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.