Top 7 Most Important Business Lessons
By Michele Schermerhorn
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Millions of people start new small businesses in the United States every day. Many fail at running a small business every day. What causes one business owner to succeed where another fails? There are seven key areas to focus your efforts for a successful small business. It starts with knowing oneself and ends with not being afraid to ask for help.
- Know Yourself
Having your own business is more than just creating a job for yourself. To be a successful small business owner, there are many personal sacrifices you will be required to make. You have to be willing to make them. By knowing yourself and what is truly important to you, you will be able to make these choices far easier than if you have never considered your priorities.
Your basic roles in a small business are in marketing, planning, finance, and administration. To get the best results, it is rare for one person to play all these roles equally well. You must know which parts you can handle yourself and which parts you're going to need help with. That's why it's so important to be objective and take a close look at your overall strengths and weaknesses. Ask yourself the following questions:
- Do you plan before you take action?
- Are you willing to hustle for the sale?
- How financially savvy are you?
- Do you have a well thought out plan? And, do you work the plan?
- Do you know how to make sales happen? Can you ask for the sale?
In those areas where you assess yourself as weak, you can ask for help.
- Ask For Help When You Need It
When you’re young and unseasoned, you tend to think you can do anything. This is a recipe for disaster for the small businessperson. If you insist on doing everything yourself, you will work 16 hours a day and not do some things well.
Remember, getting results is what counts! With outside advice and assistance, your quest for a successful business can be accomplished faster and with far fewer bruises than doing it yourself. When I started my first online business, I even created by own website. In retrospect, this was a big mistake. It took me far longer to create my site than having a more experienced person do it. Start equating every second of your time with money. Your time isn’t free. While you are trying to do everything, what’s falling through the crack?
Don't be too proud to ask for help, we all need help sometimes. With the Internet, the small business owner has a wealth of experience available to them. Why not take advantage of the many resources, paid and otherwise, available to you? Join a small business forum, like the Small Business Forum (www.smallbusinessbrief.com/forum/) where you can exchange knowledge with other small business owners. Access the millions of online articles on every business subject you can think of at ezinearticles.com.
Qualified sources are also available from your local government offices and other professional services. It is important to recognize -- what you don't know can end up costing you money and greatly reduce the chance of achieving your business goals.
With all that knowledge, you need a plan of action.
- Action Planning
I like to call it “action planning” rather than “planning”. Action is the only element which turns a plan into reality. Many people are great at planning but they suffer when it comes to follow-through. Successful small business owners are action oriented. But that action starts with a plan.
According to leading authorities, the main reason 80% of all new businesses fail within the first five years is not money, but the lack of planning. If you want to succeed, the trick is to know how to make right the decisions by implementing an effective business plan. Remember, if you fail to plan, you might as well plan to fail.
A business plan should include how you will finance the business, who will perform certain critical business functions, the license and permits required, accounting method, as well as what you know about your prospects and customers.
- “Mind Meld” Your Customer
Just knowing your customer isn’t enough for long-term success in your small business. In Star Trek, the Vulcan race had the ability to perform a mind meld. At the time of the mind meld, they could see, think, and feel everything their partner was seeing, thinking, and feeling. This is how close you must come to understanding your customer. The closer you get, the more successful you will become.
Are you listing to your customers? Make it your business to give your customers what they want and they will buy from you. They are the reason you are in business, and your future depends on them. The products and services you provide should be a direct reflection of their needs. Think in your customers' terms; buy, show, sell, and say things that interest them, not you. Don't forget, it is the customer that determines whether or not you succeed. They vote every day by where they spend their money.
Reflect on the following questions:
- Do you know the reasons why customers shop at your store? (service, convenience, price) If not, ask!
- Do you seek suggestions from your customers on ways you can boost business?
- Do you use a store or online questionnaire to aid you in determining your customers' needs?
- Do you stay in contact with customers on a regular basis?
- Do you ever try to re-establish a relationship with lost or inactive customers?
A key to success lies in knowing your customer. The other half of the equation is to know your industry.
- Know Your Industry
You can gain the greatest competitive edge if you intimately understand your industry. You must know the ins and outs of your particular products and industry. You should know every competitor as well as their strengths and weaknesses. It’s in your competitor’s weaknesses where you will most frequently find your own success.
Your competitors size, services, location, marketing approach, type of customers, suppliers, and pricing strategies should be as well known to you as your own. Your local business climate, median household income, level of education, ethnic population, and the other demographics of your potential customers should be second nature to you. To prosper, you must know the game and the playing field intimately.
Many people focus upon these areas but still fail. Why? They focus more upon the product than the finances of the business.
- Maintain Good Financial Records
If you don't know where your money is going, it will soon be gone. The "game of business" is played with products and customers, but the score is kept in dollars and cents. Good financial records are like the instrument panel on your car, they keep you posted of your speed, fuel level and engine condition. Without them you're flying blind trying to pace the other cars. If you know how much you're spending, buying and selling, you can take control and help your business make more money.
- Do you have basic accounting knowledge? Or, do you have someone you trust to keep the books?
- Do you maintain every receipt you obtain through the running of your business?
- Have you computerized your business to streamline everyday tasks and business procedures?
- Do you use sales forecasts, expense sheets, and financial statements on regular basis to assess the progress or your business?
- Do you evaluate your operating expenses and make necessary changes on a regular basis?
Many people erroneously believe good record keeping is for the government and those financial obligations. They are wrong! Good financial record keeping can help your business succeed. Use the financial information available to make improvements to the operation of the business and improve profits. Remember through it all, the old adage “cash is king” is true.
- Manage Your Cash
It doesn't matter how unique your store is, your business can't survive without good cash flow. Cash is the lifeblood of your business. The money coming into or out of your store is the vital component that keeps your business financially healthy. For profitability, more cash must come into the business every day than goes out of the business. You can have the greatest sales in the world, but if it’s all in receivables, how will you pay your bills?
A monthly Cash Flow Statement is a critical business tool. It shows the amount of money at the start of a period and how much cash was received during the period. It identifies the various sources of incoming cash and the reasons for outgoing cash. Budget wisely. Know the sources of your monthly income and expenses. Then, you won't have to worry about running out of money. And that is a good thing.
Like any game, the game of business has rules and tools. Those who excel at the game, play it better than their competitors. Keep focused upon these seven critical areas and you will succeed. Remember, Albert Einstein once defined “insanity” as doing the same thing over and over again and expecting a different result. Isn’t it time you changed the things you are doing so you can succeed? I think the time is now!
Michele Schermerhorn calls herself a Corporate Freedom Fighter dedicated to freeing cubicle prisoners to experience their own successful online business. She has over 30 years experience in the business world and over 12 years running her own successful online businesses. She is President of Online Business Institute Inc. (http://www.obinstitute.com), authors a sassy marketing blog ([http://www.imarketblog.com]), and regularly conducts free online seminars. Online Business Institute Inc. exists to Create Successful Online Business Owners One Person At A Time.
Article Submitted On: May 20, 2005