Preparing for the Long-Term Success of Your Small Business
Taking Proactive Measures to Ensure the Growth and Stability of Your Enterprise
For many, it’s the hallmark of the American Dream—working for yourself, successfully running your own small business. There’s nothing that can compare with taking your great idea and turning it into a thriving enterprise, one that allows you to provide for your loved ones, but also lets you be in control. But you don’t want to venture out on your own without thoroughly planning and preparing, without taking concrete steps to maximize your potential for success. Here are some of the essential components of a solid strategy for success in a small business venture:
Prepare and Follow a Well-Constructed Business Plan
Unfortunately, many small businesses are launched with little more than a good idea. In most instances, that’s simply not enough to ensure any type of long-term viability. A comprehensive business plan can help you:
- Help you determine whether there’s actually a potential market for your goods or services. If not, you can abandon the idea and look for other business opportunities.
- Identify your strengths and weaknesses, so that you can take advantage of the skills you already have and bring in additional talent to address critical shortages
- Differentiate your goods and services, marketing strategy and logistics from potential competitors
- Look beyond the broad scope of the business to discern key factors to your potential success
- Secure funding to launch or sustain your enterprise until it becomes profitable, whether from a bank or private investors
- Manage personnel needs, ensuring that you’re not understaffed or overstaffed at critical junctures
- Identify potential business alliances or joint ventures that will promote your potential success
The most effective business plan will identify both short and long-term goals, looking at what you hope to accomplish in the first month, three months, six months and year, as well as where you hope to be in five years.
Identify and Secure the Tools You’ll Need to Succeed
Carefully examine your business model to determine all the different components of a successful endeavor:
- Production—Where will your product be sourced and manufactured, who will set production standards, what testing will be done
- Marketing—How will you get your goods or services to potential customers? What factors are key in making the decision to purchase your product? Who will be responsible for actually securing orders for your goods or services?
- Customer relationship management (CRM)—How will you identify prospective customers? How will you maintain ongoing communication with existing customers? How will you address any questions or concerns from customers who have purchased goods or services from you?
- Personnel—What are your staffing requirements? Who will be responsible for hiring, training and managing staff? How will payroll and other human resources needs be handled?
Make Realistic Projections about Potential Growth and Financial Goals
There’s nothing wrong with identifying a best-case-scenario for growth and revenue, as long as you recognize that it’s just that—what might be expected if everything goes your way. Life, unfortunately, rarely cooperates with that vision. Instead of a single set of projections, you should identify a best-case and a worst-case scenario, as well as something in between (that’s most likely where you’ll end up). Take your time when preparing financial projections, soliciting input from all key players in your organization. It’s also a good idea to seek input from other small business owners and advisors with knowledge about your potential market, ensuring that your projections are based in reality and not on wishful thinking.
Be Willing to Turn to Proven Experts to Guide You, If Necessary
One of the most effective ways to increase your likelihood of long-term success is to build a team of trusted and experienced advisors. Instead of trying to figure things out on your own, find experienced and successful business owners who can provide guidance on the different needs of your business.
Be Diligent in Ensuring Propriety in All Financial Matters
With many small businesses, there’s too much focus on the product or service, on marketing and sales, on distribution or production, and not enough focus on financial matters. Let’s face it…the numbers often don’t look very good at first. But it’s essential that you pay close and regular attention to what’s coming and what’s going out, as it can get away from you in a hurry. Here are some specific financial recommendations to minimize the risk of serious financial problems with your small business:
- Take the time to become familiar with basic accounting principles—You don’t need to understand complex accounting procedures—you can hire an accountant to take care of those matters, if necessary. But it’s critical that you understand basic concepts, so that you know if your business is moving forward or starting to fail. If necessary, take an introductory accounting class.
- Pay yourself like you would pay any other employee—There’s a tendency for many small business owners to either take no salary or to view their income as what’s left when everything else is paid. It’s better to pay yourself a fair salary—it will give you a more realistic idea of the potential success of the venture, and you won’t jeopardize the long-term health of your business by pulling too much money out to meet personal expenses.
- Don’t mix business and personal expenses—This is the quickest way to run afoul of the tax authorities, and that can be a death knell for any business. Don’t use personal credit cards to pay for business expenses, or vice versa. If you have loaned money to the business, make certain there are documents that set forth all the relevant terms.
- Pay all bills when they come due—Don’t risk being assessed later fees or unnecessary interest. Your margins will likely be small in the beginning—late fees and interest can turn a profit into a loss. You can also get a reputation for delinquent payments, which can hamper efforts to secure new suppliers.
- Weigh every expense carefully—Determine whether you need to spend the money or if it’s a luxury that you can do without. Be willing to purchase used equipment, if it will meet your needs.
Moving Your Business Forward
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