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Want a Successful Business? Here Are 5 Keys.

Want a Successful Business? Here Are 5 Keys.

As small business owners, we all want to be successful.  That’s why we started our business in the first place.  But..in order to get there, we must be mindful of certain things.  Here is a great post from the Small Business Administration giving you 5 things you need to know.

5 Pillars of Small Businesses Success

By Marco Carbajo, Guest Blogger

Published: January 13, 2015

What does it take for a small business to achieve success?

Whether you’re already in business, or preparing to start a business, it takes hard work, tenacity and drive to achieve a high level of success. Lori Greiner, star shark of ABC’s Shark Tank says, “Entrepreneurs are willing to work 80 hours a week to avoid working 40 hours a week.”

According to Elizabeth Wilson of Entrepreneur Magazine, while some 40 million businesses are started each year, a paltry 350,000 break out of the pack and begin growing and making money. So how can a small business owner overcome some of the common business pitfalls? Marcus Lemonis, CEO of Camping World and star of CNBC’s prime time reality series The Profit, knows all about determining the success or failure of a business. Lemonis says, “Business success is about the three P’s: People, Process and Product.” Here are five pillars that make a small business successful.

1) People

If you want your small business to succeed, you need a fantastic team. Russell Simmons, Entrepreneur and founder or Def Jam Recordings says, “Surround yourself with people that are smarter than you.” A company can accomplish amazing things when it has leadership and a team who is inspired, hardworking and believes in the company’s mission.

2) Plan

“Quality is the best business plan, period,” says John Lasseter, chief creative officer for Pixar and Disney. Just about everyone in the business world agrees that having a plan is important. And that doesn’t mean the big formal business plan document you fear like a term paper. It starts small and may grow in time. At a start-up, implementation is everything. That means it’s essential to establish responsibilities, set goals, and track performance. You will also need to answer key questions, such as:

  • Have you identified your target customers?
  • What problems are you trying to solve for them?
  • What will be the most effective marketing and promotional strategies?

3) Process

Dr. W. Edwards Deming said, “85 percent of the reasons for failure to meet customer expectations are related to deficiencies in systems and processes…rather than the employee.” It’s crucial that you have a full and clear understanding of your company’s processes and have the right systems in place.

4) Product

Does your product solve a problem? Does it exist yet? Is there something that is out there that your product does in a different way? Is there a demand for your product? Success in business requires doing something you’re passionate about that fills a need in the marketplace. Debbi Fields, Founder of Mrs. Fields Bakeries says, “Once you find something you love to do, be the best at doing it.”

5) Profit

When it comes to measuring a successful business, profitability is probably the first thing that comes to mind. Is the company making money? A critical component of running a successful business is knowing your numbers. “If you want to be successful in business, you need to become proficient at handling certain numbers. You need to be able to read and understand your financial dashboard” says Dawn Fotopulos, Associate Professor of Business at The King’s College in New York.

Starting and running a successful business can be a fulfilling and rewarding experience. You as a small business owner should never stop learning, innovating, planning and growing. “Leaders spend five percent of their time on the problem and 95 percent of their time on the solution. Get over it & crush it!” says Tony Robbins.

About the Author:

Marco Carbajo

 

Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.

If you enjoyed this article and would like to recieve more like it, sign up for my email newsletters by using the form on the right.

 

5 Dangers of Fast Growth.

5 Dangers of Fast Growth.

As Small Business Owners we know growth is the name of the game.  But, did you know you can grow too fast?  Here’s a great post warning you about what can happen.

5 Dangers of Overly Fast Small Business Growth Strategies

By Suzanne Kearns
Posted in: Small Business

 

Comments1

business growth team plantWhen you start your own small businesses, you immediately start thinking about growth. Maybe you just dream of eventually opening a second store, or you might envision becoming a huge conglomerate or one day franchising the business.

Growth isn’t just admirable – it’s expected. But often, small business owners don’t consider that growing a business too quickly can eventually cause the company’s demise. You can easily find yourself lacking working capital, which is one of the biggest contributing factors to the failure of one in six new small businesses.

You and your business can avoid the dangers of overgrowth. By managing your business correctly and scaling up at a good pace, you’ll guide your company on the path to success. Whether you’re running a home office or a company with many employees, the key is planning.

Make sure you know the five biggest risks associated with sudden, unexpected growth.

1. An Overbearing Debt Loan

If you don’t plan properly for an increase in business, you can wind up taking on far too much debt. Growth takes money, and especially during the early stages of growth, working capital will be low. Many business owners take on massive debt to feed the growth machine, and a vicious circle begins. Increased orders require you to take on more debt, and so on. Too often, the cycle breaks only because the debt becomes so high that it topples the business. Even though more money is coming in, you owe even more and can’t cover debts.

 

For example, if you owned a housecleaning business and suddenly began to get more customers, you’d need to purchase more supplies and probably hire some more help. These positive developments would involve a lot of cash flow, and they can quickly turn negative by eating up all of your reserves. The new business is good, so you give incentives to your existing customers to send you referrals, leading to even more customers. Again, you need more staff and supplies. Perhaps you go as far as adding a company car with your logo to spread the word and support the increased workload.

Your working capital completely depleted, you take the next logical step: getting a loan. At first, it looks like the increased profits will more than cover the credit payments. But while the client list is growing, the debt is piling on more quickly, and keeping up with payments becomes a struggle. The growth was good, but it came too quickly and caught you unprepared as a business owner. Better fiscal management would have allowed for controlled growth based on revenue and profits.

2. Being Unable to Satisfy Your Customers

As a small business owner, you’ll be thrilled to be in high demand. But you need to be sure that you can supply the level of service your customers expect. Personal attention is a key selling point that attracts customers to a small business, especially when you’re involved in an active local community. In the face of unexpected growth, you’ll face the challenge of maintaining quality with the increase in quantity.

Consider the case of the home cleaning service. With a manageable number of clients, you can easily give each one the personal attention that makes your company special. In fact, that personal touch is what got everyone talking about you, spurring the recommendations and the increase in business. While it’s inevitable that the bigger a business grows the less interaction the owner will have with the clientele, unless you manage expectations, some clients may end up feeling put out – and they’ll stop coming to you.

The answer to this problem is – again – managed growth. Calculate how many new customers you can take on without turning your back on the clients who got you started. As you grow, bring on a customer support staff to promptly attend to all of your clients’ needs.

3. Forgetting Your Original Goal

In an effort to expand your business, you’ll be tempted to move into somewhat related – but unexplored – territory. The housecleaning business, for example, could be growing at a comfortable pace when a satisfied residential customer encourages you to bid on the contract to clean a commercial building. It’s tough to resist the prospect of big contracts and new opportunities, but straying from your original business model too quickly can create a volatile situation. While you’re striving to succeed in an untested aspect of your business, you’ll be forced to turn your back on the duties and client base that got you started in the first place.

Entrepreneurs naturally want to try new things, and success often requires taking a risk on new ideas in unproven areas. But you have to carefully consider how much time you can devote to a new plan, and budget accordingly. More importantly, make sure you maintain the safety net of your current customers and business model. If your expansion effort doesn’t pan out, you need to be able to rely on the original concept.

4. Losing Employees

Any small business owner will tell you that your best employees are the lifeline of the business. But when a business experiences quick growth, lines of communication can break down. If you’re surprised by your business’s growth, you’ll get preoccupied with keeping up, and if your employees aren’t ready for it, you’re in trouble. You need to let your employees grow with the business, but training them for management and leadership positions takes preparation. If you catch your staff members by surprise, and you’ll likely lose them. For a small business, losing employees – especially longstanding ones – means losing institutional memory, customers, and money.

In the case of our cleaning business, getting wrapped up in all the new business could easily alienate an unprepared employee in charge of the residential aspect of the business. Without guidance and support, that staff member is left in the field guessing at what decisions are best for the company. Since this employee isn’t trained for management and doesn’t have your insight into the business model, you’re probably going to be unhappy with those decisions, and your customers will be dissatisfied too.

5. Focusing on the Short Term

It’s amazing to watch a company in the middle of a growth spurt. Cash rolls in and business owners think that they’re on the way to the top. Profit and loss sheets look good, and it starts to look like worrying about bills and cutting  business operating costs and expenses will be a thing of the past.

 

But a dangerous trap lurks in these bright days. In the search for good news, you can make the easy mistake of looking only at short-term profits. Instead, consider the plans that you’ll have to implement to sustain long-term growth and success. Don’t lose control just because you see a few good weeks and months in store. Making rash decisions to boost one day’s profits can cost you something – your cash reserves. And if you’re unprepared, those good days will suddenly end.

Remember that company car with the cleaning service logo? It may have been a little premature to have taken on the expense of a brand new car and decal work. Celebrate your success, but don’t overindulge.

Final Word

For your small business to succeed, the name of the game is growth. But growth is very complex. It’s hard enough to grow in the first place, so make sure that you handle it properly when that success comes. Keep your eye on three areas of the business: your systems, your staff, and your cash reserves. Successful growth requires taking the time to plan and prepare to sustain all three as your business increases.

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