Building a business from scratch is hard. Luckily, there are common threads that contribute to success. We've identified four key factors that help small businesses survive and thrive.
They limit risk
Jeff Bezos, Amazon founder and CEO, hit the nail on the head, on the subject of risk. He explained that entrepreneurs should not be risk-seeking. They should focus on limiting risk.
There are many ways to reduce risk in your business. One of the biggest ways to reduce risk is validating the need for your product or service. You can do this by trying to sell your offering to a potential customer. Going through this process has the added benefit of helping refine your value proposition.
There are also more commonsensical approaches to reducing risk. Easy wins include insuring your business and ensuring your legal structure limits liability.
Going into any kind of business is already a risky enough proposition. You don't need to add to that risk by being unprepared for the bumps in the road that can (and will most likely) occur.
Remember the five Ps: Prior Preparation Prevents Poor Performance.
They have a target customer
Most businesses fail because they run out of cash. If we peel the onion back, it comes down to not understanding who their customer is and how to reach them. This is something successful small businesses do.
Above, we discussed validating the need for your product or service as a great way to reduce risk. The next stage is to identify your target customer.
This is often an ongoing process that takes time, patience and research. It is a vital first step in figuring out how to market your product or service.
As Alan Lakein said, "Failing to plan is planning to fail." The most successful small businesses are on top of it. They have their team organized. They keep their financial documents organized. They have their priorities organized.
There will always be fires to put out. That's the nature of running a business. The most successful business owners stay organized. This ensures the fires aren't a major distraction to their long term goals.
Lastly, organization might be the new trend in home decor (shout out to Marie Kondo). But, it’s long been a tenet of successful businesses and organizations. If you’re still unconvinced, look at the word organization. It’s literally right there in the word. You wouldn’t go work for a disorganization, would you?
In a fight between a big guy and a little guy, we tend to think of the little guy as being more nimble. Small businesses have the same advantage.
Medium and large businesses tend to have long-term fixed costs. This makes them slow to change direction. Whereas, small businesses have the advantage of being able to change direction quickly. If their product or service isn't selling as well as expected, they can shift their focus. Same with hiring. A nimble small business can use the glut of freelancers to staff up as and when it needs to.
We certainly tip our hats to small business owners everywhere. Hopefully, these common threads are ones you can draw on for your company and for your clients. Here’s to thriving!