It’s your company’s birthday – congratulations! The effort and hard work that you have invested over the last twelve months have paid off. Your sales are growing, you’ve secured a business loan or cash advance to expand and you might even be considering the possibility of taking a well earned holiday…
Of course, the path of the SME can be a treacherous one but it’s not the doom laden experience that some would have us believe. According to the Small Business Administration, 70% of businesses still operate after two years and 51% are in place after five years. Small business success depends upon realism rather than pessimism and there are ways of improving the chances of popping the champagne cork this year and for years to come.
1. Love what you do.
The giddy excitement of opening a new business may fade as the necessary ‘evils’ of invoicing, managing staff and paperwork take their toll. If you don’t love the work you’re doing, you won’t be able to sustain the long hours that are needed to run a successful business.
Outsource what you can afford and delegate what you need so that you can do what encouraged you to set up in business in the first place. Where you struggle, ask for help.
2. Get the business financing right.
Underestimating how much capital the business needs during its first year of operation is a major reason for small companies folding prematurely. This often happens because SME business owners are too optimistic about how quickly they can build their income and cash flow levels.
A business research states that successful SMEs are more likely to have used more than one source of business financing. SME owners are leveraging a combination of savings, loans, business cash advances, venture capitalists and remortgages rather than placing all of their hopes on securing a bank loan. The more options you have, the more realistic you can be about your cash flow requirements.
3. Hire the right people.
Increasing turnover generally means employing people to undertake some of the work. A poor performing staff member can have a devastating effect on a small business so you must have the right processes in place when you hire employees. It’s easy to find sample job descriptions and interview questions online. By implementing a plan of action, you automatically improve the odds of finding someone who shares your ambitions for the company.
One final word: never be persuaded to take on your unemployed cousin or a friend who’s looking for a career change. Personal connections within the workplace often end in disaster.
4. Keep ahead of technology.
Every SME is affected by technology and pretty much all SMEs need a website to succeed. The internet, smartphones and social media have changed forever the way that customers research and buy products and services.
You don’t need to be a tech expert – you can pay others for that – but you do need to recognise that adaptability is essential in an internet connected world. Small businesses can extend their reach beyond what is normally possible with offline marketing and engage with potential customers in a time efficient way. Fitzgerald HR is a busy HR consultancy in Devon that has been in business for several years and attracts clients by offering free factsheets and ‘how to’ blogs on its website. The company has recently branched into social media, posting relevant news items on its Facebook page.
5. Plan as much as you can.
What are your goals for the year ahead? What is the vision behind those goals? If SME owners didn’t have the answers at the start and haven’t developed them since, growth will be difficult to achieve. It’s easy to overlook this kind of planning in the excitement of running a new business and the first year is so fraught that it’s difficult to find time to plan and organise.
Planning targets is something that successful business owners undertake before they set up and then review at least twice a year. If you know that you’re veering off course, you know that it’s time to take remedial action before your business gets into difficulty.
You may not reach those giddy heights (or want to, for that matter), but adopting these measures will give any business an improved chance of surviving those all important first twelve months and go from strength to strength. We congratulate all those industrious entrepreneurs out there and wish them many successful years to come