Running a small business can be hugely rewarding both personally and financially.
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1. Put your idea into writing.
It is important to take the ideas in your head and get them down on paper.
Most successful businesses offer a new product or service or fill an existing niche in the market.
Whatever your reasons may be for starting a small business.
Make sure to clearly and concisely put them in writing.
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- It can be helpful to go through many drafts or iterations of your business plan.
- Include as many details as you can in your business plan. Overthinking the details is never as damaging as ignoring the details.
- It can also be useful to include questions in drafts of your business plan. Identifying what you don’t know is as helpful as listing things you are sure about. You do not want to present a business plan with unanswered questions to potential investors, but laying out relevant questions in your initial drafts will help you identify questions that require answering in your final business plan.
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2. Meet with your local Small Business Development Center.
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3. Identify your customer base.
The answer to these questions should help to determine all other aspects of your business’ operations.
- Here, it useful to ask questions of your service or product. For example, you may want to ask questions like, does my product/service appeal to younger or older people? Is my product/service affordable for lower-income consumers or is it a high-end purchase? Does my product/service appeal to people in specific environments? You won’t be selling many snow tires in Hawaii or beach towels in Alaska, so be realistic about the appeal of your product.
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4. Outline your finances.
In your business plan, you need to address key questions about your business’ fiduciary situation.
- How will your product or service generate money? How much money will it generate? How much does it cost to produce your product or service? How do you intend to pay operational costs and employees? These, and others, are critical question you need to answer in planning your small business’ financial future.
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5. Project growth.
Make sure you have identified how your business can and will respond to growth potential.
- Be realistic with your growth potential. Keep in mind that growing your business requires a growth in investment capital as well. Projecting too much growth in too short a time period can quickly deter potential investors.
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6. Make your bank work for you.
Banking with the institution that gives you the best deals will help you stretch every dollar.
- Use banking options against one another to secure the largest upfront capital and lowest interest rates. For example, if one bank offers you a $10,000 loan at an interest rate of 4%, you may be able to take that offer to a competing bank to see if they can provide more upfront capital or a lower interest rate.
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7. Secure a loan or other type of investment.
Successful businesses need capital to get off their feet. Be sure that you have arranged and secured enough fiscal backing to cover all of your small business’ operating, production, and marketing costs until your business is in a position to generate and operate on its own profits.
- Be sure to investigate the various interest rates applied to small business loans.
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8. Ensure collection methods are in place.
A successful business needs constant cash flow. Being unable to accept customer payments or waiting on those who owe you money will disrupt your business.
- You will need to decide if you will accept cash, credit cards, checks, or some combination of the three from your clients and customers.
- Cash transactions are easiest to deal with on a day-to-day basis, but are often difficult to track over longer periods. Also, dealing with cash makes securing your company’s incoming cash flow more difficult, as it is easier for employees to steal from a cash-based businesses.
- While accepting checks helps to prevent theft from within the business, checks can bounce, leaving you to handle outstanding issues with the bank.
- Credit cards and debit cards are generally the most secure forms of payments, but accepting them requires your to take on additional fees paid to various credit card companies which, depending on the size and complexity of your business, may not be worthwhile.
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9. Consider using a credit control app.
These are apps that help small businesses improve their cash flow through better management of day-to-day cash collection and customer credit control tasks.
This would allow you to take-on new customers or monitor existing ones, chasing invoice payment or running cash collection more safely.
There are several software providers that can help you with this such as iKMC from where you can also get a free trial.
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10. Manage your inventory efficiently.
Rotate inventory frequently to remove slow sellers and replace them with new items.
- Inventory management is often dictated by the “shelf-life” of the product you are selling. For example, if you are dealing with perishable items, it is critical to move the oldest products out of your inventory first to maximize the profits of your business.
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11. Consider hiring a financial professional.
It may be fiscally worthwhile for you to hire a dedicated staff member who can control the financial affairs of your small business.
Accountants can help you identify areas of your business that are not running efficiently from a fiscal standpoint, allowing you to maximize your profits.
- You do not necessarily need a full-time employee to handle financial responsibilities.
- For example, if you have a solid grasp on your inventory flow and cash flow management.
- You may only need a CPA when tax time comes around.
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12. Get your license.
Remember to register and acquire your small business license in the particular industry of your business.
This step is important to ensuring that you’re running your business legally and according to industry regulations.
Be sure to register for permits related to particular services you offer, like home repair or tax preparation.
Which could require registration and certification.
You will not be able to hire effective employees.
If your business is not operating with the appropriate licenses and permits.
- Not all businesses require licenses.
- Be sure to check with your local small business administration to see what your business requires.
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13. Certify employees.
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14. Stay organized.
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15. Delegate responsibilities.
Small businesses often require employees to take on many tasks and responsibilities that may not fall firmly in their areas of expertise.
- It is often helpful to break your business’ overall operations down into specific functions and delegate those functions to various employees or members of your team.
- Also, when delegating responsibilities, make sure you are assigning oversight of a specific function to a qualified individual. For example, you would not want an accountant representing you in a legal matter or a lawyer balancing your financial books. Thinking of your business functions in this way should also help you identify your needs when you are in the process of hiring employees.
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16. Be involved.
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From time to time you will need to hire or fire an employee.
Make sure you are aware of all state and federal laws that deal with employment equality and anti-discrimination laws in your area as they pertain to the hiring, firing, disciplining and treatment of employees.
- Leaving customer feedback strictly in the hands of your employees is a dangerous managerial tactic. Employees may benefit from presenting you with skewed information about customer satisfaction or product usefulness, which, in turn, will lead you to make bad managerial decisions for the company as a whole. As such, do not simply accept what your employees tell you about your business without seeing evidence of their claims. It is your company and you have put yourself in a position of risk, so be proactive in overseeing business results.
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17. Employ targeted promotional and marketing campaigns.
This will help you tailor your marketing plan to be as effective as possible.
- It is helpful to think of promotions and marketing relative to the capacity of your business. Paying to run a commercial on a national network does you little good if your business is only designed to operate at the local level.
- Think about who is most likely to buy your product and why they would buy it. For example, if you are selling dentures, it makes little sense to include younger people in your marketing considerations.
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18. Network as much as possible.
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19. Know your business.
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20. Offer references.
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21. Be accessible.
Make sure potential clients and customers can get in touch with you and your business whenever they may need to. The best way to grow your reputation as a respectable business is to be responsive to your customers’ needs.
- Large businesses can afford to be unresponsive and lose a handful of customers from time to time. Small businesses cannot. As a small business owner, it is up to you to make yourself and your company accessible to potential clients and your customer base. This may require you to make your personal cell phone number or email address accessible to clients as you attempt to grow your business.
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22. Deliver what you promise.
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Delivering what you promise begins with how you tailor your approach to sales.
If you or your sales team is offering or promising too much, your customers will be understandably disappointed when they receive or use your product or service, leading to negative reviews and bad word-of-mouth about your business.
Remember, good sales tactics should be centered around identifying and understanding your customer’s needs and making them see the realized benefits that your product has, not lying to your customers and clients about the potential of your product.