Small businesses play a critical role in the U.S. economy. According to the U.S. Small Business Administration (SBA) Office Of Advocacy:
- Just a few years ago, in 2016, small businesses employed nearly half of private workers (47.3%) or 59.9 million people.
- In just one year, small businesses created 1.8 million new jobs.
- Small businesses celebrate diversity. As of 2016, there were as many as 8.7 million employees working for minority-owned businesses.
If you endeavor to start a small business, these stats make it clear: you will be in good company. While small businesses are an integral part of the economy and responsible for a lot of good, starting one can be a challenging prospect.
To increase your chances of a thriving startup, demystify and simplify the process whenever and wherever possible. Start by following these tips for starting a successful small business.
Find Your Niche
One of the first tips for starting a successful small business is to find your niche. According to the U.S. Census Bureau, there are as many as 30,748,033 small businesses nationwide. To last as one of them, you will need to carve out a unique purpose for your company. Do this by:
- Conducting market research. “Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area,” The Small Business Association (SBA) explains. The SBA recommends researching demand, market saturation, market size, pricing, location, and economic indicators. Complete this research using surveys, focus groups, interviews, and questionnaires.
- Thinking about what truly moves you. To truly excel at what you do, it needs to be something that moves you. To find your niche, start with a list of your top 10 passions. Use this list to begin narrowing down your niche. Think about questions like, “What do you like to do in your free time?” and “What would you do anyway even if you weren’t paid for it?”
- Finding problems you can solve. One sure-fire way to make sure your business is a success is to solve a problem. Think about what frustrates you in your day-to-day life, and if you have potential solutions to solve any pressing problems.
Other ways to solve problems and find your niche is to, once again, use focus groups, research keywords, and look at any forums and social media sites where users pose common questions. By doing your research on Google Adwords or Google Trends, you can find out what queries people are searching for — and parse out the problems that do not currently have satisfactory answers.
For example, if you realize that there are faulty connections in important electronic devices and important medical devices, consider specializing in sealed fiber optics to solve that problem.
- Testing out your ideas. Once you have a solid idea or whittle it down to a few solid ideas, test them out. Use landing pages and A/B split testing to determine whether your niche is profitable or whether your idea needs some work. Before buying a dental practice outright, employ these methods to ensure your business idea will be successful.
What are the best tips for starting a successful small business? Start with a niche, and make sure it is one that you are passionate about and one that you have thoroughly vetted and tested.
Start With A Business Plan
All small businesses need a business plan. Whether you wish to become an orthodontist or an eco-friendly coffee shop, you need the foundation and groundwork of a detailed business plan.
“Use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business,” the SBA writes.
To draft a traditional business plan:
- Start with the executive summary, company description, and market analysis. An executive summary needs to include key facts about your company’s management, workers, location, and financial profile. A company description will include what you do, your target demographics, and what makes your business competitive. Use the detailed findings of your research for your market analysis.
- Deep dive into your management, organization, and services. Describe your managerial structure and legal structure in great detail. Then describe what product or services you plan to sell. Add market research about your service or product, patent filings, copyright filings, and/or your step-by-step plan for product development.
- Explore marketing and sales, funding requirements, and financial projections. Plan a comprehensive sales and marketing strategy. Remember that your first few weeks — or months — of business may not go as planned and work that into your strategy. Your sales plan should include several different avenues to generate profit and revenue.
Further, few startups or small businesses have the necessary capital to go it alone. One of the most important tips for starting a successful small business is to seek out investors and additional capital. Your funding requirements should layout how much funding you need and how you plan to get it.
This part of your business plan needs to “convince the reader that your business is stable and will be a financial success,” the SBA continues. Include cash flow statements, balance sheets, income statements, and budgets. Reconcile these figures with your personal funding and the funding you are seeking from investors.
- Your final words or appendix. The appendix section is a bit of a grabbag. Include any other documents that may be relevant and any documents that investors request. Credit histories, letters of references, resumes, permits, patents, legal documents, blueprints, product pictures, and contracts are all common items to file away in the appendix.
Coming up with a business plan is one of the most worthwhile tips for starting a successful small business for good reason. Any prospective partners, angel investors, or financial advisors will likely request your business plan before moving forward with sizeable investments.
Buy And Renovate Your Office
With your business plan in-hand, it is time to get serious about your business. The next tips for starting a successful small business are practical ones. Take the necessary steps to secure a property, make it your own, and make it suitable for your day-to-day business operations and employees.
Here are some worthwhile pointers:
- Find office space and plan for the future. Starting a business does not require a lot of space. Keeping that business in operation and growing that business is a different story. True, Business Insider reveals that Amazon began in Jeff Bezos’s garage and Facebook owes its beginnings to Mark Zuckerberg’s freshman dorm room. While taking temporary measures to get started may be necessary, these spaces are not scalable or practical long-term.
Start by considering how many employees you already have, how many you have immediate plans to hire, and how many employees you are likely to have if your best financial projections come to fruition. It is always wise to leave some wiggle room. It is much easier to make do with an oversized office space than to cram employees into any available nook and cranny.
- Make the office comfortable. Remember, with any luck, you will have a fair amount of employees in and out of the office every day. When renovating the office, start with renovations to make your employees comfortable. Invest in heating, ventilation, and air conditioning installation — or HVAC installation — to keep your employees comfortably warm or comfortably cool as they work.
- Save money where you can. If all goes well, your office space is going to be an ongoing expense for the foreseeable future. As with any other aspect of a business, it is important to be efficient and to save money where you reasonably can. Talk to commercial solar installation companies about your options and about what your company stands to gain from the long-term use of commercial solar panels.
Tips for starting a successful small business are not always about detailed business plans and market research. Some of the best tips involve the most practical steps, like securing the right premises.
Tackle Advertising Strategies
Tips for starting a successful small business would be remiss without a discussion of marketing strategies and PR solutions. To optimize new businesses’ advertising and marketing strategies:
- Don’t underestimate email. “Regardless of industry or organizational size, marketers across the board point to email marketing as the tactic that produces their highest return on marketing dollars invested,” Entrepreneur writes. Plus, the best part is that your customers want to receive them. Surveys show customers prefer to receive emails over texts, mail, and other forms of marketing communications.
- Tailor advertising to your small business. Marketing strategies for orthodontics should look very different from marketing strategies for hard seltzers and wine spritzers. Tackle advertising strategies with your target audience in mind. Orthodontists may want to exude professionalism and reliability. A hard seltzer campaign, on the other hand, will typically focus on entertainment and fun.
- Reach as many people as possible. How do you do this? For one thing, consider where the bulk of your customers will be. Times are changing. At one time, word-of-mouth may have been one of the best advertising avenues. Now, the internet is increasingly important. An overwhelming 81% of sales begin online. Make sure your online presence is strong. Be easily accessible using local search, mobile search, and voice-assisted search.
Stick To Your Budget
One of the most critical tips for starting a successful small business is to make a budget and stick to it.
A new business budget needs to include any funds you need for materials and labor, costs of operation, all startup costs, how much money you need to keep your business afloat, projections of business finances. Remember, operational costs need to include everything, including costs of paper, printing, shipping, and commercial fuel services. Try to map out all possible costs, and leave some room in the budget for any expenses that you may initially slip your mind.
Speaking of leaving some room in the budget, your financial projections should be conservative. It is always best to have a bit of a buffer instead of feeling powerless as debts continue to pile up.
Plan to Grow
Your business plan and tips for starting a successful small business need to include the future. Keep your financial projections conservative, but keep in mind what you will do should the opposite happen — what will you do if your business is successful beyond your wildest dreams? Or, more realistically, what will you do if your business is pleasantly and comfortably successful?
Think about the practicalities of expanding your business. Think about the costs associated with hiring more employees, working with recruiters, hiring contractors or renting construction equipment to add on to or renovate your office space.
Stay abreast of current market trends. Your marketing strategy will have to adapt to the times. In the interest of your future, always stay on top of current marketing strategies. Learn about voice search, mobile search, and even the growing potential of automation and artificial intelligence (AI).
Continue Working On Yourself
“Work harder on yourself than you do on your job,” entrepreneur and motivational speaker Jim Rohn advises. The best business leaders take his advice to heart.
To grow your business, some of the best tips for starting a successful small business include continually working on yourself and fine-tuning your management skills.
For example, as your business grows and demand for American-made products grows, consider meeting with a manufacturing engineering consultant one-on-one. Talk to a manufacturing consultant about the costs and practicalities of producing your own goods. Take leadership workshops. Ask your employees for feedback, and listen to that feedback with an open mind, kindness, and commitment to doing the right thing.
Entrepreneur sums it up nicely: “Great entrepreneurs are constantly learning how their businesses can adjust and change with time to be relevant now and in the future.”
While many believe the outlook for small businesses remains overwhelmingly positive, the fact remains that only 33% will make it 10 years or more. Unfortunately, half will fail in their first five years. Make sure your business is in the clear by carefully following tips for starting a successful small business and by taking them to heart.