Do you own a small business and you desire to manage it effectively? If YES, here are 10 tips that will help you run and grow your business successfully. As an entrepreneur, I bet that it’s your dream to build a big business empire or conglomerate. Bear in mind that every mega corporation that exist today was once a small business.
If you cannot competently handle a small business, then how do you expect to grow into a big business? Incompetence with respect to small business management is the sole reason why most businesses fail in their first five years. This is the more reason why you need to learn how to run a small business successfully.
How to Run a Small Business Successfully in 10 Steps
Table of Content
- 1. Be Prepared
- 2. How Solid is your Company’s Operational Plan?
- 3. Keep your Cash Flow Strong
- 4. Recruit Competent Employees and Re-train them
- 5. Build a Strong Business Team
- 6. Take Care of your Customers
- 7. Develop a Strong Overall Business Strategy
- 8. Concentrate on your core competence
- 9. Learn from your Mistakes in Business
- 10. Protect the Downside with a Strong Risk Management Strategy
1. Be Prepared
“See thou a man diligent in his business? He shall stand before kings; he shall not stand before vain men.” – Proverbs 22: 29
“For whatsoever thy hands find to do, do it with all thy might; for there is no work, nor device, nor knowledge, nor wisdom in the grave.” – Ecclesiastes 9: 10
One of the most important determining factors of running a successful business is you, the Entrepreneur. As an entrepreneur, you are the pilot or helmsman of the business; so succeeding or failing is your call. To successfully run a business and grow, you will need the following:
“When you innovate, you’ve got to be prepared for people telling you that you are nuts.” – Larry Ellison
“If you are doing something new, you’ve got to have a vision. You’ve got to have a perspective. You’ve got to have some north star you are aiming for and you just believe somehow you will get there, which kind of gets to the passion point.” – Steve Case
ii. A strong mission
iii. A worthwhile personal goals and business objectives
“Being first is more important to me. I have so much money. Whatever money is, it’s just a method of keeping score now. I mean, i certainly don’t need more money.” – Larry Ellison
“The best thing to invest in your business is your time. To schedule, plan and use time effectively, know your turf and know your objectives. Assess the obstacles and opportunities, then devise your strategies.” – The Mafia Manager
iv. The right mindset
“I’ve never felt like I was in the cookie business. I’ve always been in a good feeling business. My job is to sell joy, my job is to sell happiness and my job is to sell an experience.” – Debbi Field
v. Business skills
“The ability to sell is the number one skill in business. If you cannot sell, don’t bother thinking about becoming a business owner.” – Rich Dad
Running a small business successfully starts with a sound business plan, a plan that guides your direction throughout the course of your business operation. As your business evolves and leaves the startup phase; your business plan too must evolve into a strategic operational plan. This is especially important since the competition surrounding small businesses is very fierce and aggressive.
Having a business plan in place allows you to take the right first step, and the right next step thereafter. Business plans also allow owners to experiment on ideal strategies in paper before they start the real business operations. This is how to run a small business successfully.
“The most important word in the world of money is cash flow. The second most important word is leverage.” – Rich Dad
To point out the obvious, it is the nature of small businesses to require profit-loss forecasts, break-even and cash-flow analysis to determine in how they are faring at different angles. This boils down to cash flow; the life blood of business.
Research shows that 80% of business failures is directly or indirectly linked to poor cash flow management. So you must keep a keen eye on your incoming and outgoing cash. A successful small business operation always takes cue on how it is supposed to make profit. After all, the purpose of a business is to serve the customer, and generate profit.
This means you have to carefully go over the business expenses, such as the raw materials used for the products, rent of the space used for the operations, employee compensation, and many more. You must successfully sell to your intended market so as to cover your business expenses and hopefully start generating profit (break-even analysis).
4. Recruit Competent Employees and Re-train them
“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them.” – Jack Welch
“There will be times when you will have to be abrasive, even brutal to members of your staff. Don’t worry that your people will say bad things about you because of this. They already have. But in general, try to be pleasant and accommodating. Try to please the greatest number who work for you that you can; antagonize the fewest. Blow smoke.” – The Mafia Manager
“People are definitely a company’s greatest asset. It doesn’t make any difference whether the company’s product is cars or cosmetics. A company is only as good as the people it keeps.” – Mary Kay Ash
“After loyalty come ability, skill and competence. Promote only able people (and the occasional humbler). You find able people by testing them.” – The Mafia Manager
“Courteous treatment will make a customer a walking advertisement.” – James Cash Penny
“There is only one boss; the customer. And he can fire everybody in the company, from the chairman down, simply by spending his money somewhere else.” – Sam Walton
7. Develop a Strong Overall Business Strategy
“The most meaningful way to differentiate your company from your competitors, the best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” – Bill gates
“To win one hundred battles in one hundred victories is not the ACME of skills. To subdue the enemy without fighting is the ACME of skill.” – Sun Tzu
“I came from an environment where if you see a snake, you kill it. At General motors, if you see a snake, the first thing you do is to hire a consultant on snakes.” – H. Ross Perot
8. Concentrate on your core competence
“The men who have succeeded are men who have chosen one line and stuck to it.” – Andrew Carnegie
“To succeed in business, to reach the top, an individual must know all that is possible to know about that business.” – J. Paul Getty
“And here is the prime condition of success, the great secret. Concentrate your energy, thoughts and capital exclusively upon the business in which you are engaged in. Having begun in one line, resolve to fight it out on that line; to lead in it. Adopt every improvement, have the best machinery and know the most about it.” – Andrew Carnegie
“When stumped for a solution to a particularly difficult problem, look to the past for a solution.” – The Mafia Manager
“Sometimes when you innovate, you make mistakes. It’s best to admit them quickly and get on with improving your other innovations.” – Steve Jobs
10. Protect the Downside with a Strong Risk Management Strategy
“Lying dead in the water and doing nothing is a comfortable alternative because it is without risk, but it is an absolutely fatal way to manage a business.” – Thomas Watson
Many small businesses these days still make that basic mistake of covering all of their startup costs by entering loans, expecting that with the profits coming their way soon they will be able to pay those loans.
What they have yet to understand clearly is that new businesses would normally take many more months or years before they can ever record profit from their business operations, and so they will be heavily burdened by taking on those loans since they cannot expect anything yet from their fledgling businesses.
“Before making an important decision, get as much as you can of the best information available and review it carefully, analyze it and draw up worst case scenarios. Add up the plus or minus factors, discuss it with your team and do what your guts tell you to do.” – The Mafia Manager
If you try to save money for your startup capital before you start operating, you can help make sure that your new business will not be threatened or drowned through the loans you made. It would also help to anticipate anything that happens in your way, especially if your lender turns his back on you by modifying the terms, making them unfavorable just because your business operation just didn’t start out successfully as initially planned.
Protect yourself at all times. While small businesses are usually patterned after the sole proprietorship and partnership setups that are easy to form up, they are not without significant liabilities that risks business owners to incurring unanticipated heavy debt and bad judgments. Expect to see the creditors in every possible corner, constantly coming after your personal assets whenever you are unable to comply with their terms.
“Seek advice on risk from the wealthy who still take risks, not friends who dare nothing more than a football bet.” – J. Paul Getty
Insurance may help reduce liabilities in some ways, but it would be worth your while to consider a corporation setup, or rather a limited liability corporation setup. Such structure will protect you significantly from personal liability. Taking careful, measured steps always remain the best secret on how to run a small business successfully.