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!