One of the things that holds folks back from pursuing any dream is their fear of failure. We hear the stories too often, see the Going Out of Business signs, learn about the loss of nest eggs or family member investments... small businesses do fail. But many succeed, and they create jobs, build wealth for the owners, and add to the vibrancy of the local economy. Small businesses are the foundation of a community in so many ways.
After nearly 20 years of getting to know small business owners, I've come to notice many similarities in the successes. Through this experience, I find there are 12 essentials to create success in a small business. If you're preparing to roll the dice on a small business enterprise, or you’re already a few chapters into your own small business success story, make sure you're equipping yourself with as many of these as possible.
A Plan. Gotta have a plan! It doesn’t matter if it's a one-page Business Model Canvas, or a 30-pager built on your new invention and a gob of market research, if you don't know who you are and where you're trying to go you'll probably go nowhere and spend a lot of time and effort along the way. Make sure your plan has numbers in it, and justifiable assumptions. And as they say, begin with the end in mind.
Financial Capital. It's rare that a successful small business gets started without at least a small pile of capital. Whether it's an inheritance, frugal saving as a corporate stooge, sold my house in California, or a rich and supportive uncle - if you don't have skin in the game the likelihood that you'll find banks or investors ready to get onboard is low. Without capital, there is little barrier to entry and where there is little barrier to entry there is seldom sustainable profit. You full-on bootstrappers who’ve become successful – God bless you and congrats, you are so rare!
Social Capital. It might be your network, it might be your training, it might be that you've invented the best thing since sliced bread and people are excited about it – but one way or another you’re going to need social capital. If you don’t care about people or they don’t care about you, you’re yesterday’s news. The funny thing about social capital is you only really notice you have it when you collect on it.
Help! You may have to start small, maybe as a solopreneur or a side hustle, but to build anything significant you’re going to need help. At first, it might be a spouse or friends and relatives, and the consultants at the local Small Business Development Center, but eventually, you’ll have to attract your tribe. I’ve often observed that the small business operator is constrained by the size and quality of the key managers they can develop. Your help will include employees, but also referral partners and mentors. If you’re building it alone, you’re not building much.
Sound Financial Reports. As a banker in a small-business focused community bank, I have seen a woefully large number of inadequate financial reports. None of them were from my most financially-successful clients. Coincidence? – I think not. Business of any scale is full of constant change, in cost structure, in margins, and in taking advantage of new opportunities – if you don’t know your numbers you don’t know how to adapt and do more of what’s working and less of what isn’t.
Willingness to Change. To read some versions of history, it seems that a hundred years ago, or fifty even, business models would remain static for years, decades even. Those days are gone. Today, businesses that do things the way they’ve always done them are an endangered species. If you want to make sure you outperform last year, you’ll have to figure out what how you’re going to add even more value to more clients – and keep your costs constrained!
Perspective. This is one of the secret sauces of the successful. Gaining perspective with intention. This can and should include the inviting of employee ideas, gathering customer feedback, might include business partners or investors, and in this writer’s humble opinion, should include peer advisory (such as LoCo Think Tank). Let the power of perspective impact the way you approach problems and pursue solutions.
Online Presence. If you don’t have a digital presence in today’s world, you probably don’t have a business. The Yellow Pages are gone, (maybe not, I dunno, are they?) and people arguably spend too much of their time in a digital world. But we need to connect with our customers where they are, so if you’re not find-able online you don’t really exist.
Accountability. Some people are born with it – self-accountability. Most are not, and new entrepreneurs often suffer from a sudden lack of accountability. “There’s no one to tell me what to do!” – is a phrase often uttered with a mix of joy and fear. Successful entrepreneurs, however, ensure that they build accountability into their routines, even if it’s not in their nature. This might be you, but is more likely a business partner or spouse, a mentor, COO, or a great Office Manager. Perspective and accountability can also be found in a peer advisory group, such as LoCo Think Tank.
Marketing Plan. This might be relationship-driven and baked into your activities, or it might be an event-driven written plan – but you need to have a plan. Be out and about in the places where your customers are, and know who might refer you. How do your potential customer look for businesses that do what you do, and how do you get in front of them? Fish where your fish are located, and offer them something of value in the way that they want to be caught.
Selling is Helping. Rare is the small business success story where selling is driven by pursuit of money. Big corporations might make their decisions that way, but small businesses are built upon offering (often with great passion) something of value to the client and working to capture a profit margin along the way.
Special Sauce. Why you, and not the guy down the street, or in the next town over? You have to know what makes you different, and why people will choose you over other options to get a similar good or service. You should probably document something of your special sauce in your Mission, Vision, and Values (or similar – this is your story), and use these foundational purpose documents along your journey.
What did you think? What are we missing? Do you have a story that contradicts or reinforces any of the items on our list? We’d love to hear from you. Send us an email at [email protected] or comment on our Facebook and LinkedIn pages – we want to hear from those on the ground what is helping them be successful. Good luck, Godspeed, and let us know if we can help.
- Curt Bear
LoCO Think Tank Founder