8 Things Every Small Business Owner Needs To Know
The Small Business Administration considers any company with fewer than 500 employees “small,” which accurately describes 99.7 percent of businesses in the United States. Running your own business comes with great benefits—such as freedom, control, financial rewards, unlimited growth, and seeing your dreams come true. But it also comes with risks, like stress, time commitment, and financial uncertainty.
A somewhat sobering report from Bloomberg claims that 8 out of 10 entrepreneurs who start a business will fail within 18 months. Rather than simply plunge forward and hope that all goes well, learn from those who have taken this journey before you. The tips that other small business owners have picked up along the way are numerous enough to fill a book, but understanding these basics can help keep your business afloat as others flounder. (See also: How to increase the visibility of your business).
Here are 8 things every small business owner needs to know:
A better way to manage your finances
With Hiveage you can send elegant invoices to your customers, accept online payments, and manage your team — all in one place.
1. Culture Counts
Whether your company employs two people or 200, corporate culture matters. According to Growth Everywhere, culture refers to the overall feel of the establishment, including mission, value, persona, and atmosphere. Employees are looking for an organization where they can fit in, contribute to its success, and feel satisfied. Happy people are productive people, and there is a direct correlation between happy employees and business profit.
Research from the University of Warwick’s Economics Department shows that satisfied workers are 12 percent more productive than others, and that unsatisfied workers are 10 percent less productive—to the tune of $300 billion annually. In other words, it pays to ensure that your business is a great place to work!
2. Hire the Right People
The person you hire, and not just her resume, is important to your business’ success. Case in point: the hiring process of Zappos includes offering all trainees $2,000 if they will quit because they want to be sure that those who stay absolutely want to. Harvard Business Review reveals that Southwest Airlines embraces the idea that character matters more than any particular skill set—and it’s paid off. As other airliners have folded, Southwest stays in the air because they know that they can always teach someone how to do a job, but they cannot infuse a person with good character.
3. Delegate Your Way To Success
If you are just starting out in business you may feel as though you can—or must—do it all. The truth is, in order to grow you need to give up some control for the good of the business. When you delegate tasks to other employees, your business becomes more efficient because if you’ve hired the right people, they are experts at what they do. In this way delegation also allows those people to develop and broaden their skills. Effective leaders teach their skills and pass on knowledge to their employees so that they have time to plan for the next step and then lead the way.
4. Have a Contingency Plan
To run a small business you must be capable of wearing many different hats.
It’s vital to have a contingency plan because thunderstorms will come and usually when you least expect them. Yes, it takes time and resources to plan for disasters, both big and small, but if you neglect this important task you could wind up paying dearly in the end. Play the “what if” game and come up with a plan: what if there is a recession, a credit crunch, or a major vendor goes belly up?
Your contingency plan should cover natural disasters and any other factors that disrupt your flow of work, such as which backup vendors are able to deliver all-important materials when your go-to vendor is snowed in. Keep in mind that it’s important to prioritize when you’re coming up with a contingency plan so that you don’t waste time and money preparing for something that is low on the list of risks—like a tsunami in the Midwest. Instead, think about the elements of your business that are most crucial on a day-to-day basis: cash flow, employees, inventory, and office equipment.
5. Billing is Vital
As busy as you are running the daily operations of your business, you must have a constant cash flow to continue functioning—and that cash comes from paid invoices. Make sure that you have a spot-on billing system that allows you to submit professional invoices and to know when and if they’ve been paid.
As a small business, you may choose to outsource your billing to an outside vendor. At Hiveage we provide online billing software and invoicing systems that take the guess work (and headache) out of billing. The system presents your company in its most professional light, and also tracks which clients have paid and which have not. We’ll even send a follow-up reminder so that you don’t have to. The best part is that come tax time, you’ll have all your invoicing information in one easy-to-find spot.
If you want to try out an online invoicing tool without signing up, check out our Free Invoice Generator: it’s totally free, and has all the important elements clearly marked with detailed explanations. With the free invoice template you can easily generate an elegant PDF that will be emailed to you right away.
6. Customer Service is King
If each employee is armed with the ability to make things right for the client, you are far more likely to have customers for life.
Good customer service is about more than just presenting a smiling face. It directly factors into your profits because most companies need repeat business to flourish. Business Case Studies reveal that it costs five times as much to gain a new customer as it does to hold onto a current one. If your customer service consists of one weary person answering complaints, something needs to change. Customer service should be woven into the fabric of your corporate culture with every employee able to provide a great answer to customer problems.
Whether any worker picks up the phone to answer customers’ questions and concerns, or each department provides their own customer service line, problems tend to get taken care of right away. For example, a programmer taking a call can immediately rewrite code in order to address a customer’s issue. If each employee is armed with the ability to make things right for the client, you are far more likely to have customers for life.
7. Understand the New Healthcare Law
The new Affordable Care Act was put in place to make sure that everyone in this country can afford quality health insurance and business owners need to understand how they are affected by this new law. There are several measures in place to help businesses with fewer than 50 employees, such as tax credits, to help lower the cost of premiums.
To get this credit, your business is required to buy health care from the Small Business Health Care Exchange (SHOP), an open market, which means better prices. Keep in mind that organizations with fewer than 50 employees are not required to provide their employees with health insurance, but those with over 50 employees must or they will be subject to fines.
Stay up to date with the new law and how it specifically affects your business by taking a webinar from the Small Business Administration.
8. Marketing To Ensure High ROI
Small businesses can feel overwhelmed by the idea of marketing, particularly if they don’t quite understand it or have the budget for a marketing team. But if you want to grow your company, you must figure out a way to continually draw in new clientele and keep them coming back.
According to the Small Business Association, marketing your small business includes market research (who is your audience?), market strategy (what can you do better than the competition?), target marketing (be specific), and determining a marketing plan (products/service, promotion, price, and distribution).
To run a small business you must be capable of wearing many different hats and continually keep up on the latest rules or culture of this world. Reviewing this list will allow you to remain on top of your business game and be in a much better position to expand it!
Join thousands of business-savvy entrepreneurs on our mailing list.
Curated emails that’ll help you manage your finances better.