A Guide for Success as a Small Business Owner
Owning your own business can be very satisfying and stressful, especially when figuring out how to make it grow. You are responsible for the financial health and welfare and for planning for its future success. This guide will help you set reasonable goals, find your community of customers, and avoid some common pitfalls.
Growth During Challenging Market Trends
Many retail businesses are struggling in today’s swiftly changing business environment. The global marketplace and increased competition require businesses to cater to current customers and expand their offerings to stay competitive. Growth hinges on time spent increasing sales in all aspects of your business.
Small retailers need to build on their successes to thrive during challenging market trends. Below are ten ways to grow your retail business without significant investments or changes in infrastructure.
- Increase Customer Satisfaction. To increase customer retention, you need to exceed your customers’ expectations. If you don’t know their expectations, ask! Online surveys are well worth your time and money, and the feedback they generate is a valuable tool in understanding your areas of success and where you may need improvement.
- Implement Customer Feedback. Once you have the data, use it! Making small changes to your business to accommodate your customers creates a sense of trust and appreciation for them, and they will appreciate your efforts.
- Always Pick the Low Hanging Fruit. A common term for the easiest opportunities, low-hanging fruit typically requires very little investment and builds upon current business practices and successes. It’s a quick win.
- Make Yourself Visible. Increase your brand awareness through direct marketing and advertising. The key here is to keep it direct because general awareness campaigns offer very little return on investment.
- Embrace Technology. Technology can help you manage your business in productive and innovative ways. Employee efficiency and inventory awareness are two ways that technology enhances your customer’s experience with your brand.
- Embrace Social Media. Promoting your business on social media is an easy way to expand your reach. This type of outreach also solidifies current customer relationships. As you gain “likes,” you’ll know your customers are saying good things about your company. Word of mouth is still the most effective marketing method to increase sales.
- Analyze Your Sales. A detailed sales report helps you evaluate your business’ performance. Weekly, monthly, and quarterly reports show sales trends and other important information. Knowing the average dollar amount for each sale can help you make revenue projections and know how to adjust prices and control costs to raise your revenue and increase profits. Knowing who your customers are, whether they are new or returning, will also help you increase customer satisfaction.
- Examine Cash Flow. The growth of your company requires healthy finances. A little investigation into your finances can help you fix any problems in your balance sheet. It’s essential to address problems before expanding your business to avoid any setbacks or missteps. Fix them, and you can make more accurate cash flow projections for the coming year.
- Network with Peers. There are many models of success to follow right in your industry. Find out how they did it, and let it inspire you. Innovation is excellent but taking time to learn from your community is also worth the time and effort.
- Find New Products and Markets. Researching product trends and markets is a proactive way to avoid business slowdowns. You can take advantage of new products to increase your competitive edge and open new markets. New services and offerings can also get your existing customers excited.
Some of these activities need to be done regularly, while others should be performed less frequently. What’s important is that they become a part of your routine. Don’t change direction until they’ve had time to make a difference. It takes time to see the results of your hard work, but it’s worth it.
How Do You Know Your Business Is Growing?
Once you’ve started to grow your small business, you will want to start looking for results. The sign of a healthy business is year-over-year growth. Any slowdowns or steady declines in sales can indicate a failure to plan for changes in the marketplace or poorly performing operations.
Over time, even a good business plan needs to be analyzed and adjusted. Making the right decisions rests on having good data. A centralized point of sale and accounting system will gather these for you. If you do not have one, you may need to pay an accountant to gather the numbers for you. For any retail business, the data on hundreds of SKUs and expenses can and should be easily captured through an all-in-one point of sale system. That system will generate the following quarterly reports that are essential to understanding the health of your company:
- Total revenue.
- Total costs of goods purchased.
- Average daily cash.
- Selling, General, and Administrative expenses (SG&A).
- Total sales by individual product and/or service.
The data from these reports allow you to analyze your company’s performance and plan for the future.
Below are terms used to describe the health of a business. Financial institutions, large and small, make decisions on purchasing or loaning money to businesses based on this information. As a business owner, it’s crucial to know these terms and how to give your business a check-up.
- Gross Profit – Gross profit is the money on which your business runs. The formula for this is simple:
Total Revenue – Total Costs of Goods = Gross Profit
This can also be calculated as a percentage, called the margin. Any increase in profits in dollars or margin is a healthy sign your business is growing, and decreases can indicate slow sales or inflation of costs.
- Operating Profit – Earnings before interest and taxes (EBIT) show the health of a typical business operation. Here is that formula:
Gross Profit – SG&A = Operating Profit (EBIT)
This can also be shown as a percentage or described as a margin. How efficient is your business? Your EBIT will tell you. Any decrease in EBIT shows that operations are eating into profits and should be addressed quickly.
- Sales Analysis – Some products sell quickly, while others sit on the shelves for more extended periods. Understanding the shelf life and margins of your products provides valuable financial data about your product offering. Deadstock, or product that hasn’t sold takes up valuable shelf space needed for revenue-producing items. More importantly, knowing what is selling and what isn’t is a window into what your customers expect from your store.
- Customer Experience – The reports above show the fiscal health of your company but neglect the most important information—who are your customers? Robust business data is more than just sales numbers. It describes your customers and their experience with your small business. Capturing information about your customers helps you understand:
- Returning customers versus new.
- Frequency of visits for returning customers (loyalty).
- The geographical reach of your store.
- Customer engagement (loyalty programs and feedback).
Repeat customers are definitely the best customers, but you cannot survive alone on your existing customer base. Understanding where your customers are located and how they engage with your business helps you learn how to attract new customers and keep your repeat customers coming back. Loyalty and reward programs are also effective tools to capture interest and keep customers happy.
How to Set Business Goals and Track Their Progress
Watching your business grow is very satisfying, but now what? As a small business owner, you already understand the value of setting business goals. Goals steer your business in the right direction and help you stay focused on your mission. Yet, even small business owners with goals in place often fail to track their business progress.
To achieve your goals, you need a roadmap. Your roadmap will have specific objectives describing the things you must do to achieve those goals. Roadmaps also give you a series of benchmarks to measure your progress on your way.
What Is a Goal?
Races have a finish line, and crossing that line first is the goal of the race. Goals in business apply to areas like profitability, operations, or growth.
Unlike a short race, a goal is something to achieve over time. That time can be measured in months, quarters, or even years. Whichever it is, you can decide which ones best serve your business’ needs and align with your mission.
Setting Your Goals
To create a goal, you need to understand the direction you want for your company. Analyze your business data: accounts receivables, inventory, cash flow, marketing, and operations (how you execute on your sales). Understanding your current situation allows you to see the big picture and make better decisions. All this helps you understand market trends and create a more realistic, obtainable goal.
Use the acronym GROW as a guide to developing your business goals and objectives:
Gather: Financial information and how you operate your current business.
Resources: Utilize your employees and business networks to their fullest potential.
Objectives: Describe each step toward your goal and create a roadmap.
Waste: Eliminate any unnecessary action or business practice that may delay or prevent you from achieving your goals.
Objectives to Grow Your Small Business
When traveling to new places for the first time, you usually follow a map. You know where you want to go. You just need a little direction. Along the way, you recognize milestones that let you know you are heading the right way. On the roadmap toward your business goal, these milestones are called objectives.
An objective is a specific, measurable step that shows that you are making progress toward your goal. Your objectives are associated with specific dates and data, such as revenue or cash flow. Keeping track of objectives keeps you focused, efficient, and on track.
An excellent example of a simple roadmap for a small business is the following:
Your one-year goal
Starting on January 1st: increase your product offerings by 50%.
Your objectives would be:
- Increase cash flow by April 30th,
- Research top-selling products in the market before June 30th,
- Expand warehouse space by July 31st,
- Increase the number of SKUs by 10% for each month, starting in August.
A goal is general. Objectives are specific and incremental. And don’t be afraid to change the objectives to get to your goal. Flexibility is important, and if something isn’t working, change it.
Not only is tracking goals fun for you and your employees, but it’s also good for employee morale. According to Locke’s Goal Setting Theory, employees are motivated by clearly set goals and workable feedback to help them achieve them. Put company goals on a whiteboard and allow your employees to participate in tracking their progress and bringing them to fruition.
Goals, Clear and Simple
Unrealistic or unclear goals can set you up for disappointment. Olympians also set big goals, but they follow a roadmap with small steps toward the gold medal. They meet the objectives they set for themselves on the road to their ultimate goal. Don’t be afraid to go for the gold.
How To Activate Your Professional Network to Grow Your Small Business
A worthwhile goal for new or small businesses is to gain a professional network. You’ve spent the past year frequently attending networking events and reaching out to new and old contacts in person or over social media. Business networking is one of your best practices. Your efforts have filled your professional contacts database, but now you need to know what to do with it.
Time to Flip the Switch
Your human network is essential for your professional and personal growth. Now, it’s time to activate this network to grow your business. The best part is that you have already built your community and don’t have to look for it. You may be surprised at your reception, and the returns could be tenfold.
Activating your network takes a little research. Discovering the different strengths in your network can be beneficial, especially when you’re in a pinch and really need advice or help. The research you have already done will tell you which of your contacts can be most helpful in which situations.
There are several ways you can create value in your network for yourself and your contacts:
- Referrals – Ask yourself who in your network would most benefit from getting together? Create a list of your professional relationships and match them up through industry and business needs. Connecting people through referrals is a great way to solidify new relationships and reconnect with old ones.
- Sales Leads – Providing free leads saves your contacts time and money. The benefits are more immediate than a referral, and the favor you provide may be quickly reciprocated.
- Sharing Information – Your perspective and knowledge base are unique, which gives you insight into business-related issues that might be another person’s roadblock. Mentoring or sharing your expertise is a great way to engage with your network and demonstrate credibility. Being a resource for others extends your network.Knowing where to share is important, too. General information is best shared on social media, and more specific or in-depth information can be sent through an email or conveyed in person or Zoom call. Direct contact allows you to answer any questions that come up.
- Vendor Promotions – Reach out to your vendor network to learn about promotions and programs. Often, promotional materials and discounts only go to high-volume sellers. Express an interest in becoming one, and they may throw in some marketing and advertising tools to help you succeed. Your interest differentiates you from your competition and makes your vendors take notice. They benefit from your success, pay more attention to your needs, and help you achieve your sales goals.
- Think Local – Your neighbors are your best customers. They support your business through consistent sales and word-of-mouth reviews of your business. The Keep-It-Local movement is an excellent way for small business owners and neighbors to work together for their community.Thinking local also means being active in local government. The decisions they make can affect your storefront, customer traffic, and customer experience. Staying active in your local government has many benefits and gives you input on community development projects that may affect your business and neighborhood.
- Be Open, Be Patient – Being receptive is the first step in a reciprocal relationship with your network. If you take the time and energy to connect and reconnect with people through the steps above, you are developing spheres of influence that contribute to your success. But remember that this doesn’t happen overnight. You’ll need to be patient now and thankful when your efforts are rewarded.
Six Ways to Make Better Business Decisions
Once you have established and activated your networks and created and met a few goals, you still have the day-to-day operations of your business to handle. Every day, retailers are faced with hundreds of small decisions regarding their business. There are also quite a few significant decisions to be made that may affect its health and longevity. It can be exhausting.
Too many decisions over a long period can lead to decision fatigue. It’s where the saying, “I can’t think straight,” comes from and is characterized by decision avoidance and increased anxiety. This can be dangerous to your personal and business wellbeing. Every business owner needs to be aware of the mental stress making choices can cause, especially when feeling overwhelmed.
Even seemingly innocent choices like ordering lunch contribute to mental fatigue. So when a big decision comes along, it can be much more difficult to react appropriately. Making a big mistake is, unfortunately, easier than ever because of automation and technology. We may press the wrong button or misread something, causing delays and more stress. Here are a few ways to prepare yourself to ensure that you always have the energy and the right frame of mind to make the right decisions.
Make It a Process
To be a successful decision-maker, you need to cultivate the right environment. This requires a process, a routine to keep you on track when you’re tired and prone to mistakes. These six steps will help you create a decision-making process that moves you away from relying on instinct.
- Take the Time to Think. There is no excuse for failing to take the time you need to think about your business. Time allows you to write or revise your priorities and expectations. It also allows you to look at the calendar and see what’s over the horizon. Plus, taking time to think makes you more productive because you’ll make fewer mistakes.
- Prioritize. Some tasks can be stretched out over time, while others require immediate attention, and others need attention every day. If you know your priorities for the day, then you’ll be able to proceed as planned and not feel the need to stop when making another decision.
- Begin with Difficult Decisions. Start with the most difficult or the most complex decisions. These cause the most stress and need more attention than the others. Take these on when you are most alert so you can avoid a mistake where it counts the most. Don’t expect to make the right decision at the end of the day. Having the energy to make the right decision is as important as being informed enough to make it.
- Research. To base your decisions on facts, you need to perform some research, including historical market and sales information. Remember, more significant decisions require more research, so give yourself some time to analyze the data and make the right decision.
- Persistence. Being a small business owner isn’t always easy. It can be challenging to act with the courage of your convictions. As long as you have taken the necessary time to plan and set reasonable goals, persistence will get you there.
- Get feedback. Now is the time to activate your network. Feedback from people you trust gives you much-needed perspectives on your decision-making process. It provides a window into how others think about your decision and the potential to see things from another point of view. Accepting feedback is also a form of collaboration and is necessary to grow your small business. It’s a great way to be inclusive while getting input on decisions you have to make.
There are many pitfalls in this process. First, learn to recognize when you and those you rely on are avoiding important decisions. Waiting too long may have financial repercussions. Also, don’t be fooled by success. What worked in the past may need examining or changing if it begins to falter. Staying on top of your objectives and goals will keep you informed and let you know that hard decisions must be made. Following the steps above can help you make them with as little stress as possible.
A Few Things to Remember as You Grow Your Small Business
Owning a business can be an exciting and fulfilling experience, but many things factor into your success. Keeping your customers happy, keeping up with relevant technology, and understanding how to find and use your business data are just a few of the things that come together to make your business thrive. Take the time to connect with your community and build a network of peers and mentors; however, your business and your customers will thank you.