Small businesses across the world keep our economies going as they support jobs, professional development, and local needs. From your quaint neighborhood coffee shop to after-school tutoring programs, small business ownership comes in numerous forms, industries, and sizes. According to research, small businesses present pathways to entrepreneurship and independence, yet, at the same time, 50% of small businesses fail within five years! The following tips are here to help small business owners and aspiring entrepreneurs thrive!
TIP 1 – Know Your Market and Be Exceptional in What You Do!
Consumers have numerous choices today given traditional brick and mortar retailers and online offerings that display product ratings from peers.
One of the most common things I hear from people when I consult is “we’re better than our competition.” While ego can move you forward as an entrepreneur, it won’t keep your doors open when the reality of a competitive marketplace humbles you.
Spend time on market research or hire a consultant to do some groundwork for you to know reality over fantasy. Market research will help you identify who is already in your space, their strengths and weaknesses, what customers are saying on public sites like Yelp or Google reviews, check-ins to determine local engagement, and industry trends to know if you’re entering a dying industry or one on the verge of disruption.
After you’ve gathered information on your market, start brainstorming on how you will be exceptional in what you do and how you will sustain that, which leads us to the next tip.
TIP 2 – Have a Solid Offering and Innovate Before You Die
Every brand has a solid offering to drive the bulk of their revenue. While coffee shops might offer a seasonal item like the famous unicorn frappuccinio, they do this to drive incremental revenue compared to the core of their business which is coffee. If you are a fan of hole-in-the-wall restaurants, you probably go there for one or two things. Know what your core offerings are and focus on growing these, be it a professional service or product.
While your core offering will drive the bulk of your business, you must innovate or you will place yourself and your company at-risk for being disrupted. While taxi cab drivers once spent thousands of dollars to secure their futures with permits, today, Uber and Lyft make it easy for anyone with a vehicle to start earning money.
Every industry today faces some risk for disruption and those who do not stay informed are at the highest risk for extinction. Spend time attending industry trade shows to learn what’s going on so you can stay ahead of the curve because your future depends on it!
TIP 3 – What’s the Purpose of Your Real Estate
One of the biggest expenses outside of employees is real estate. In my hometown of San Francisco, rents climb at astronomical rates making the pathway to entrepreneurship a lot more challenging, requiring start-up restaurateurs to know their product and above-average finance skills.
How you use your real estate is critical.
When I view a restaurant, I view it as a manufacturing assembly line and take out the emotional service part for a brief second. You have a line of cooks churning out products for consumers who have an expressed demand. While assembly lines need downtime for maintenance, they need to be producing as much as possible. Retailers can use partnerships with companies like UberEats, GrubHub, etc. to increase production and sales to consumers who have a demand for their product despite wanting to avoid coming in.
Retailers also need to be thinking about co-ops and space sharing if their operations do not warrant a larger space. When building out your real estate, know what your revenue per square foot calculates. Know why you need your real estate and strategize on how to maximize the use of the space for present time and future needs.
TIP 4 – Technology, Technology, Technology
Technology improvements are critical to shaping your business so that your operations are efficient, your customers engaged, and your leadership team members informed.
Technology comes in many forms from Salesforce.com which can help organizations improve process flows, real-time financial reporting, up-to-date customer info to Revel Systems which helps retailers at the Point of Sale to Google documents that can be shared to collaborate.
Understanding your industry, competition, and needs of internal and external stakeholders is the first step to thinking about what technology you need in your business. At minimum, every small business today should have a clean website that is mobile friendly to integrate into Google search results so that they can tell their story to people who are interested in their business.
If you’re interested in social media, check-out my article where I share the Pros and Cons of each major platform so you can decide what amount of social media is right for your business.
Bottom-line, the next-generation of consumers demand the need for technology, relevant information, and the ability to share their experience with your brand online via reviews or pictures. Shifting your mindset to embrace technology will also propel you to understand that data is today’s new currency. The more data and real-time insights into your business, the better equipped you’ll be to respond instead of react.
TIP 5 – Figure Out the Labor Challenge
Talent is what keeps companies energized! How you view your talent and the hours they labor are critical as a leader. It’s a tough world today when margins in a lot of small businesses are small and labor costs continue to climb in urban cores. Unfortunately, the average consumer does not care that your ingredients cost more and that your employees do too as they order their favorite ice cream expecting a reasonable price to satiate their sugar-fix. So, here you are, at the cross-roads of a public policy issue and upset customers who want more for less in today’s Amazon bargain world.
Small business owners need to work together to solve these challenges through local Chambers of Commerce through a regional collaboration in urban areas. Some Chambers of Commerce are taking innovative paths to offering better healthcare options through non-traditional approaches to help small business owners offer better benefits to attract and retain talent.
While a local sandwich shop tries to hire entry-level employees and a manager, their competitor who is a franchise is offering 401K plans, healthcare, and paid time off. You have to figure out your labor challenge and create non-traditional labor solutions to attract and retain talent. The old attitude of simply providing a job doesn’t cut it for today’s informed workforce.
Build a culture, develop your talent, invest in those who keep your dream alive, and network with other business owners to create solutions on a regional level that impact your bottom-line through traditional means like taxes to non-traditional approaches to healthcare to reduce turnover costs.
BONUS TIP – Scale Your Business if You Can
Economies of scale help entrepreneurs reach more people at better profit margins. As you develop a plan to scale, take note of what systems you need, what vendors want to work with you to offer better pricing, what lenders are willing to give you money at the best terms possible, and what markets present the most reward for the risk you’re undertaking.
Growth presents the opportunity for you to have more choices in who you do business with and where you do your business to make your impact.
While one market may run a certain way, we’ve seen case studies from giants like Home Depot fail in China to regional franchises declaring bankruptcy after growing too fast. That is why my advice is, scale if you can.
Knowing when to stay where you’re at and when to grow is a challenge for type-A entrepreneurs who are driven by passion, optimism, and true grit. Consider hiring a consultant in addition to putting together a free sounding board of leaders in your network to review your ambitious growth plan to improve your chances of success.
Remember, running a small business today requires a different approach to be sustainable for tomorrow. Keep improving your offerings, innovative where you can, and enjoy the ability to change the lives of the people who work for you and who rely on you to provide a great experience each day. While you might be small in terms of business, the number of small business owners is massive, so get connected and keep it growing!
