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Starting A Small Business-5 Critical Stages
In the famous book “Rich Dad, Poor Dad” distinctions on how people manage their wealth were made between average to poor people and rich people. Rich people stay on top by learning to be their boss in the field of business. Opening a small business requires great effort, resilience, good management skills and of course a little bit of luck.
1)Planning
Opening a small business starts with planning. Concentrate first on what kind of product or service you want to engage in such as food, retail or real estate. Make sure that you have enough knowledge and passion to back it up.
The last thing you want is to be saddled in a business that you know nothing about and get bored after a year or so. Take the time to research what materials you need and where to get them at the best prices. If you are catering to a specific place ask people around what kind of product or services they are willing to pay for. Know the wants and needs of the community.
2)Finances
Second, consider your finances.
If you are planning to support you business with your salary reflect on how much you are willing to risk on business without compromising your daily expenses. Besides your salary, there are several options for you to choose from like taking a loan from banks or lending companies or to engage in a partnership.
There are people who are more comfortable in investing their money and leave the management and work to other partner. This is where you come in.
3)Market Research
After deciding on the product or service for your business and settling your finances, the next thing is to survey the community for a good location. Location is a crucial aspect in opening a small business because this will affect your product/service introduction and accessibility.
Choose a place where there are many people like the downtown area, a corner of the street or a place in the mall. Your store serves as your best advertisement to your would be customers. Even without the flyers and banners curious customers will take time to see what is in that new place.
4)Marketing
Your next step is marketing. Opening a small business requires an extensive marketing strategy from product/service introduction to ways on how to sell it to the people. This is very important because through marketing you will be able to entice people to be your customers and possibly your patrons.
Some entrepreneurs would even go to the trouble of hiring professionals to come up with new and innovative ways on how to establish their product or service to the public. For starters, it is helpful to learn from the experts; however your finances may dictate that you carry out a lot of these tasks yourself but you will learn a lot from these processes-lessons that will serve you very well in the rest of your entrepreneurial career. You might think of copying the marketing plans including selling methods, pricing and advertising of successful businesses.
5)Business Plan Execution
After drawing up your plans and strategy to launch your business, you now need to execute your plans. Buy the necessary equipments and materials and hire good employees for your business. For small businesses, it is advisable to have a hands-on management in order for you to familiarize the ins and outs. Most importantly, hire a good and honest accountant to take care of your records and financial statements.
You must always bear in mind that business can be risky. Your business might fail or succeed depending on many factors. Most successful entrepreneurs would tell you that it took them many years and many failed businesses before they arrived to where they are right now. But you do learn from your mistakes and hopefully this will be the start of a hugely successful business career.
Expanding Your Small Business
If you own a business, chances are you’ve already considered expansion in some respect – whether in terms of product and service offerings, marketing operations, or the number of staff you employ. What’s more, the size of your business has likely had great influence on your ideas of expansion. For instance, small businesses often start with a base set of products or services, limited marketing, and a modest number of staff – ultimately working towards expansion in all of these areas.
There are a number of ways to expand your small business, and countless tools that can help you do it. And interestingly enough, one prominent business expansion tool also happens to be one of the world’s most widely used resources: the Internet. The Internet holds a wealth of information, resources, contacts and more to help you expand your small business in a way that’s right for you.
For example, if you’re looking to expand your business in terms of product or service offerings, you’re likely to need an additional base of suppliers. And what better place to source those suppliers than through the Internet? The Internet can return countless results via a search for specialised suppliers, enabling you to sort through your options and choose the most suitable suppliers based on your business goals.
Alternatively, you might want to expand your small business with regard to product and service promotion – something which can be achieved via online videos, blogs, news articles, or email updates to your clients. The online world happens to be one of the most powerful promotional tools available to business owners, quite simply because it’s so widely used the world over.
However, what if you simply want to increase your number of staff? Once again, the Internet can be one of the most useful resources available for staff recruitment. It’s a fact: countless people search for jobs online, everyday. So if you place job postings online, you’ll get the most exposure – and the highest number of applicants – for your post. The higher the number of applicants, the higher the chances you’ll find the staff you’re looking for.
However, in utilising the Internet for your business expansion operations, it’s worth remembering that certain types of Internet services adhere better to businesses. For instance, you can find specialised business broadband deals which offer higher – and often unlimited – broadband usage, increased speeds, mobile broadband services and more, ultimately giving you better access to the tools you need to help you operate and expand your business.
Therefore, it could prove worthwhile to enquire about business broadband in your area, and discover what this dedicated service can do for your business.
Performance Measurement, Difficulties in Measuring Small Business Performance
Trying to measure performance, in general, is a difficult task for scholars; the difficulties intensify when the subject is the measurement of small business performance. In this article, which is the third in the series, an overview of the major obstacles for measuring small business performance is presented.
Time is a substantial factor that needs to be taken into consideration when trying to measure performance in small business, because measuring the profitability of small businesses in their first years of operation can be misleading. Mcdougall, Robinson and denisi (1992) state, that small businesses are usually not expected to generate any profit in their early years of operation. Biggadike (1979) define a milestone of eight years in operation, in average, before new venture is expecting to generate profits.
Growth rate is not equal in all businesses; moreover it varies substantially between businesses and across industries. Cooper (1979) has related to the potential influence of rapid growth, and noted that operational losses or poor profits in small businesses with growth orientation can’t be used as an indicator for management failure, if the cause for the result is heavy investments in new markets or products. If at different industries we’re expecting different growth rate, then as Miller and Tolouse (1986) states, the industry in which the business is operating in is affecting the level of business performance in general as well as the small business performance.
Accounting measures consider as objective and more accurate then nonobjective measures, but even if such objective measures can be obtain it is very hard to interpret them in small businesses (Covin and Slevin, 1989, 1990). This statement reinforced by Rappaport (1981) and Stewart (1991) findings of weak correlation between accounting measures related to small business performance and the small business value. Dess and Robinson (1984) argue that the reason for the difficulty in interpreting objective data such as accounting measures may be due to different accounting rules for different types of corporation like proprietary limited company and partnership. Covin and Slevin (1990) relate to the small business owners’ salaries as another potential cause for problem, which is unique for small businesses. In many of the small businesses the owner salaries takes substantial share of the business profitability.
Solutions To Small Business Problems: Value
Problem: Some businesses struggle to generate leads and then turn those leads into prospects. Others can get the leads just fine but can’t convince the buyers to buy. Businesses may have a large list of people on their contact list but still struggle to turn those prospects into paying customers.
Although there could be other factors at work, part of the problem is the lack of value provided by the business. Simply put, if a business wants to get money from a customer, it needs to prove that the customer is getting something in exchange. That’s value.
Solution: Value is created when a product or service solves a customer’s problem or fulfill a customer need.
This might be a fairly simply situation. For example a customer wants some chocolate so they buy a chocolate bar. The value they get from that purchase is the fulfillment of their need.
Or, this can be a more complex situation. For example, a customer wants to get from point A to point B so they might need some kind of transportation. But they also need to get there quickly (so the bus is out) and without a lot of effort (so a bicycle is out). That leaves a range of cars or trucks. But they have another need, perhaps one they don’t even realize. They want jealous neighbors. So they buy a beautiful high-end sports car to solve all of their needs at once.
Customers only buy to solve problems or fulfill needs, even if they aren’t aware of the needs or can’t adequately articulate them. Businesses that are successful understand exactly what problems they solve and what needs they fulfill and they target those in their marketing.
Examples: The classic, beloved example of the difference between a product and the value it provides is the drill. A customer does not buy a drill. They buy something to make holes. The business that will sell more drills is the one that can relate to the consumer that their drill makes the best holes (and, perhaps, solves other needs like being low budget or quiet or easy to use or rugged).
Application: So, how can you put this into practice?
1. List all of your products or services, each on their own piece of paper.
2. Create 2 columns on each paper.
3. In the left column, list the problems or needs that your customers have which prompts them to buy your product or service. Don’t be afraid to spend a lot of time on this step!
4. Based on the list of problems or needs, create a customer profile of your typical user.
5. In the right column, beside each problem or need, write down how your product or service solves or fulfills each point. Be aware that you might not have a point for each one (and this is the case, it’s a clear signal why your buyer is not buying).
6. Based on the list on the right-side column, revisit your marketing, your brand, your pricing structure, your distribution channel, your customer service, and even how your product or service is created, to express how you are able to solve many of their problems or fulfill many of their needs with your solution.
Essential Marketing Metrics for Small Business Owners
As a self-employed professional or small business owner, time is your most valuable resource. It can be tough to juggle business with life and create balance. The best way to make the most of your time is to implement metrics. Metrics will allow you to measure results of your actions so that you can better manage your available time.
Below, I have provided a list of key metrics that I urge all my clients to track. Any metric you track should be easy and quick to compile and review. Be sure to check your metrics weekly, this lets you know very quickly when something is awry and keeps you from getting to far of your business success roadmap. This is a good task to give to your virtual assistant, if you employ one. You should be able to compile and review this material in about 15 a minutes a week.
Website Metrics: (My favorite – Google Analytics – It’s free!)
• Metric: Keywords used to find your site.
• Why it’s important: This lets you know if the keywords you are using in your articles and blog posts are pulling the “right” kinds of traffic to your site, and it lets you identify topics that are trending upward.
• Metric: Your current website traffic in relation to last week and last month.
• Why it’s important: This gives you a sense of how your efforts are unfolding over time. If you’re getting a lot of new visitors this week or this month, then it means you’re on the right track.
• Metric: The percentage of visitors to your site who sign up for your mailing list or newsletter.
• Why it’s important: This tells you whether or not your call-to-action to sign up is effective or is in need of tweaking. It may also give you ideas for how to play with your layout. (In other words, does moving the sign up box up, down, left or right effect the subscription rate? You might be surprised)
• Metric: The number of repeat visitors to your site.
• Why it’s important: If you have many people who return to your site repeatedly, it means that people view your content as high-quality and relevant.
• Metric: The dollar value of every visitor to your site (i.e., the value of sales divided by the number of unique visitors).
• Why it’s important: It keeps you from spending more per visitor than you can earn.
• Metric: The number of people who became clients, or bought something.
• Why it’s important: This tells you your conversion rate (the percentage of your visitors who purchased something), and it lets you play with your marketing tactics to find ways to raise your conversion rate.
Newsletter metrics: (My favorite –AWeber for its metrics)
• Metric: The percentage of people who looked at your newsletter.
• Why it’s important: This tells you whether or not your subject line is compelling, which subject lines seem to do better, and which don’t work at all. If your subject line isn’t compelling, no one is going to open to newsletter to read it.
• Metric: The percentage of people who followed the call-to-action in your newsletter.
• Why it’s important: It tells you which calls to action are effective and which need work.
Marketing campaign metrics:
• Metric: How your leads are generated—which of your marketing techniques pull clients to you?
• Why it’s important: It lets you focus on the marketing techniques that are most effective for drawing in new customers.
• Metric: Which marketing technique drew in the best-converting leads, and which were most profitable?
• Why it’s important: This lets you focus on the most profitable marketing techniques and set aside the ones that don’t earn as much.
• Metric: What are the results of your marketing leads? Do the people download reports? Do they purchase something? Do they become clients?
• Why it’s important: This gives you a clearer idea of what your target market is most interested in and what they are reluctant to do.