8 Tips for Small Business Owners - Part 2

Last week, we discussed four tips for small business owners that will help lead their companies to success.  I hope you were able to step back, and take stock of how well you are applying those principles to your business, because I've got four more for you.

5. Know Your Competition

Yes, you have competition. Every business does. Don’t be stupid. Don’t be arrogant. No one “owns” a market. At the very least, each of your customers has the choice between buying what you sell, and buying NOTHING.

If you acknowledge that you do have competitors, then study them. Don’t copy them, don’t imitate them, but know them well. Not just their products and prices, but how they go about doing their business. The Art of War taught us to “keep your friends close, but keep your enemies closer.” The better you know your competition, the better you can fill a need that they are not currently filling.

And for you hardheads who still think you have no competition, consider this: you still have to be able to articulate to customers why buying your product is better for them than standing pat. Don’t laugh – “doing nothing” is one very serious competitor!

6. Business Planning

It is still amazing to me, after being in the business world for decades, that some small businesses and family businesses operate year after year without a business plan. It’s like trying to drive to someone’s house, and not having a map or GPS, and not even knowing the person’s address, or town or state! You just figure you’ll get in the car and figure it out on the way. Because you’re smart that way. Yeah, right.

Business planning is a complicated matter, depending on the depth and breadth of your business and your market. There are few generalities (other than to create a plan!) that can be offered in a short article like this, but here are two that go hand-in-hand.

One, always overestimate your expenses. And two, always underestimate your revenues. These two things, while they may not look pretty on paper when you write them, will make most end-of-the-year “surprises” be pleasant ones. It’s one thing to be ambitious with your business planning, but being realistic to the point of slight pessimism may make running your business a bit less stressful on you and your managers

7. Value Beats Cost

As stated above, sales are what keeps your business alive. The more sales you make, the better off your business will be. But sometimes, those sales plateau or decline, and you need to figure out why. Oftentimes, the knee-jerk reaction to declining sales is to lower your prices. Who can resist a good deal, right? Wrong. Assuming that you did your homework when you initially created your pricing, chances are very good that the cost of your product or service is not the reason people are not buying.

Lowering your prices does several things, none of them good. It devalues your product when the world knows that what you are selling is below the market norm. And think of those people who did pay the full price for your product. These should be your best customers, but now you run the risk of pissing them off when they see that you selling the same thing to others for less money. The same principal applies to those “New Customer” special deals. You’re going to give a better price to someone who has never used your product or service than you give to someone who is an existing customer? Really? Go back to point #1, and get your priorities straight.

Instead of fretting over pricing, concentrate on the value of what you offer. You can increase value in many ways, through innovation, upgrades, bundling with other products, or penetrating other markets. Concentrate on these things, and don’t become a discounter.

8. You’re Not Superman or Wonder Woman

Finally, the thing I have to constantly remind small business owners is that you don’t have to do it all yourself.   You don’t have all the answers. You don’t have all the skills. Hire intelligently, and surround yourself with smart, hard-working people with skills and experience that you do not have. Don’t look for clones of yourself; look for complementary pieces. When you find them, treat them well, give them the tools they need, and then get the hell out of their way. They’re going to help you be successful.

These tips, and those presented last week, are not silver bullets to bring you instant business success.  No such thing exists, you know that.  But these fundamentals are the foundation of a business built to succeed.  The rest is up to you and your team!

8 Tips for Small Business Owners - Part 1

You and I both know that there are untold numbers of books and articles written each year, advising business owners and leaders on how to improve their chances for success. There are thousands of ideas and things to consider, some of them old school, some of them bleeding edge. None of us who think about these things for a living have all the answers, but most of us have something to contribute to the challenge of successfully running a small business.

Whether you are a seasoned entrepreneur, or the proud owner of a shiny new MBA, I have compiled a short list of tips for your consideration. While you might be tempted to think that some of these are pretty obvious (and, yes, they very well may be), I would counter with the fact that knowing something, and being able to execute that something are two very different things. So read this first, and make sure you are doing (not thinking about doing, but doing!) the things on this list. Then come talk to me about the more complicated stuff.

1. Set Your Priorities
This is especially important for those who are starting a new business, but it is also something that older businesses need to be reminded of periodically. Cash flow is the lifeblood of any business. Sure, you can get a business going with loans, grants, investors, even your credit cards, but you will, at some point, need to pay the piper. And until the piper has been paid, you have that hovering over your head, and factoring into every business decision you must make.

Customers are what you need. Not “satisfied” customers. You need ecstatically happy customers. They will not only bring you repeat business, but they will tell their friends, family, and colleagues about you. Landing several of these kind of customers, and doing everything in your power to keep them loyal to you, is your Number One priority. Without customers, you don’t have a business; you have a hobby.

2. What Are You Selling?
There is a school of thought that says being the first to market with a new product or technology is the way to success and riches. And to the handful of businesses over the years that have been able to score on something new, that would seem to be the case. But upon closer view, there are thousands of struggling businesses, or former businesses, who thought for sure that their new brainchild was something that everyone needed and would buy. But they either over-estimated or misunderstood the public’s needs, or else they simply did not know how to introduce a new product or concept into the public’s imagination.

You need to offer what people want to buy, not necessarily what you want to sell. Having a small slice of a proven market is preferable to having a huge slice of nothing. You want to innovate? Great! Innovate from the vantage point of a sound market where the product is already an established item. Then, make it better. Bundle it with other things to create more value. Make it bigger, make it smaller, make it faster, change its color. Do what you can do to keep it fresh and exciting to people, but with the knowledge that the heart and soul of your product is already established.

3. How Are You Selling?
The “power trio” of business is Marketing, Sales, and Customer Service. Having one or two of these things covered is not going to make it. These three disparate functions need to play nicely together, and to provide the same message to the customer. If one flounders, the other two can rarely save the day. If two of these flounder, pack up the business and try something else. It doesn't matter what your business is. Marketing will put the idea into the customer’s head, Sales will make the promise of filling the customer’s need, and Customer Service keeps the promise with every single interaction. These three functions are your business’ foundation, not your product or your technology.

4. Know Your Customers
Don’t assume you know what customers want. And don’t guess what they want! It is your job to know what they want. Be certain. Have confidence in that knowledge… because YOU SPEAK TO YOUR CUSTOMERS. You ask them questions about what they like and don’t like about your product and your company. Then you give them MORE of what they like, and LESS of what they don’t like. This is not rocket science here, people. But it is amazing how few businesses really do this with any kind of intent. Oftentimes, companies send out surveys that are completely self-serving. What kills me is the companies that ask you to take surveys, and in the next breath, have the audacity to ask you to rate them as all “10’s” or whatever the highest score is. They are not using the survey results to better their company; they are using it to better themselves.

The better way of knowing your customers is to talk with them at every opportunity. Every time they come to your shop. Every time they call. Every time they keep an appointment with your salesperson. Just ask a few questions to get them talking. “What can we do for you that we’re not doing?” “What are we doing that you wish we weren’t?” “What’s coming down the pike for you in the next few years, and is there any way we can help you with that?” Simple little questions that show that you care. This is how you get to know your customers.
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Next week, we will discuss four more tips for running a successful small business.  Until then, work on the points listed above, and set your business up for success.  Remember, it's more than just doing the right things; it's doing the right things right!