What does it take to start and manage a successful small business? This is one question many small business owners should be eager to learn because the failure rate of small business is very high. In fact, some developed countries like USA have found that about half of all new business survive five years or more and about one-third survive 10 years or more. In this article, we discussed 7 key tips on small business success.
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1. Understand that Customer is the Boss.
If you observe the bigger companies like banks and GSMs, you will notice that they treat their customers like a king.
Customers can fire everyone in the company by refusing to buy from you. You should make them feel important to your business success. Customers’ personal recommendation and word-of-mouth are the cheapest method of advert (good or bad) for any business. With the use of internet, customers have more information at their fingertips. They can search and compare about anything before making their buying decision.
Without (profitable) customer segment, no company can survive for too long.
Small business owners should understand that each group of existing and potential customers have different preferences and needs (such as cultural, and socio-economic). For example the brand of office dress uses by directors are usually different from what a new junior staff would use. If you failed to recognize and meet such expectations, you will either lose the director or entry staff to other competitors. In order to better satisfy customers, successful company groups them into distinct segments with common needs, common behaviors, or other attributes.
2. Differentiate your products and services.
What is the value proposition your products offer compared to the competition? Why should customers buy from your firm instead of the competitors?
The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need. Each Value Proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific Customer Segment.
Many business experts believes that customers do not buy the product but the benefits and features the product offer. It is important to present the key benefits of your products and services to the right customers through highlighting the unique solutions it offers to their needs. Differentiation can be achieved through improved products and processes. For example if you operate a restaurant in the Gambia, you could offer a free delivery service within certain neighborhood or at a very low cost.
3. Plan for business success.
To fulfill your dream of owning a profitable and successful business, you must plan your success steps along the way. Successful entrepreneurs understand the power of planning to grow their business. A good business plan helps you increase your chances of business success by defining your business idea feasibility, estimate costs, predict sales and control the operation. Your plan should be simple, specific and realistic. There are few successful entrepreneurs who says that they never planned at the beginning. This people may had no written business plan but they clearly knew what they wanted and how they will get it. They are often flexible and quick to change directions when they see their plans are not working.
Planning for business success would also include business budgeting, marketing, learning, stakeholders, financing and the use of the right tools.
4. Manage your Cash and Liquidity
Every manager loves to see good profit numbers, however, over a short-term cash is more important than profit for most small businesses.
Cash flow is the lifeblood for every business and it is lack of cash, not lack of profits that forces firms into bankruptcy.
Managers should make sure that the business has positive cash flow position to avoid problem such as late payment of account payable and other dues. Cash flow can be manage through:
- Collecting your trade receivables on time by offering cash sales or cash discount.
- Take advantage of credit payment period from vendors.
- Manage inventory control – just keep what will be needed within certain time period.
- Arrange for bridge loan or overdraft with your bank. This depends on the relationship you have with the bank.
Proper cash and credit management is a key tool for small business operations. It impact your firm’s credit score and poor scores will not attract good payment term from suppliers or a better credit rating by your banks.
5. Grow the business in a Niche
Niche businesses specializes in a certain type of market or product. A small firm with limited resources can efficiently serve niche markets by focusing on certain potential buyers. Niche market is designed to avoid direct competitions with larger firms. It also targets a small number of customers seeking special benefits from your product. Most firms begin with niche strategy, which helps them focus on specific products or services. It also helps them create a more effective overall advertising campaign for the target audience. A saloon that target students will most likely focus advert in schools.
6. Build on the relevant Knowledge and Attitude
Many people incorrectly assumed that their personal or business success solely depends on paper qualifications, general intelligence and good looks. In fact, human development experts believes that the key determinants of our performance and success are knowledge and attitude. As a business manager, you should always tries to learn key skill and updates relevant to your industry. Growth of any business depends on what the manager(s) know about their business environment and how they respond it. For example in the Gambia, many small fashion shops have started using social media to market and sell their products. They know that the target customers (young people) are constantly surfing Facebook.
Learning is a process which should continue throughout our life. When business leaders stop learning, the businesses will stop growing. Unfortunately, majority of people stop learning when they leave school or university. The more you learn, the more you will come across new ideas or solution to your customer’s’ problem. Do not forget that learning also involves the observation of your customers, competitors and the big businesses.
If we keeping on doing the same thing, we will keep on getting the same result – Brian Tracy.
7. Professional Advisers and Mentors
Running your own business involves many decisions, which is often seem overwhelming. In today’s business world, the technology, social and economic conditions are rapidly changing and at very fast pace. It therefore make sense to increase your chances of small business success by seeking the expertise that professional advisors and mentors can provide. This is very important on areas that relates to regulatory compliances or contracts. For example engaging a legal counsel would ensure that you acquired the relevant permits and structures before starting a new venture. You will agree that registering a pharmacy at company registrar is not enough to start selling drugs. You will require relevant health department’s licenses. Accountants can help you on corporate tax, value added tax and other finance matters. If you make some money, you can engage the service of other consultants.
In summary, the most important success factors to small business success are the entrepreneur and the strategies to add value.
Share your small business success tips with us.