George's Business Tips wk. 4/20/22

 

The Bottom Line

According to 2021 data from the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.1 If you want to be among that 25%, rigorous attention to these nine tips is a good start, but certainly not exhaustive. Being a business owner means being in a state of constant learning and adapting.

1. Get Organized

To achieve business success you need to be organized. It will help you complete tasks and stay on top of things to be done. A good way to be organized is to create a to-do list each day. As you complete each item, check it off your list. This will ensure that you’re not forgetting anything and completing all the tasks that are essential to the survival of your business.

Many software-as-a-service (SaaS) tools exist to increase organization. Tools like Slack, Asana, Zoom, Microsoft Teams, and other newer additions. That being said, a simple Excel spreadsheet will meet 95% of a business's organization requirements.

2. Keep Detailed Records

All successful businesses keep detailed records. By doing so, you’ll know where the business stands financially and what potential challenges you could be facing. Just knowing this gives you time to create strategies to overcome those challenges. 

Most businesses are choosing to keep two sets of records: one physical and one in the cloud. By having records that are constantly uploaded and backed up, a business no longer has to worry about losing their data. The physical record exists as a backup but more often than not, it is used to ensure that the other information is correct.

3. Analyze Your Competition

Competition breeds the best results. To be successful, you can’t be afraid to study and learn from your competitors. After all, they may be doing something right that you can implement in your business to make more money.

How you analyze competition will vary between sectors. If you're a restaurant owner, you may simply be able to dine at your competition's restaurants, ask other customers what they think, and gain information that way. However, you could be a company with much more limited access to your competitors, such as a chemicals company. In that case, you would work with a business professional and accountant to go over not just what the business presents to the world, but any financial information you may be able to get on the company as well.

4. Understand the Risks and Rewards

The key to being successful is taking calculated risks to help your business grow. A good question to ask is “What’s the downside?” If you can answer this question, then you know what the worst-case scenario is. This knowledge will allow you to take the kinds of calculated risks that can generate tremendous rewards.

 

Understanding risks and rewards includes being smart about the timing of starting your business. For example, did the severe economic dislocation of 2020 provide you with an opportunity (say, manufacturing and selling face masks) or an impediment (opening a new restaurant during a time of social distancing and limited seating allowed)?

5. Be Creative

Always be looking for ways to improve your business and make it stand out from the competition. Recognize that you don’t know everything and be open to new ideas and different approaches to your business. 

There are many outlets that may lead to additional revenues. Take Amazon for example. The company started out as a bookseller and grew into an eCommerce giant. Not a lot of people expected that one of the major ways that Amazon makes its money is through its Web Services division. The division did so well that when Jeff Bezos stepped down as CEO, the head of Amazon Web Services was named the new CEO.

6. Stay Focused

The old saying “Rome wasn’t built in a day” applies here. Just because you open a business doesn’t mean you’re going to immediately start making money. It takes time to let people know who you are, so stay focused on achieving your short-term goals.

Many small business owners don't even see a profit for a few years while they use their revenues to recoup investment costs. This is called being "in the red." When you are profitable and make more than you need to spend to cover debts and payroll, this is called being "in the black."

That being said, if the business is not turning a profit after a substantial period of time, it's worth looking into if there are issues with the product or service, if the market still exists, and other possible issues that might slow or halt a business's growth.

7. Prepare to Make Sacrifices

The lead-up to starting a business is hard work, but after you open your doors, your work has just begun. In many cases, you have to put in more time than you would if you were working for someone else, which may mean spending less time with family and friends to be successful.

The adage that there are no weekends and no vacations for business owners might ring true for those who are committed to making their business work. There is nothing wrong with full-time employment, and some business owners underestimate the true cost of the sacrifices that are required to start and maintain a profitable business.

8. Provide Great Service

There are many successful businesses that forget that providing great customer service is important. If you provide better service for your customers, they’ll be more inclined to come to you the next time they need something instead of going to your competition.

In today's hyper-competitive business environment, often the differentiating factor being successful and unsuccessful businesses is the level of service that the business provides. This is where the saying "undersell and overdeliver" comes in use, and savvy business owners would be wise to follow it.

9. Be Consistent

Consistency is a key component to making money in business. You have to keep doing what is necessary to be successful day in and day out. This will create long-term positive habits that will help you make money in the long run.

What Is the Fastest Way for Growth of a Business?

Businesses will grow at their own rates, and many times this is out of the control of the business owner or workers. However, there are some aspects to running lean that may help a business grow quickly, such as focusing on a small product line, scaling up instead of scaling down, and providing some sort of obvious edge over your competitors.

How Do You Increase Sales?

Increasing sales can come from a few different places. You can increase advertising expenditures where it has a proven effect, offer referrals from existing clients, build a direct-to-consumer email list, and others. You can also expand a product line, but if it underperforms, it will negatively affect your bottom line.

 

KEY TAKEAWAYS

  • Starting a business requires analytical thinking, determined organization, and detailed record-keeping.

  • It’s important to be aware of your competition and either appropriate or improve upon their successful tactics.

  • You’ll almost certainly end up working harder for yourself than you would for someone else, so prepare to make sacrifices in your personal life when establishing your business.

  • Providing good service to your customers is crucial to gaining their loyalty and retaining their business.

  • Make sure not only that the business is ready for launch, but you are as well.