Since the economic recession started, the media has panicked multiple times a day, lamenting the state of small businesses in columns, blogs and online zines. But the truth is that even now, a sizeable number of small business and start-ups are out there, thriving and inspiring other people to start their own businesses, in spite of the gloom and doom predictions from pundits. What does it take to keep your business ahead of the curve? Read on to find out.
A business that works is effective. How can your business be effective? According to Stephen Covey’s book, The Seven Habits of Highly Effective People, the first step is to be proactive. Being proactive, instead of reactive, is really the key to making a business not only survive, but also succeed.
It’s sometimes hard to get in the spirit of being proactive when you’re worrying about how new tax laws, stricter loan applications, higher interest rates and the new healthcare bill will affect your business. After all, those topics dominate the news, painting small businesses as victims of some external, insurmountable force—such as current economic trends, the government, or even bad luck.
But wait—you aren’t a victim. Business might be slow right now, but it’ll pick back up. You’ve got a solid business plan. You believe in your product. You add value to the marketplace. You have the ability to turn things around. Why? Because you’re proactive! You anticipate and solve problems before they begin. And you continually devote time to the following activities, which are:
1. Utilize the Right Resources
A great resource for small businesses is the Small Business Administration (SBA), which helps businesses with everything from getting start-up loans, to free/low-cost training for employees, to managing your daily operations. In addition to using government agencies like the SBA, you should also consult people in different fields from your own who can offer different perspectives on a given situation or problem. Ask your banker for tips on financing and interest rates. They can probably refer you to some other local sources for funding. Talk to an attorney about the legal issues regarding trade marking and advice on licensing, tax, insurance and other related business regulations. Consult the IRS about new tax laws and deductions that could have an impact on your tax reporting.
If you’re completely new to starting a business, don’t hesitate to enroll in community business classes or head to the library or book store to do some research. There are tons of books that list forms relevant to small businesses, as well as advice on creating a business plan, getting investors, etc. Even if you’ve been in business for years, you can still benefit by brushing up on new information.
2. Establish Good Credit
Good credit is important to establishing the reputation of your business, which can work in your favor when applying for loans. In general, be wary of using credit cards, which tend to have relatively high APRs. But, if you are fastidious about paying it off on time, go ahead and get a credit card with your company’s name. This can help you build up your company’s credit and also makes it easy to keep track of expenses. For those who sometimes make big purchases that tend not to be paid off by the credit card due date, Ron Jauregui, an FDIC Community Affairs Specialist, advises people to consider getting a bank loan, which typically offers a lower interest rate than credit cards.
If you’re a freelancer, contractor or self-proprietor of any kind, you probably manage your own finances, which is fine. But, you may want to consider hiring a professional who can manage your books and keep track of expenses meticulously. They can remind you about late payments and even help you develop an effective system that doesn’t let payments, due dates or invoices slip through the cracks. If you have a pair of capable eyes overseeing your finances, it’ll free up more of your time to handle other aspects of your business.
3. Take Security Seriously
Just because they earn less revenue than large corporations, it doesn’t mean that small business are any less prone than large ones are to fraud. Don’t simply assume that nobody is going to target you and that you’re safe against security threats. Stay on guard against bank fraud as well as online fraud. Keep a vigilant watch on your bank statements and report suspicious activity immediately. Make sure your anti-virus software is up-to-date, and use secure password software (like LastPass) to help you manage and create stronger passwords. Also, remember to change your online passwords frequently and keep track of them somewhere, such as a spreadsheet.
4. Prepare for Disaster
Disaster can strike at any moment. You’re not being paranoid if you think so. Take Internet fax service GoFaxer as an example. GoFaxer’s service was down from June 9, 2009 to July 21, 2009 due to a substantial server issue. It took them an entire one and a half months to fix the problems that could have been prevented if they had been proactive and kept backups of their sever that could be easily accessed and utilized once their main server crashed. Frustrated, some of their customers switched to other email fax service providers and were gone forever.
The lesson here is to back up all of your stuff frequently. It’s best to have multiple copies of documents vital to your business stored in multiple places, such as external hard drives, discs or online (remote storage). If you go with online backup, try to pick a service that’s located far away from you so that there’s less of a chance that their server will be prone to the same disaster as yours. You can also set your office phone to forward calls to your cell phone. In the event that your hardware is malfunctioning or destroyed, you’ll still be able to receive calls. (However, this will not work if the entire phone network goes down.)
5. Take Advantage of New Technology (Web 2.0, Saas, Cloud Computing)
Obviously, you need capital to grow your business. But, being able to invest money often requires you to reallocate your funds and readjust your budgets. You should always be looking for ways to cut operating costs, which sometimes means going beyond traditional tools and equipment. More people are already starting to reduce their overhead/infrastructure costs by going with online (hosted) services and products like online fax, virtual PBX, website builders, email marketing services, etc. These services help businesses reduce their dependence on hardware and eliminate maintenance costs and other superfluous purchases.
Web 2.0 is a goldmine for entrepreneurs and small business owners. In addition to the software as a service (SaaS) products mentioned above, free and low-cost applications (like Google Apps) give you access to conferencing tools, document-sharing tools, collaboration tools, etc. for a fraction of regular IT costs. Spend some time learning about and utilizing these tools, which can help you manage your business without requiring you to fork over the big bucks. Save your money for a rainy day when business is slow.
6. Keep Your Finger on the Pulse
A lot of business owners would like to think that they’re clued in to what their customers want, but quite a few of them really have no clue. If you’ve got a limited budget, you don’t need to pay for a bunch of fancy market research reports to figure out what customers are thinking. Simply create a Twitter account and jump into real people’s conversations. If you spend anything at all on marketing, spend it on these three things: your website, a decent email marketing service, and place for customer feedback. These three tools are interactive, which means they can help you gauge customer satisfaction and improve your product/service. You may also want to hire people who can manage all of these things.
Eliminate purchasing barriers. Make it extremely easy for customers to do business with you and give you repeat business. Don’t do something stupid like not include your prices or business hours on your website or other marketing material. I have seen this on numerous websites of a lot of local businesses, and I am baffled by it. Maybe they are thinking that if they force me to call them, they can persuade me to buy or come in anyway. FYI: It doesn’t work. Like a lot of people, I price-compare nearly everything before I buy. If your product is relatively more expensive, give me a reason why—a reason to buy.
7. Think Forward
I think “NBC” should be the new “ABC.” I’m not talking about the television networks. You’ve heard of “Always Be Closing,” but an even better maxim is “Never Be Complacent.” Maybe your business has already achieved some degree of success compared to all the businesses that are floundering around you. But, that’s no excuse to rest on your laurels. Spend some time each week thinking about how you can grow your business. Try to diversify, target other markets and/or work with other businesses. Plan your investments prudently. Venture into new (and scary) territory. Want to make your business completely virtual? Or how about completely mobile? Do a bit of research. Dive right in. Pick one day a week to test new ideas and crowd source with your employees and colleagues. Get creative. You just might find yourself solving your all your future problems before they start.