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A PRACTICAL GUIDE FOR SMALL BUSINESS SUCCESS
Entrepreneurs who start a small business have high hopes of big
success. Yet few small businesses survive beyond five years.
Actually, there are just four broad requirements that can almost guarantee your small business success:
- A few personal traits essential for small business success
- A big enough market that a small business can tap
- Planning and organizing
- Monitoring and controlling
PERSONAL TRAITS ESSENTIAL FOR SMALL BUSINESS SUCCESS
People with very different personalities have succeeded in
business. Hence, one cannot say that there is an entrepreneurial
personality.
But there are certain traits that are essential for business
success. The traits listed below are practically self-evident:
- A self-starter - This is the essence of entrepreneurship.
Employees have a boss to tell them what to do and how to do it.
Entrepreneurs must decide what to do and learn the how.
- Persistence - Unless you are able to persist against all the frustrations and adversities that are inevitable while doing a competitive business, you are not likely to see small business
success.
- Learning through doing - Without observing the results of
your decisions and actions, and learning from your mistakes and successes, your persistence might actually make the situation
worse. You might be persisting with wrong actions.
- The habit of planning and organizing - If you don't have the
habit of working out the details involved in achieving what you
want, and then going out and organizing all that is needed, you
might be floating around aimlessly. Aimless activity do not
lead to small business success.
A MARKET THAT A SMALL BUSINESS CAN TAP
There has to be a market for what you plan to offer or there
will be no business. Next, existing competition in this market
should be something that you can handle or you will find
yourself driven out of the market.
Whether the market is competitive or otherwise, you simply have
to know your customers. If you don't know such things as their
age, gender, occupation, needs, likes and dislikes, you simply
cannot hope to write sales messages that will appeal to them.
Then you'll need a clear idea about what your customers expect
from your kind of product or service. These customer expectations
will form the basis on which you develop your sales messages. You
can also gain a competitive advantage if you can meet any
expectation that isn't currently being satisfied properly.
Finally, you have to know the places your customers frequent, the materials that they read, and the programs they attend or listen
to. You communicate your sales messages to the customers at these places, or through these materials or programs. Select the most appropriate medium to communicate.
PLANNING AND ORGANIZING FOR SMALL BUSINESS SUCCESS
Although a bit of forecasting is involved in planning, plans
are primarily an expression of your vision. You have some ideas
about the business you want to do, the results you want to
achieve and the way you would go about these.
Business planning involves evaluating these ideas against the prevailing business realities,
including the market, the
resources required, and the resources available to you.
The plan also needs to include an estimate of outside assistance
that you will need. It will explain your background, what you
plan to do, as well as the resources requirements and how you
would arrange these.
Another key component of your business plan would be the program
for achieving profitability - how you will achieve required
volumes, the prices you will be able to charge, and the costs
you will incur.
An essential element of the business plan would be estimating cash flows. Initially, there would be cash outflows for establishing the business.
Once operations start, there would be cash inflows from sales.
However, until the sales reach a certain level, the inflows would
be insufficient to cover all the outflows. There would also be the problem of credit - the credit you receive could be less than the credit you have to extend to customers.
A cash flow statement showing inflows and outflows month by month, incorporating all the above factors, would show how much external financing you would need and when. The same statement would
indicate when you would be able to repay the borrowings.
Plans alone would achieve nothing. It is organizing that creates
the business. With the clear ideas provided by the plans, you go
out into the world of government, investors, bankers, suppliers
of equipment, merchandise and services, employees and customers.
You would work with them to translate the plans into an operating business.
MONITORING AND CONTROL OF YOUR SMALL BUSINESS
You have the plans telling you how to achieve profits. Now you
have to compare your actual performance against the plans:
- Are costs within allowable limits?
- Are sales growing at planned volumes and realizing
estimated prices?
- Are credit sales being collected in time?
- Are unsold stocks accumulating?
- Is there any significant change in market conditions?
Inevitably, there will be variations between planned and actual results. Your task then becomes identifying the factors that
caused the variance and taking the necessary actions to ensure profitable operations.
For example, if costs increase, you might have to increase your
selling prices. If local demand declines, you would explore new markets.
Effective control is exercised not by bossing people around, but
by setting standards, checking performance against those
standards, and taking appropriate action in time.
CONCLUSION
Small business success is achieved by:
- Assessing yourself to improve your success traits
- Assessing the market for demand and competition
- Meeting customer expectations and publicizing this fact
- Making detailed plans and implementing these effectively
- Controlling performance through monitoring and timely action.
About the Author
Gopi Nathan is a qualified management accountant who worked in
finance positions before starting out on his own as a computer applications developer. He is the publisher and webmaster of [url]http://www.smallbusiness-start.com[/url] that discusses how to
start a small business right.
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