Small business owners may very well be the hidden backbone of the United States. According to 2011 US Census Data, companies with less than 500 workers represented over 99 percent of firms in the country.
Of those 99 percent, nearly 90 percent had less than 20 workers. However according to the Small Business Administration, “About half of all new establishments survive five years or more and about one-third survive 10 years or more.”
While the reasons for the mortality rate of small businesses may vary, there are lessons a small business owner could learn from the corporate world as a whole which result in a long-term benefit.
Have a Well-Thought Out and Appropriate Mission Statement
A mission statement is simply the declared purpose for a company to exist. According to BusinessDictionary.com, it is “A written declaration of an organization’s core purpose and focus that normally remains unchanged over time.”
As one would expect, all major corporations have a mission statement. A very simple example is the mission statement of Google: “Google’s mission is to organize the world’s information and make it universally accessible and useful.” They have put into a simple sentence their entire purpose to exist.
The company can filter all corporate decisions and/or policies through this simple statement. This will help to better understand which ones align with the declared direction of the company. A mission statement, however, may suit a small business as much (if not more) than it does the corporate world at large.
If Mr. Smith owns a small business manufacturing Widgets, and has the opportunity to invest a substantial amount of capital into goldfish farming, he would be well advised to consider the possible ramifications on his Widget factory. Be it failure and loss of needed funds or even success, the new enterprise could have a profound and lasting impact on his primary venture. While this does not rule out new avenues, it gives pause to rash decisions.
Have a Business Plan
If the Mission Statement is what drives your business, then the Business Plan is the roadmap your company follows. According to entrepreneur.com, “A business plan is a written description of your business’s future.” What are the short- and long-term goals of your enterprise? Who do you interact with and where is the company capital derived from? Where will the business be in 2 months, 2 years, 5 years and a decade out?
It’s important to remember is that, like a roadmap, a business plan may have more than one possible route. Short-term goals may of necessity change in order to achieve the long-term goals. Unless you’re a priest or a rabbi, Moses did not descend from Mount Sinai with your plan carved in stone.
Some of the basic components of a well written business plan are Market Analysis, Financial Analysis, Strategies, Organization, and Management. Without a continuous and careful scrutiny of all factors affecting your business, in many ways a business is operating like a lost driver, they may indeed happen across their destination, but probably not without costly wrong turns.
Handle Finances Professionally
While the “I’m not broke, I still have checks left” financial plan may work (to some extent) for some households, it definitely is not a long-term financial plan for a small business. Perhaps the single most important thing a small business owner can do is to handle the finance side of their company in as professional manner as possible.
Keep books consistently balanced, up to date, and have a professional accountant. If you’re running a small business, your spouse’s Uncle Larry who does yard work and keeps people’s books on the side is probably not the guy for you. Throughout the year, and especially at the end of the year, have an experienced certified public accountant be the last one to sign off on your taxes.
Another avenue toward handling finances professionally is to have a relationship with an experienced small business banker, preferably one who is known and trusted in your community. They can be a fount of good advice for the business person who looks (figuratively) to break new ground.
Small business expert Walter McLauglin told Decoded Business:
“A good small business banker is one who has enough experience to have helped many businesses during his or her career. They should possess the vision to see things not just how they are today, but how they could be tomorrow. An effective banker has a keen ability to view the world three-dimensionally: if things aren’t working now, what steps can be taken to right the ship? Or if the situation is solid today, how can they be better still down the road?
A small business banker strives to not just be a financial expert, but a counselor, mentor and occasionally a critic. Some of the best advice a banker can give is what not to do. Don’t be afraid to listen to them, even when the advice isn’t what you want to hear. I can’t tell you the number of times I’ve been thanked later on for delivering the tough message during my career.
Interview bankers as seriously as you’d interview a prospective job candidate. After all, they work for you, not the other way around. When you feel the fit is right, give them what they need to do their job. Keep in touch with them regularly and make sure they get to know your business, inside and out. In the end, you will both benefit if your relationship is open and honest.
A good banker is essential for the success of your small business. The right one is worth his or her weight in metaphorical gold – which can help translate into very real profits for your small business.”
In Short, Be Professional!
There are certain things a small business owner could learn from big business practices which might help them be one of the success stories. In short, it might be summed up “Be Professional.”
Whether you’re running a landscaping business consisting of you and one or two other weed eater operators, or the owner of a widget manufacturing plant and significantly more employees, treat your business in as professional a manner as possible.
To use an old cliché, the business world is “dog eat dog.” Don’t let the success of your small business hinge on a lackadaisical attitude. Be proactive; keep yourself, any business partners, and any employees educated and up to speed not only on the changing business environment, but on any avenues of personal or corporate improvement.