Find out everything you need to know about running a small business successfully; from how to get started to the best ways to market your new business.
Running a small business is no easy feat, but with the added benefits of being your own boss, working towards achieving your own goals, and potentially earning a lot of money once you are up and running, more and more people are thinking about setting up a startup.
Unfortunately, it is not as simple as just opening up your laptop and jotting down your ideas. There is a lot that goes into the planning, the setting up, and the running of any new startup business, but luckily for you, we are here to help you get started with everything you need.
We have put together this article as a guide to running your business successfully so that you know what you are getting yourself into. Ready to learn and earn? Right, let’s get into it.
2021 Business Success and Failure Statistics
One of the factors that can and should influence the way you run your own business is the successes and failures of other businesses in recent years, as this can inform your strategy.
Just to give you an idea of where the business market is at right now, here are some startup statistics that you might find surprising if not useful when running your own business:
- It is estimated that approximately 90% of startup businesses fail.
- Around 99% of businesses in the US are considered small businesses with less than 500 people employed across the business.
- Over 69% of small businesses in the US started out as a home enterprise.
- Only 40% of startup businesses are profitable whereas 30% will break even, and the final 30% will actually lose money.
According to findstack.com, the survival rates for an American small business look like:
- 80% of small businesses are able to survive their first year of business.
- 70% of small businesses are able to survive their second year of business.
- 50% of small businesses are able to survive their fifth year of business.
- 30% of small businesses are able to survive their tenth year of business.
- There is a 30% chance that formerly successful business owners will also be successful in future ventures.
As you can see, the longer your business is in business, the lower the survival rates, hence why those first few years are so essential in building up your brand and reputation.
The reasons for the high failure rate of startup businesses can include the following:
- Misreading or misinterpreting the market demand (42%).
- Running out of funding or using up too much personal capital (29%).
- Not having a strong founder or founding team (23%).
- Strong competition (19%).
Now that you know what to look out for, you can draft your business plan accordingly.
Draft a Business Plan
The key to any new business venture is to make you have a plan in place before you start putting anything into practice, so this section will help you learn how to draft a business plan.
Make a Plan and Set Goals and Processes
A business plan should cover all areas of your business as this is what you can use to plan and predict your future success and growth. It can also act as a sort of guide that you can refer back to throughout the development of your startup to remind you of your aims.
There is plenty of advice that you can find and follow online on how to write your business plan, but as a general rule, you should take into consideration the following factors:
- Company description
- Market analysis
- Services or products
- Marketing and sales
- Financial projections
Your business plan should essentially set goals for the future of your business and plan the processes you will use to achieve them. Research, research, and more research is key at this stage, so make sure you have looked into your competitors and what they are doing.
A Business Plan Needs to be Shared to Your Stakeholders
Your stakeholders will have a huge impact on the running of your business and their attitudes and actions can even have an impact on your success, according to experts.
In order for them to have confidence in your business (which is what will get them to continually invest in your growth) it is important that they understand your business plan. This will help you convince stakeholders that their money is in good hands and it will show them what you and your business will work towards in order to return their investment.
This requires a good level of stakeholder communication, of which there are many benefits. For example, your stakeholders may be able to spot any red flags in your business plan that you yourself might have missed or might not have the experience to recognize as issues.
Always Be Organized
The success of your business will also largely depend on how organized you are, as the ability to complete tasks on time will be an essential part of running a successful startup.
Create a To-Do List Every Day
It might sound like a simple solution, but that is because it is! Creating a to-do list can be an incredibly effective way to ensure that you are able to stay on top of everything that needs to happen in order for your business operations to run smoothly, without forgetting anything.
Start by jotting down a quick list of things you can think of off the top of your head. Then, take a look at this list and begin to flesh it out with other, equally essential business tasks.
This can also help you to prioritize each job as seeing them all laid out before you can put things into perspective in terms of what needs to be done first per the businesses’ needs.
Helps You Complete Tasks and Stay on Top of Things
As we’ve just mentioned, organization can help you stay on top of things.
Being organized not only helps you know what tasks you should be doing, but it also helps you to actually complete them as you will be able to see what urgently needs to be done.
Doesn’t everyone enjoy the feeling of crossing something off your to-do list? We sure do.
Ensures You Are Not Forgetting Anything Essential
There is a lot that goes into running a business, so we wouldn’t blame you for not being able to remember every single little thing that needs doing without first having written it down.
Organization is important because it helps ensure that you are not forgetting or missing anything essential because of silly mistakes, as these can be detrimental to the business.
For example, not remembering to order more stock on time can cause huge delays on your lead times for customer deliveries or worse, it can lead to you having to refund customers to avoid charging them for something that they might not receive for weeks or even months yet.
Keep Detailed Records to Know Where the Business Stands Financially
According to Investopedia, all successful businesses keep detailed records of their finances.
This allows you to keep track of where the business is at from a financial standpoint as well as keeping an eye on any potential challenges that your business might be about to run into.
Being organized when it comes to your finances means that you can stay up to date on any changes coming up and knowing this allows you to successfully plan for them in advance.
This also conveniently leads us onto our next section on how to run a business smoothly...
Finance is Key
It doesn’t matter how good your business idea or plans are - without the correct finances in place, you will not be able to set up and run a successful startup business. This is just a fact. So, it is therefore important to get on top of your financial situation as soon as possible.
Draw a Budget Based on Your Business Plan
Although it requires a little bit of guesswork in terms of the financial projections, the first thing you need to do for any new startup is to create a budget for your small business. This should be based on your business plan and any goals or targets that you will be aiming to achieve.
Don’t fall into the trap of thinking that you do not need to come up with a business budget, even if your business is booming and you are already earning a significant amount of profits.
Even in this case, you will still need to draw up a detailed budget for your startup business. This can benefit your business in a number of different ways, including the following:
- It can make your business more efficient.
- It will show you if there are areas you can cut back in which will allow you to reinvest.
- It can help you spot trends in your profitability which can help you stay out of debt.
- It will indicate what you need to do in order to be profitable in the future.
- It can help you stay in control of your business.
To come up with a suitable budget for your business, you will need to work out how much finance you and your business will require, which we will discuss more in the next section.
Work Out How Much Finance You Require
In the majority of cases, you will need to seek out additional financing for your startup business. For this reason, it is important to work out how much finance you will require. This is another good reason as to why you should draw up a detailed budget for your business.
To do this, you will need to follow these steps which will show you the funds you will need:
- Total your sources of income: Firstly, you will need to assess how much money your business is already bringing in (if any) and how much you are earning through other forms of income. Consider your sales figures and any other income sources.
- Figure out any fixed costs: Fixed costs are expenses that your business racks up each month, such as rent, utilities, website hosting, and payroll costs. These will usually be the same amount every month which makes it easy for you to plan for.
- Don’t forget to think about variable expenses: One fatal mistake that many small business owners make is to forget about the variable expenses of the business, such as travel costs, shipping costs, and usage-based bills. These will be different every month which can push you under or over your business budget if you are not careful.
- Include single spends and one-off purchases: Similarly, sometimes you will need to make one-off, single purchases for the business, but these still need to be thought of when planning your budget in order to avoid running into financial burden later.
- Work it all out from here: Once you have all of the above information (preferably easily accessible and at your disposal whilst drawing up your budget) you will be able to tally up your total incoming and outgoing financial transactions and plan for them.
It can also be a good idea to try and set aside a contingency fund within your budget or to gradually build up a fund up through budgeting that you then keep as a separate amount.
Decide What Short and Long-Term Borrowing Suits You
After you have established what finances you have and what funding you need, you can then start to take a look at what sort of borrowing is best suited for you and your business.
There are a number of different options available to small business owners when it comes to financing their startup business. This includes both short and long-term borrowing of money, whether you are seeking an angel investment or looking to apply for a short-term loan.
Finding funding for your new startup business can provide you with the cash flow you need in order to get a good start and can also be the reason that your business can grow in future. The wrong type of financing, however, can have disastrous consequences for your business.
Here are some of the different types of funding options that are available to new businesses:
- A new business startup loan: This is one of the most common types of financing for startup businesses and it is where you borrow a “principal” amount which you then pay back with interest over a period of time you have agreed with the lender.
- Crowdfunding: This is where you generate a large number of smaller investments using an online platform. Investors will typically take a small share of the company.
- Business grants: Although these are harder to come by, business grants are basically free money that certain small businesses are awarded by the government.
- Overdraft alternatives: Often known as a flexible overdraft, this is similar to a traditional overdraft from a bank except you will have more control over the additional funds that you have access to and it is reserved for businesses with good turnover.
- Cash flow loans: Another option is to take out a cash flow loan which works for various types of business depending on the level you are at and how much you wish to grow your business by. It’s worth checking out all options available to you here!
- Personal savings: Of course, you can also use your own personal savings to start your new business, although this poses more of a personal risk to you. If you are lucky, you might also have friends or family members who are able to help you out.
- Venture capital: Funding can also be provided by venture capitalists who finance your business in exchange for a percentage of equity in the business. This will mean they become shareholders and they can offer advice in addition to financial help.
As you can see, there are plenty of options to choose from, so it is all about choosing the type of finance that is the best fit for you and for the funding requirements of your business.
Check Whether You Qualify for Any Financial Support
As we have just mentioned, there are a range of grants/schemes available for start up businesses that you may or may not be eligible for. Business loans are also available, but grants are the better option if you qualify for them as these do not need to be paid back.
This is obviously going to be much better for your business and be a serious help when you are still getting your new startup enterprise off the ground. So, it is worth shopping around.
We couldn’t put together a guide on how to run a successful business without mentioning marketing, so this next section will be fully focused on just how much marketing matters.
Conduct Market Research
Market research should definitely be something that you do at the beginning of setting up your business when you are still drafting your initial business plan, but not only this, as it is something that you should be continually doing alongside running your business as well.
This can help you understand competitors and consumer needs which will in turn help you to run a successful business as you will have a better insight into what your customers want.
Your market research should include looking at the following factors:
- Your target audiences’ age, location, likes, and dislikes.
- Your competitors' successes and failures.
- Industry trends.
- Is there a gap in the market?
- Similar products/services to yours.
This will help you to get a better understanding of what it is that your business should be doing which you can use to inform your marketing strategy and how you promote yourself.
Understanding the Risks and Benefits of Running a Business
Running a business always comes with risks. The market is forever changing, as are consumers and their needs, so finding something that sticks can be a challenge in itself.
As a business owner, it is essential that you understand these risks and the fact that not all risks are bad. Taking risks in business can actually have an incredible payoff and can be hugely beneficial. So, it is important that you know what the best and worst case scenarios would be for both you and your business if you were to take a risk to see if it will be worth it.
Essentially, you will need to learn how to take calculated risks. For example, in order to grow your business, you might need to invest more into marketing so you can cover the costs of the expansion. This can be risky, but if your strategy works, it could be just what you need.
Without taking a risk like this, you may not be able to expand your business, so it is all about weighing up the pros and cons from each side and trying to minimize risks where you can. The more information you have at your disposal, the better position your business will be in.
Draft a Marketing Plan
When you are drafting your marketing plan, you should consider the factors we mentioned previously, but it can also be a good idea to look at it through the lens of the four Ps.
The four Ps of marketing are as follows, so consider these questions about your product:
- Product: Does your product meet consumer needs? Is it a specific product or service? Is it a physical product? Online?
- Price: What is the price and therefore value of your product? What are your competitors charging? How much do you think customers will be willing to pay?
- Place: Where are customers already looking/where can they find your product? Does the place you are selling make sense for your target market? Distribution channels?
- Promotion: What sets your product apart from your competitors? Do you have a unique selling point? What platforms will you use to promote your product?
These are all considered foundational points of any marketing strategy, so make sure to include them and to apply the concept of a marketing mix to your business model as this will be the best way for you to learn how you can promote your products most effectively.
Spread Your Businesses’ Message
The best way to market your business is to spread your message far and wide, but also whilst making sure that you are marketing to the right people (more on this in a moment).
To spread your business’s message, first think about your product in terms of the solutions it provides to customers, as this is a clear way to market and promote your product.
Headlines and subheadings should be thought-provoking, catchy, and unexpected so that you can catch the attention of your audience. Many marketing experts argue the importance of having a clear message, which we would definitely agree with. If your message is confusing, your customers might not understand what your business or product is all about.
It is also a good idea to try and include some sort of marketing hook to interest your readers. For example, “get in touch with us today for a free X” or “download a free Y”. Not only does this spread your message, but it also opens the channel of communication for customers.
It’s All About Getting the Right Message to the Right People
Marketing, according to smallbusiness.chron.com, is all about finding the shortest path between the consumer and the brand. However, as we have just mentioned, making sure that you are targeting the right consumer is absolutely key for any small startup business.
There is no point marketing your product for seniors at a teen market on TikTok, for example, or trying to push your message about pet care to those without any pets at home to care for. So, making sure you are marketing to the right people is also an important part of marketing.
This is where your market research about your target audience will come into play, so make sure that you don’t scrimp on this earlier on when setting up your small startup business.
Embrace Digital Marketing
Marketing is just one aspect of our lives that has moved online and digital marketing has become an increasingly successful way to spread your businesses’ message to customers.
Social media marketing in particular has seen huge growth in the last few years with platforms such as Instagram and TikTok becoming a popular way for brands to market themselves. Some businesses will even turn to social media before setting up a website.
That isn’t to discount more traditional digital marketing methods, however. Email marketing still has equally as much potential to spread your message to customers. For the best results, we would even recommend using a combination of different marketing techniques.
Other Top Tips
Before we wrap up this article, here are our final top tips that we’d like to share with you.
Set Revenue and Profitability Targets
When you create your business plan, it is important to think about any goals you have for your business and where you would like to see yourself in five years time, for example.
This includes setting revenue and profitability targets which you can then work towards achieving as your business successfully grows. Without these targets, you may not have the same vision for your startup or you might not recognize what success looks like for you.
Making enough money to keep your business afloat is the same core value that all startups share, and with enough financial planning, you will increase your chance of lasting success.
Hire the Right Employees
Having the right people around you to help you take your business to where you want it to be is hugely important, but it is a big thing to consider for new startups where funds may be limited. This is why you must make every employee count by only hiring the right people.
Not only that, but you must work to encourage loyalty to the brand. You cannot hire the perfect team and then expect them to stick around with no incentives or benefits to them. As such, you should try to remember to offer benefits to staff to encourage motivation and loyalty to the brand that you are building together. You won’t be able to do it without them!
Focus on Customer Experience
It doesn’t matter how good your product or services are if the customer experience is not up to scratch, as this is what consumers really care about when patronizing any business.
On top of the market research you should have already done into your target audience and what they look for in a product/business, it is important to continually ask for customer feedback as this will show you which areas, if any, that you may be going wrong in.
It is not enough to just request customer feedback, however - you will also need to act on it.
Always Offer High Quality Customer Services
Have you ever been impressed by a business that has terrible customer service? Us neither. That’s because, like most people, we want to know that our money is in safe hands and that any issues with an order of a product or service will be handled efficiently and effectively.
For that reason, you should always offer high quality customer services when you are running a business, as this is what will keep your customers coming back for more. Even if it means a short-term small loss for the business, like sending out a replacement product, the brand loyalty that good customer services can build will be more beneficial in the long run.
As we have mentioned several times throughout this article (and now that you have reached the end of it, as you can see for yourself, hopefully) there is a lot that goes into running a new startup business. Don’t let that put you off, however, as it can also be hugely rewarding.