According to the Bureau of Labor Statistics, the number of small business births is exceeding the exit rate of companies, or company closures—a positive trend we haven’t seen since 2007. With increasing competition, how can your small business stay ahead of the pack?
I’ve found that every small business needs to consider these top ten must-haves to thrive in today’s small business environment:
1. Business plan
Not a book filled with boilerplate language and spreadsheets, but a definitive written plan with a target customer group and marketplace, a plan to grow the business by adding products, services, customers, staffing, overall budgeting, and financing needs, prepared at inception and updated at least annually. This will serve as a roadmap to keep business owners on track.
2. Good sources of credit and good-to-excellent credit performance
A good credit rating is an objective view on how well you keep your word, financially. Paying one’s bills when due will help open credit sources for your business. Credit ratings of both the business and the owner are important. Sources of credit can be with banks, lessors, and suppliers, and each play a vital role in optimizing cash flow for the business.
This can be as sophisticated as a full set of management financial statements or as condensed as a dashboard with business metrics and results, considering the most important measurements as you progress through the day, week, month and year (developed as part of your business plan). Waiting until sometime next year to look at “what happened” is far too late and won’t give the ability to adjust plans, if needed.
Other than death and taxes, the only other guarantee is that the business environment will change, so the better you are at adjusting to change, ideally by anticipating it, the smoother the business will run.
5. Customer-centric company culture
Customers include suppliers, clients, fellow employees, and prospects. Know or learn their needs by seeking to understand their perspectives on your deliverables, and by all means, deliver.
6. Engaged employees and accountability
Help your team really understand your vision and get full buy-in by sharing the progress. Welcome healthy debate on achieving the company’s goals. Be sure to share how each area of the business fits into the overall goals of the business and how the business fits into the industry. Once the team becomes engaged, a system of accountability for all should be deployed. In the purest of terms, accountability is doing what we said we would do.
7. Product and/or service differentiation
Identify those products and services your business provides and examine what makes them unique. This goes much beyond features but extends to benefits. “It’s not what it is, but what it does.” Perhaps you provide ordinary products and services, but in an extraordinary way. Emphasize the impact your business’ uniqueness has on your customers. Your customers add credibility to your marketing messaging, so never hesitate to ask your customers for testimonials and for their permission to use them.
8. Trust and solid leadership
Teams will follow a leader they trust, not only in terms of integrity but with trust in the leader’s competence. Stephen M. R Covey’s book “The Speed of Trust,” discusses in excellent form the value of trust in an organization of any size. Recognize that a leader can emerge from within the company and might not even be the owner/entrepreneur.
9. Trusted set of advisors
An accountant and an attorney that understand you, your personal financial/legal status, your business and industry; an insurance agent(s) for all insurance matters; and a business mentor to act as an objective sounding board.
10. Make a profit
This seems obvious, but it isn’t. Seek a continuous and fair profit to; a) earn a return on your investment in the business; b) to build capital in the business, improve credit standing and enhance the business’ ability to handle a “storm,” and c) to support future reinvestment in the business. Too often in small businesses, profits are pulled out for a host of reasons. As an owner, think of your compensation as an exchange for your rendered services to the business and the profitability as a return on your investment. Seek to have your business achieve a level where a fair profit is garnered after paying yourself a fair wage for your services. And, perhaps most importantly, never be ashamed to earn a fair profit; it is the lifeblood of business perpetuity.