Small businesses play a critical role in the economy, not just in the United States but globally as well. According to the World Trade Organization (WTO), small and medium-sized enterprises (SMEs) contribute more than half (55%) of the GDP of developed countries. Therefore, when you start a small business, you stimulate the economy more than the average consumer.
Starting a small business is exciting, and most new entrepreneurs believe they’ll succeed if they work hard enough. It’s an excellent and necessary attitude but, in many cases, success depends on more than a willingness to work hard.
Any seasoned entrepreneur would agree that the road to becoming a successful business owner is paved with challenges and mistakes they wish they hadn’t made. While mistakes may have helped us grow and get to where we are today, avoiding them may have made the journey a wee bit smoother.
Here are some of the things I wish I’d known before starting my business.
- Small businesses typically contribute 55% of a country’s GDP
- Approximately 20 percent of startups fail in the first year; about half fail by the fifth year
- Small business owners can learn from the mistakes of others and avoid failure
- Entrepreneurs either neglect essential but noncore tasks or spend too much time on them
- All businesses can benefit from online resources and tools
Find What You’re Looking For
Why Are You Starting a Small Business?
Helping the economy is a noble goal in becoming an entrepreneur but, realistically, that isn’t the reason most small business owners go that route. In a 2020 survey of 2,400 small business owners. About 29% stated they started a business because they wanted to be their boss, 17% were dissatisfied with corporate life, and 16% wanted to pursue their passion.
Other reasons included taking up an opportunity, acting on inspiration, avoiding retirement, and losing a job. Interestingly, about 2.5 million veterans use the skills they acquired while in service to run a small business in the U.S.
Whatever your reason for starting your own business, believe it’s a good one. However, you also should be aware that about 20% of startups don’t make it to the first year. Only about half make it to the fifth year.
The purpose of pointing this out isn’t to discourage you from starting a business. The goal is to make you aware that, like any adventure, starting a business involves a certain amount of risk.
The Best Tips for Starting a Business
Here are some of the best tips for starting a business that many entrepreneurs admit they learned along the way.
Create a Business Plan and Stay With It
Two of the best qualities of entrepreneurs are creativity and risk-taking. However, they can also land you in trouble if there’s no self-discipline.
When your mind is teeming with business ideas, you might be persuaded to change tracks and divert the focus of your business. While pivoting can benefit a startup, it only makes sense if intensive market research indicates a need for it.
Avoid making a muddle of your startup by creating a business plan. Then, stick to it. A business plan provides you with a roadmap to help you achieve your goals.
A business plan might seem like a lot of unnecessary work, especially considering the amount of research you need to do. However, think of it in terms of buying a car. Because buying a car involves a significant cash outlay, you make an effort to find out as much as you can about it before you put a cent down.
You need to make the same effort for your business. Once you have a good business plan, stick to it unless something forces you to modify it. For example, if you sell a trending item and market research indicates that the trend is shifting, you need to change your business plan accordingly.
It’s a Business, Not a Hobby
This might seem like an obvious point, but many startup owners make the mistake of forgetting that most tasks involved in running a small business are noncore. That means every business owner will spend about 85% of their time on marketing, sales, customer service, and administration activities.
Neglecting these tasks in favor of spending all your time taking photographs, developing software, or whatever is the core task of your business is a sure way for your business to fail. As tiresome as they may seem, you need to take care of the noncore tasks as well or get others to take care of it for you.
Suppose you don’t have the inclination or capacity to manage your business efficiently. In that case, you can delegate these tasks to a business manager or outsource them to a third-party service provider. The delegation of these noncore but essential aspects of your business will allow you to focus all your attention on core tasks.
Work Smarter, Not Harder
Burnout is real, particularly for startups. While this might be inevitable as the business grows, it is avoidable in many cases if you know how to work smarter, not harder.
The phrase originated from industrial engineer Allen F. Morgenstern in the 1930s while thinking of ways to simplify processes to improve production efficiencies. In the context of entrepreneurship, it means choosing to work more on tasks that’ll deliver high value and less or not at all on other activities.
For example, if you run an accounting business, bookkeeping is a high-value task you should be doing. However, if you run a graphic editing business, spending a lot of time and effort figuring out and doing bookkeeping isn’t smart.
That’s not to say that bookkeeping is unimportant, as pointed out previously, but you shouldn’t be trying to do it yourself. Learn to delegate to maximize your time on core tasks and grow your business.
Follow the Money
You have to follow the money. While your goal should be primarily about delivering value to the customer and not making money, you need to keep a keen eye on your finances. Running out of money is the top reason for the failure of many small businesses.
Many entrepreneurs make the rookie mistake of thinking that since they’re bringing in a lot of money, they are in the green. However, they fail to account for expenses, which include overhead costs and accounts payable.
Work with your accountant or bookkeeper to get a clear picture of your present and future cash position. Ask about your balance sheets and acquire a basic understanding of essential accounting terms to make sense of them.
Bookkeeping software can help you generate reports when you need them to make informed decisions.
If you anticipate needing more capital to keep your growing business in the green, you might want to consider getting external funding. The point is you don’t want any surprises when it comes to money for your business. Manage your money properly and be ready with funding sources before you even need it.
You Need to Network
When John Donne wrote, “no man is an island,” he was very sick and contemplating how people always need the companionship of others, no matter how self-sufficient they think they might be. While the need for other people applies to all facets of life, the implication of the phrase is never more valid than when trying to make a go of a startup.
Businesses don’t exist in a vacuum ― at the very least, you need clients ― and neither do business owners. You need to build relationships not only with your customers but with like-minded individuals, especially with those in your field.
Joining a professional community gives you a path to get insights and answers to any problems you may encounter along the way. Instead of figuring out issues on your own, you can reach out to more experienced business owners who may have already faced and solved similar problems. Most people typically develop a deeper connection with a few people, and some can serve as your mentors to help you avoid costly mistakes.
Connecting with people in your industry can give you some comfort and companionship, even if only virtually. It doesn’t take that much time to foster these relationships, especially in online communities, yet the returns can last you for a lifetime.
Create a Diverse Workplace
A diverse workplace in this context isn’t on a cultural or racial basis but in skills. People tend to gravitate to others who have the same interests, but you want to have people in the business who have the skills you don’t.
For example, if you’re an excellent content writer but have no instinct for social media, you want to find someone who excels in social media marketing. Having a diverse workplace makes your business well-rounded and more likely to succeed.
The Recommended Resources for Starting Your Business
You’re now set for success in your small business and shouldn’t waste any time getting started. Fortunately, many resources are available to convert a host of business ideas into reality.
While some resources are more appropriate to certain types of businesses than others, all startups will benefit from the following:
- Accounting software
- Business management software
- CRM software
- Website hosting
- Market research
- Marketing tools
- Content tools
- Social media management
- Third-party services like content creation and voice talent
You don’t need to use these resources if you don’t want to. However, they can be of infinite value to you in automating redundant processes, monitoring productivity, and generally making your life as an entrepreneur so much simpler.
What Should You Do Next?
You can maximize the value of these tips before you start a business, particularly when making a business plan. However, if your business is already up and running, no worries.
You’re never too late when making positive changes. Use these insights to help you improve how you manage your company. You might also consider using some of the suggested tools and resources to automate processes and increase efficiencies. Work smarter, not harder.
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