠀⠀⠀⠀⠀⠀⠀⠀⠀

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Reach out to lbenson@strategiccforesources.com to begin the process.

 

Alexander W. Bartik,  Marianne Bertrand. “A Way Forward for Small Businesses.” Harvard Business Review, Harvard Business Review, 14 Aug. 2020, www.hbr.org/2020/04/a-way-forward-for-small-businesses.

Brown, Courtenay. “Small Businesses Are Spending to Reopen, Even as More Coronavirus Shutdowns Loom.” Axios, Axios, 27 July 2020, www.axios.com/small-business-coronavirus-expenses-87b59746-7a44-45e8-b1d9-3c6e56735b1a.html.

 “Coronavirus Business & Economy Impact News.” Business Insider, Business Insider, www.businessinsider.com/coronavirus-business-impact.

“COVID-19 Forcing CFOs to Become Change Agents and Strategists.” StackPath, 31 Aug. 2020, www.cpapracticeadvisor.com/accounting-audit/news/21152345/covid19-forcing-cfos-to-become-change-agents-and-strategists.

 “COVID-19 Guidance: Businesses and Employers.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 6 May 2020, www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html.

Probasco, Jim. “Paycheck Protection Program (PPP).” Investopedia, Investopedia, 29 Aug. 2020, www.investopedia.com/your-guide-to-the-paycheck-protection-program-ppp-and-how-to-apply-4802195.

Rushton, Charlotte. “Advisory Services in the Pandemic: A Mutually Beneficial Right Thing to Do.” Accounting Today, Accounting Today, 17 Sept. 2020, www.accountingtoday.com/opinion/advisory-services-in-the-pandemic-a-mutually-beneficial-right-thing-to-do.

Schooley, Skye. “Government Grants for Small Businesses.” Business News Daily, 10 Aug. 2020, www.businessnewsdaily.com/15758-government-grants-for-small-businesses.html.

CEFO Advisors welcomes new Controller, Marthanne Gershman

CEFO Advisors is excited to welcome Marthanne Gershman to the team as a new Controller. Marthanne brings over twenty years of experience in finance and accounting to CEFO Advisors, and has worked in a variety of industries. Marthanne will be working with clients on month-end closing, financial statement preparation, KPI design, cash flow forecasts, business modeling and overall strategy.

“I am looking forward to rolling up my sleeves and bringing my experience to clients in a multitude of industries,” Gershman said. “I thrive on putting together the puzzle pieces while working through challenges to find multiple solutions.”

Marthanne has experience in both the industries such as retail, media, non-profit, architecture, manufacturing and contract research, among others.

Stay updated on CEFO Advisors on LinkedIn: https://www.linkedin.com/company/cefo-advisors/