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Learn the ins and outs of owning a small, or large, business
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Owning a business involves keeping tabs on and managing lots of aspects, from finances to customer satisfaction to employee performance. But millions of people do it every day, and now it's your time to shine! We'll help you get into the business-owner's mindset, optimize your operations, and successfully market and grow your business into the gig of your dreams.
Things You Should Know
- Jump into a business you're both passionate and knowledgeable about to ensure you have the motivation and smarts to keep it running.
- Get your basic operations, like commerce and customer service, running smoothly before you focus on turning a profit.
- Limit your expenses as much as possible to get your finances in order, but don't cut corners when it comes to basic quality.
Steps
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Start a business that you're passionate about and knowledgeable in. That knowledge can come from either prior work experience or a personal hobby that you're ready to turn into a career. Even if a business idea seems highly profitable in theory, don't start that business unless your heart is in it. While profit is important, it likely won't keep you coming in early every day and driving growth. [1] X Research source
- For example, imagine you have experience making coffee as a barista or waiter and want to turn your passion for good coffee into a small business. You would already know a good amount about the industry and be able to apply not only your knowledge but your passion to your work.
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Start with a well-defined purpose. While the financial benefits of business ownership can be great, most successful business owners don't start with money in mind. To get your business off the ground, you'll need a clear purpose. This purpose should be something more intangible than money, like giving back to your community by creating jobs, solving a problem that you see in your daily life, or pursuing a passion. This doesn't mean that you shouldn't also strive for profitability, just that your primary goal should be the achievement of a greater purpose. [2] X Research source
- For our coffee shop example, your purpose would be serving the perfect cup of coffee to every customer. Alternately, it could be to form a community in your coffee shop where people can meet and spend time with friends.
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Understand your customer. Before you get started, take some time to do market research and get to know your customers and your industry. The U.S. Small Business Administration provides a great deal of information on which services and products are in demand. You will also want to think about who will be buying your product or using your service and learn the best way to appeal to this population. [3] X Expert Source Art Lewin
Entrepreneur Expert Interview. 11 June 2021.- With the coffee shop, ask yourself: Am I trying to appeal to "coffee snobs" who don't mind waiting five minutes for their pour-over? Or is my focus on the people who are on their way to work and want to grab a cup and run? Or both? Understanding the people you plan to serve can help you serve them better .
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Find a first step instead of a destination. You should always start with a business model that can be up and running quickly on a low budget. Too many small businesses start with grandiose goals that will require a large amount of startup capital and investors. However, successful businesses will have a model that can be used on a smaller scale. This proves to potential investors that your idea is a valid way of making money, and increases your odds of ever getting investment money (if that's what you're looking for). [4] X Research source
- For example, imagine that in our example, you want to start a large operation that sources, imports, roasts, and packages its own coffee beans that are then either sold or served to customers at its coffee shops. Rather than seeking huge contributions from investors to buy all of this equipment, you should start with a small coffee shop first, then maybe try sourcing and importing beans, and work up from there to build a brand.
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Create a support network. One of the most important parts of successful business ownership is getting over your own ego and seeking help. Your biggest sources of advice are going to be your group of business associates and other professionals that share your goals. Surround yourself with knowledgeable and successful people and feed off of their ideas and enthusiasm. [5] X Research source
- Also seek general small business tips online; the web is a goldmine of information. Just be sure your information is from a reliable source.
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Find a mentor. A good mentor in this case is someone who has already run or is running a successful business of their own. A good example would be a family member or family friend that has been successful in business. This mentor can help you with anything from knowing how to manage your employees to properly filing your taxes. Because their knowledge comes from direct experience, they're able to help you more personally than any other source could. [6] X Research source
- While your mentor doesn't have to have founded the same type of business you are starting, it would help. For example, another coffee shop founder would be the best source of information in our coffee shop example, but a restaurateur could also be of significant help.
EXPERT TIPPersonal StylistAlena Le Blanc is the Personal Stylist and the Founder of Le Blanc Label. Based in San Francisco, California, Le Blanc Label is the leading personal stylist brand for sustainable style transformations. Alena and her team specialize in seasonal wardrobe refreshes, closet edits, styling for special events, travel, photoshoots, and general personal needs. Alena has been featured in podcasts including EMPOWERED BY WMN, I Am Fearless, and Mind Power Meets Mystic. Alena received her BFA in Fashion and Apparel Design from the Academy of Art University.Find a mentor to offer you guidance. Reach out to an expert who can offer specific business advice tailored to your industry. Consider joining online communities for entrepreneurs to build a network of like-minded individuals. You'll gain valuable knowledge for the early stages of building your business.
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Focus only on your primary operations at first. That is, avoid being caught up in every business opportunity that comes your way. It's better to be perfect at one thing than mediocre at five. This applies as much to making decisions to diversify your business as it does to deciding to take on additional projects for yourself outside of your primary business. Focusing on one thing will allow you to commit all of your resources there and be more productive in that endeavor. [7] X Research source
- Continuing with our example, imagine that you see another coffee shop making money by selling customized coffee-related merchandise. This may make you want to jump into this market as well. However, doing so before establishing your primary objective, making coffee, would introduce significant risk, and may detract from your ability to focus on coffee quality.
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Focus on cash flow, not profit. While making a profit should certainly be one of your goals, it should not be your main focus when you are starting out. Cash flow is far more important — many small businesses run out of money before they have even been around long enough to generate a profit, and must close their doors. Pay careful attention to your overhead costs and sales during the first years, and let profit take a backseat.
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Keep detailed records. In order to be successful, you'll have to make a habit of recording each and every expense and revenue that your company has, as well as every dollar that flows through it. By knowing where exactly your money is coming in and where it's going, you're more capable of recognizing financial difficulties before they arise. In addition, doing this will give you a better idea of where exactly you can make cuts to expenses or increases to revenues. [8] X Research source
- For example, in our example, you would keep detailed records of how much coffee you bought and sold in a given month and what you paid for it. This could you help you identify if, for example, the price of coffee beans was steadily increasing and help you plan whether or not to raise your own prices or consider switching suppliers.
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Limit expenses as much as possible. While this may seem obvious, just try to think of areas where you could generate the same effect by spending less money. Consider using pre-owned equipment, finding cheaper forms of advertising (for example, fliers rather than newspaper ads), or negotiating better payment terms with suppliers or customers to save a few dollars here and there. [9] X Research source Try to maintain very low spending habits and only spent money when and where you absolutely have to.
- In our example, this could mean starting out with used coffee grinders (as long as they still functioned well) and trying to get as many supplies as possible from the same supplier (cups, lids, straws, etc.).
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Consider supply chain efficiency. Your costs, and therefore your profits, depend on a successful supply chain organization. By fostering good relationships with your suppliers, organizing deliveries, and consistently providing customers with timely service, you can increase your profitability and reputation. Successful supply chain management can also help you eliminate any part of your business with wasted resources, like raw materials or labor. [10] X Expert Source Art Lewin
Entrepreneur Expert Interview. 11 June 2021.- For example, our example coffee shop would want to be on good terms with its coffee bean supplier and have an organized supply chain structure for a number of reasons. This is especially crucial for ensuring that you never run out of coffee, but could also mean that you could get more consistent deliveries, try new types of coffee bean when they become available, or negotiate lower prices.
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Consider finding strategic partners. Much like a good mentor, a strategic partner can provide you the boost you need to grow your business. Foster strategic partnerships by reaching out to businesses you think could benefit yours, whether they are suppliers, technology providers, or complementary businesses. A good relationship with another company can provide you both free advertising, lower your costs of doing business, or allow you to expand to new markets, depending on the partners you choose. [11] X Research source
- For example, your coffee shop could benefit from a strategic relationship with a supplier that gives you access to discounts or new products. Alternately, a strategic partner in a complementary business, such as a pastry shop, could help you both reach new customers and increase your revenues. This could be done either through recommending each other or by offering product's from your partner's business and vice-versa.
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Be responsible when it comes to debt. It's very important that you realistically assess your ability to pay back any debt that you take on. While starting and running a business is always risk, try to minimize your liabilities by only taking out as much as you absolutely need. And when you do take on debt, be sure to structure your cash flows such that you are paying it off as quickly as possible. Prioritize debt repayment before you do anything else. [12] X Research source
- For example, if you took out $20,000 to get your coffee shop started, don't think about expanding your product offerings or upgrading your coffee grinders until you've paid that loan back.
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Perfect your business pitch. Have a 30-second speech ready that explains your business as briefly and efficiently as possible, including information about your purpose, your service/products, and your goals. Having a practiced pitch that you can rattle off to anyone can help you in situations where you're trying to make a sale to a customer as well as it can when you're trying to bring an investor on board. [13] X Research source If you can't explain your business in this short time, your business plan needs refining.
- For your coffee shop, you'd want to explain what you do (sell coffee), your services (the drinks you offer), what makes you special (maybe the coffee you serve is rare or locally roasted), and what you plan to do next (expand to another location, new products, etc.).
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Earn a reputation for good service. Earning a positive reputation is like free advertising; your customers will spread the word of your business to friends and come back frequently. [14] X Research source Treat each and every sale like the success or failure of your business depends on it. This also means that you should be consistent with every action your business takes and every interaction with customers. [15] X Research source
- For your coffee shop, this may mean throwing out a burnt batch of coffee so that your customers are always served the absolutely best product you can offer.
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Watch your competition closely. You should always look to your competitors for ideas, especially when you're starting out. Chances are, they're doing something right. If you can figure out what that is, you can implement it in your own business and avoid the trial-and-error they probably went through to get there. [16] X Research source
- One of the best ways to do this when you're starting out is to examine your competitors' pricing strategies. In our coffee shop example, it would be much simpler to price your coffee similarly to competitors rather than to experiment with different prices on your own.
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Always be looking for growth opportunities. Once you've gotten established, you should always be on the lookout for places you can expand. Whether that means moving to a larger storefront, increasing manufacturing space, or opening a new location will depend on your business and goals. Successful business owners realize that one of the primary opponents to long-term growth is remaining stagnant. This means taking the risk of expansion rather than resting on your laurels at one, original location.
- For our coffee example, maybe there is a nearby area that you find is underserved by coffee shops. Once your primary location is up and running smoothly, you should investigate opening a new shop in that area. This could also mean moving up from a small stand to a full coffee shop, depending on your circumstances.
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Diversify your income streams. Another way to increase the value of your business is by seeking out other areas where you can make money. Assuming you've already established your primary business, look around and see where you could offer a different service or product. Maybe your customers frequently visit your store for one item and then immediately go to another store for a different item. Find out what that other item is and offer it. [17] X Research source
- Some easy diversification options for your coffee shop would be offering pastries, sandwiches, or books for purchase.
Bill Gates, Businessman & PhilanthropistLearn from challenges and failures. "It's fine to celebrate success but it is more important to heed the lessons of failure. Your most unhappy customers are your greatest source of learning."
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Tips
- Pay all insurances up for the year, (I.e., liability, etc.) as soon as possible.Thanks
- Be prepared with 6 months worth of working capital in your business.Thanks
- This article serves primarily as a guide for the business owner in getting the most out of their business. For more detailed guides that cover the minute details of starting a business, see how to start a small business and how to run a small business .Thanks
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Warnings
- You can lose money if you are personally invested in your company.Thanks
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References
- ↑ https://www.entrepreneur.com/growing-a-business/10-tips-for-the-first-time-business-owner/307637
- ↑ http://www.forbes.com/sites/nextavenue/2014/09/10/secrets-of-successful-small-business-owners/
- ↑ Art Lewin. Entrepreneur. Expert Interview. 11 June 2021.
- ↑ https://www.entrepreneur.com/growing-a-business/10-tips-for-the-first-time-business-owner/307637
- ↑ https://www.entrepreneur.com/growing-a-business/10-tips-for-the-first-time-business-owner/307637
- ↑ http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/August-2013/3-Ways-to-Become-a-Successful-Business-Owner.aspx
- ↑ https://www.entrepreneur.com/growing-a-business/10-tips-for-the-first-time-business-owner/307637
- ↑ http://www.investopedia.com/articles/pf/08/make-money-in-business.asp?header_alt=false
- ↑ http://www.forbes.com/sites/nextavenue/2014/09/10/secrets-of-successful-small-business-owners/
- ↑ Art Lewin. Entrepreneur. Expert Interview. 11 June 2021.
- ↑ http://www.forbes.com/sites/davelavinsky/2013/04/02/does-your-business-have-strategic-partners-why-not/2/
- ↑ http://quickbooks.intuit.com/r/managing-debt/5-ways-to-reduce-small-business-debt
- ↑ https://www.entrepreneur.com/growing-a-business/10-tips-for-the-first-time-business-owner/307637
- ↑ http://www.investopedia.com/articles/pf/08/make-money-in-business.asp?header_alt=false
- ↑ http://www.investopedia.com/articles/pf/08/make-money-in-business.asp?header_alt=false
- ↑ http://www.investopedia.com/articles/pf/08/make-money-in-business.asp?header_alt=false
- ↑ http://www.forbes.com/sites/nextavenue/2014/09/10/secrets-of-successful-small-business-owners/2/
About This Article
Article Summary
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To be a successful business owner, start a business in an area you have experience in, like serving coffee. Then, before you open your business, set a well-defined goal, like opening a small coffee shop, rather than trying to implement a grand plan straight away. Similarly, try to focus initially on perfecting your primary operation instead of spreading yourself too thinly. To improve your chances of success, look online for helpful business tips or seek advice from fellow professionals or associates. For tips on how to develop a business pitch and how to manage debt, read on!
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