Downfalls like not being a profitable venture, startups shutting their doors or even bankruptcy are often caused by a lack of knowledge or a willing ignorance amongst small-business owners.
“If the owners really knew what they were doing wrong, they might have been able to fix the problem,” entrepreneur and business speaker Jay Goltz told The New York Times. “Often, it’s simply a matter of denial or of not knowing what you don’t know.”
Don’t fall into the trap. Armed with the following knowledge and know-how, you have a fighting chance of making it as a profitable business that continues to scale for years to come.
1. Prove your expertise. To get customers to trust you (and pay for your products or services), you have to prove you’re an expert in your industry.
You can accomplish this by posting blogs, sending out newsletters, participating in interviews, publishing content through noteworthy blogs or publications and making informative how-to and instruction videos that relate to your business.
“You cannot buy trust at any price. But slowly, over time, you can build it for free,” business advisor Jeffrey Gitomer told Copyblogger.
2. Take calculated risks. All entrepreneurs are risk-takers. They kind of have to be, as it is a huge leap of faith to start a business. But what makes one entrepreneur succeed, where another will fail has to do with if a person makes calculated or reckless risks.
Look at the costs and benefits of every decision and figure out the worst-case scenario. Have back-up plans in place and rely on trusted advisors like your accountants, bank, marketing consultants, lawyers and insurance agents.
Carefully plan out your course of action and make it a collaborative effort amongst you and your employees. That way, if failure does occur, you have people there to support you and assist you in deciding the next move and risk you should take. Plus, by taking these more conservative risks, you are less likely to make a mistake that could have detrimental ramifications -- ones that could create financial situations that are hard to climb out of.
3. Develop a cash-flow strategy. Having a steady flow of cash is critical when you have a small business. You need to pay the bills and your employees, as well as purchase materials to scale your services or build your products and more. You also need to make a list of one-time expenses and ongoing expenses and figure out how much money you’ll need to operate on a day-to-day basis.
One great tool is SCORE’s break-even chart, which allows you to track your profits and can help you see how to increase them. To prepare for slow times of the year, you should save at least three to six months worth of cash to keep your operations going.
4. Appreciate your employees. When you hire employees, make sure that they’re actually passionate about the industry you serve. If an interviewee is enthusiastic, does his or her research about your business and asks engaging questions, then he or she is likely to be a good candidate for a position and could provide amazing insights into growing your company.
Once you hire your rock-star team, treat employees as equals and trust them. Show that you appreciate their efforts by encouraging new ideas and collaboration. You can do this by simply being available to them and being positive when they have suggestions. If everyone is on the same page and feels like they have a say, the business is more likely to thrive.
Small business success can be achieved by thinking ahead and planning out your next move. It’s a challenge to run a small business, but with the right preparation, you can come out on top.