It’s hard to build a successful small business – let’s get that out on the table right from the start.
The small business graveyard is littered with dead bodies of the hundreds of millions that dared venture before you, originally filled with crazy hopes, dreams and aspirations. These googly eyes most likely blinded them from what they really needed to focus on to build a successful SME.
In my corporate life, most recently as a CEO in the finance world, I was exposed to the full gamut of ‘what to do’, and almost more importantly ‘what not to do’, when running a successful ‘see profitable’ company. Whether you’re in the tech industry or fashion industry, or whether you’ve just opened your suburb’s best fish and chips shop (I’m originally from NZ) – the same rules still apply.
Building a successful SME may be hard, but it’s also simple.
1. Have a great product or service
This seems like an obvious starting point, but you’d be surprised at how poorly most people gauge ‘great product or service’. It usually involves feedback at the pub or a family barbecue, with well-meaning friends and relatives quick to lend their support.
What I’m referring to is product-market-fit. Does the market (not your friends and family) want your product and will they pay what you’re asking? If they do, then great. Spend the time and effort to ensure you have a well-executed product or service (it doesn’t have to be ‘perfect’).
2. Look after your customers and staff
Without loyal repeat customers, business is like trying to fill a bathtub with water while the plug is out – it’s only a matter of time before the bath (see your bank accounts) run dry.
You must look after your customers. Whether a customer comes back to you over and over is driven equally by two variables. The first is how well your product or service fits their needs and how well it performs. The second is how they ‘feel’ being a customer of yours. Do they feel loved? Do they feel valued? Do they enjoy the experience of being a customer of yours? This second variable is one that’s overlooked by most small business owners, to their own demise.
Look after your staff. That’s it. Nothing more. It starts with your staff. Look after your employees and they’ll, in turn, look after your customers. Happy employees do better work.
3. Manage your cash
‘Profitable’ businesses go out of business every day. It’s not just about your profit margins (although that’s obviously important), it’s really about your cash flow and managing the cash balances in your accounts so you don’t run dry.
If you’re running an established, profitable business with healthy levels of cash at the bank then this isn’t as important. However, if you’re trying to start and/ or grow a small business, it’s critical. I’ve seen lots of businesses with the healthiest of healthy margins, with lots of loyal customers, go out of business because the accounts ran dry; don’t let that happen to you.