Tips for small business success
A favorite line for politicians is “Small business is the backbone of the U.S.” Is it true? If so, why and how? The value of Main Street cannot be overemphasized.
The 2010 census shows there were 27.9 million small businesses registered in the United States. Of the 28 million small businesses, over 22 million are individually operated, without any employees.
The make-up of small businesses is as follows:
• Sole Proprietorships — 73.2 percent
• Corporations — 19.5 percent
• Franchises — 2 percent
• Home-based —.52 percent
Of U.S. employer firms, 99.7 percent are small businesses. Almost half of the private sector workforce is employed by small businesses. That is over 120 million people.
Over the past 20-plus years, small businesses have been responsible for creating two out of three, or 64 percent, of net new jobs in our country. These positions account for 43 percent of U.S. payroll dollars. This drives consumer spending into our economy as well as income tax dollars into the government’s budget.
What does it take to survive in the intense competitive marketplace environment? Some of the common traits of successful small businesses follow.
1. Sound financial plan — A plan along with the discipline to follow it is crucial. Financial resources, stability and backing with staying power is necessary to get off the ground. An understanding that no profits should be expected in the first few years of operation plus a commitment to reinvest back in the business is essential.
2. Business processes and operations — Having clearly defined business processes will increase productivity, while reducing costs at the same time. A continuing focus on becoming more efficient will cement the foundation for the business.
3. Marketing plan — An overall marketing plan includes advertising, public relations, product development, sales and promotions. In order to compete, the use of social media should be utilized. Offering online sales and shipping in addition to the in-store point of sale will maintain your competitiveness.
4. Passion about the business — Loving what you do cannot be replaced by any amount of effort or investment. You cannot punch a clock and be successful sticking only to a 40-hour workweek. Utilize your skills and focus on primary products that turn a profit.
5. Hire the best people — Without outstanding employees the business will not succeed. Committed and talented staff members are more important than great operations and high tech processes. Once you hire people, ensure you pay competitive wages, offer good benefits, provide training and development opportunities. This will ensure a higher than average retention rate.
6. Be creative and flexible — Creativity by you and your employees will keep your business fresh and up to date. Being flexible and listening to and responding to your customers will keep them coming back. Trends change rapidly and customers are fickle. Have fun in your business will keep it fresh. It will make shopping a rewarding experience for customers.
The failure rate of small businesses is 20 percent in the first year. 30 percent of small businesses fail in their second year. 50 percent of small businesses fail after 5 years in business. 30 percent fail in their 10th year of operation. These rates are consistent over time and are tracked by the Bureau of Labor Statistics.
Entrepreneurial business owners who are successful choose to work long hours, often sacrificing vacation time, and keep going and taking the necessary risks to succeed. It is a 24/7 commitment. The payback is more than financial. It brings satisfaction and fulfillment. Ownership by women account for more than 11.6 million firms in the U.S. An additional 2.5 million are owned equally by women and men. They employ nearly 9 million people and generated $1.7 trillion in sales in 2017.
Be opportunistic by always being open to innovative new ideas. Utilizing teamwork with practical solutions will result in success. It is important to stay close to the customer, capitalize on all available resources and stay within your budget by watching expenses like a hawk. With commitment and perseverance you can be successful.
Becky Vaughn-Furlow retired from Trustmark Bank as executive vice president and human resources director. She can be contacted by emailing firstname.lastname@example.org.