Advertisement
  1. Business
  2. Small Business
Business

How to Become a Successful Small Business Owner

by
Difficulty:BeginnerLength:LongLanguages:

If you’ve just started or are thinking of starting a new business, you’ve probably heard plenty of gloomy statistics about small business failure rates.

Often, this can lead people to give up before they begin—a Gallup survey found that a quarter of Americans had thought about starting a business but decided against it. Of those people, 66% said they were influenced by “worry that the odds of success of a new startup are very low”.

But you don’t have to give up on your dream, nor are you doomed to add to the gloomy statistics. If you do things right from the start, you can become a successful small business owner, running a thriving, profitable company that serves both you and your customers.

Become a Successful Small Business Owner
Discover how to become a successful small business owner.

In this tutorial, I’ll give you some tips on how to achieve this and how to move forward effectively from the start. I’ll look at some of the questions you need to ask yourself, how to get support (both moral and financial), how to get money coming in quickly, and more.

By the end, you’ll be equipped with some practical strategies to use as you run your business, and I hope you’ll also feel inspired and confident that you and your company can be a success.

1. Ask Yourself Some Simple Questions

When you’re starting a business, it’s natural to be excited about what you’re doing and want to jump right into creating your first product or service right away. But it pays to take the time to ask yourself some questions first, so that you have some clarity.

Here are some of the most important questions to ask yourself. It’s best if you write the questions and answers down somewhere and save them to refer to later on.

Why Are You Starting the Business?

It may seem obvious or unimportant, but this is a crucial question to start with. If you answer something like “Because I hate my job and want to be my own boss” or “To make money”, that’s a good start, but push yourself further. Why this business? What attracted you to the idea? If you’re wildly successful, what will it look like?

The idea here is to get clear about what’s important to you, where exactly your passion lies, and what the point of the whole venture is. As a small business owner, it’s easy to get caught up in the minutiae of paying bills, writing the website copy, changing the website copy several dozen times, filling out tax forms, and so on. Don’t lose sight of the big picture.

What’s Your Offer?

In one sentence, what exactly do you do? How is it different from what other companies already do, and why will people love it?

Your answer will be something like the famous “elevator pitch”, or maybe a mission statement. It doesn’t matter whether it’s perfectly polished yet, but it is important that your answer is clear and easy to understand. If you were talking to your neighbours at a barbecue and they asked you what you do, would your answer make their eyes light up or glaze over? Would it make them ask for more details, or hurriedly excuse themselves to grab another burger?

As an example, here’s Amazon’s mission statement:

Our vision is to be Earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

Whether you love or hate Amazon, that’s a pretty clear mission. Come up with your own, and as you’re doing so, try to focus not so much on the mechanics of what you do as on what you’re offering to customers and how it will improve their lives.

Who Will Buy It?

Once you’re clear on what you’re offering, ask yourself who will buy it. Get as specific as possible here, creating a detailed “customer avatar”—a profile of your ideal customer, including their name, age, gender, personality, likes, dislikes, hobbies, dreams, and more.

Customer avatars have become quite popular, so maybe you’re familiar with the concept already. If not, or if you want more details, check out this tutorial on getting to know your customers.

What Are You Good At?

It helps if you’re good at what you want to do in your business. For example, if you’re setting up a web design studio, it would help if the answer to this question includes the phrase “designing websites”.

But to be successful in business, you’ll need other skills too. You’ll need to communicate, negotiate, promote your business, sell yourself and your products, keep the accounts, stay organized, and much more.

So run a self-inventory here. The answers are for your eyes only, so be completely honest. What are you good at, and what are you not good at? What are your strengths and weaknesses?

If you identify areas of weakness, you’ll need to make a plan for dealing with them. If you don’t have a head for figures, perhaps you could partner with someone who does. Or you could hire an accountant, or improve your own skills by checking out some of our super-simple accounting tutorials or doing other training. If you’re no good at designing websites, hire someone to do it for you.

The key here is to make the most of your own strengths, and to make sure you get the necessary support to compensate for your weaknesses.

You can find more important questions to ask yourself in the following tutorial:

2. Get Help

Speaking of getting support, you’ll need plenty of it if you’re running a business. Other people have been there before and made many of the mistakes that are common among new business owners, and they can help you avoid them. They can also provide inspiration, help you develop strategy, and even introduce you to new opportunities.

A great way to do this is to find a mentor. Many of the most successful entrepreneurs have relied heavily on mentors. Here’s a quote from leadership expert Bill George, referring to Facebook founder Mark Zuckerberg:

People always ask, How does he have the wisdom of someone 20 years older? The answer is, he sought out really good mentors, early on.

One of those mentors was Steve Jobs, who himself was mentored by Bill Campbell.

To find out how to identify and approach a mentor and how to manage the relationship, see Lisa Hunter’s tutorial on How to Find Great Mentors.

You could even appoint a "personal advisory board" of several trusted advisor. And the support doesn’t end there. Find local business associations and networking groups, and reach out to people on relevant social media or other websites.

Don’t forget self-help either. We have a large and growing library of business tutorials here on Envato Tuts+, so you can get up to speed on some important business topics:

3. Fund Your Dream

In that Gallup survey I mentioned earlier, the top two reasons for not starting a business were connected to lack of money.

But it doesn’t have to be a barrier. There are plenty of sources of business funding you could explore, and you could also apply the bootstrapping approach, keeping expenses tight and developing your business with limited investment.

Keep in mind that it can take some time for a business to become profitable. You can work out how long it will take for you to break even in my tutorial on creating a financial model for your business.

Even if you’ve created a model and think you’ve got enough saved, it may still be worth exploring funding. That’s because of something the Scottish poet Robert Burns once wrote:

The best laid schemes o' mice an' men / Gang aft a-gley.

The last part is often translated as “often go awry”, and I’m sure you understand the sense: no matter how carefully you plan, things rarely go as expected. We live in a complex, interconnected world, and even if you do everything right, your business could be knocked sideways by a sudden economic meltdown, a real estate crash, a war on the other side of the world that raises prices for your raw materials, the sudden entry of a powerful competitor into your turf, and much more.

So it pays to have a comfortable cushion, just in case things don’t pan out as expected. And it’s much easier and cheaper to arrange funding when times are good than it is when you’re desperate. Of course, you don’t want to be paying interest on unnecessary debt either, but there are funding options, like lines of credit, that you only pay for when you activate them. In any case, it’s worth researching your options early on.

4. Jump-Start Cash Flow

When people are just starting out, they often focus on keeping expenses tight because they don’t want to burn through their initial funds too quickly.

That’s a valid strategy, but another way to free up more money for the business, of course, is to get revenue coming in quickly.

A common strategy, particularly with internet startups, is to build and launch a product much more quickly than traditional businesses would have done. Instead of making something perfect, create a Minimum Viable Product (MVP), release it to the world, and start improving it gradually as you go along.

This can be an efficient way of developing new products, but it also has the benefit of allowing you to bring in money quickly—assuming your product is “viable” enough that people will pay for it!

For more on this, see my tutorial The Lean, Agile Way to Build Your First Product.

But even if you’re not an internet startup or these techniques don’t feel right to you, you can still take steps to get money coming in quickly. If you run a service-based business, you can structure contracts so that clients have to pay a certain amount up front or at agreed milestones, instead of all at the end. With long-running projects, this can make a big difference to your cash flow. You can also offer special discounts and limited-time offers for people who sign up as early customers.

The more money you can get coming through the door in the early days, the quicker you can break even on your original investment, and the more funds you’ll have available to invest in growth.

5. Get the Word Out

For a small, new business, there’s an obvious problem: nobody knows you exist.

Overcoming this problem is easier than it used to be, thanks to the plethora of marketing opportunities on the internet. Many of them, of course, are free or low cost, but don’t forget that your time is also an investment. So don’t make the mistake of signing up for every social media site out there and letting your valuable time dribble away in tweets and status updates.

Instead, get strategic. Make a marketing plan that identifies what you want to achieve and sets out the strategies and the channels you’ll use to achieve it. Take advantage of free opportunities, of course, but don’t neglect opportunities that can save you a bunch of time for a minimal investment.

For more on this, see our marketing tutorials on Envato Tuts+, such as:

6. Hold Yourself Accountable

We live in an age of data. Back in 2010, Google CEO Eric Schmidt famously said that every two days, we create more data than we did from the dawn of history up to 2003. And our data production has continued to grow since then.

While your small business will probably not be creating exabytes or zettabytes of data, there will still be plenty for you to analyze. You’ll have detailed financial records, customer records, website traffic, social media engagement, click-throughs, conversion rates, sign-ups, and much more.

Of course, you can’t track everything, and you’d go crazy if you tried. So pick some key metrics that are most closely aligned to your overall business goals, and make a plan to track them on a regular basis. For more help with this, see my series of tutorials on the key metrics every business should track.

Also make sure you have a structured process for setting measurable objectives, reviewing your progress, and adjusting the objectives or setting new ones. A good way is to keep a simple monthly checklist of the most important items. All of this should be driven by your overall business plan (you do have a business plan, don’t you?), and you should use the data you collect to help you keep the plan constantly updated.

7. Grow and Diversify

Often, a business starts out with one product. If that product is a success, it can be tempting to stick to doing what you do well. But that can also be dangerous, particularly in a world of fast-moving technology.

Here’s an example from Envato, the company that runs this site. Envato started out ten years ago as FlashDen, a marketplace where creators could upload Adobe Flash assets and people could buy them to use on their websites.

It was hugely successful and grew rapidly for the first few years, even after it was forced to change its name from FlashDen to ActiveDen. It would have been easy for the company’s founders to have kept investing in that one site, focusing on becoming the best Flash marketplace out there.

But they didn’t do that. Instead, they diversified into multiple income streams, creating marketplaces for lots of different products, from WordPress themes to royalty-free music, graphics, and more—as well as a freelance marketplace on Envato Studio, and tutorials and courses here on Envato Tuts+, of course.

In retrospect, that was a very good strategy. Use of Flash has declined from about half of all websites in 2011 to less than a quarter in 2015. As usage of the marketplace declined too, Envato announced the closure of ActiveDen last year.

How the ActiveDen website looks today
How the ActiveDen website looks today

If the company founders had kept all their eggs in one basket, the decline of Flash would have pretty much smashed all those eggs, and they would have been left bemoaning their bad luck. But by creating multiple income streams, they ensured that the company would still be successful even if one of its main products went into decline.

So think about how you can diversify your own business. Think about the risks you’re subject to, the technologies you’re dependent on, and how changes in the competitive landscape could blow you off course. Then come up with ways in which you can create multiple income streams, so that if one product or service is no longer popular, others can pick up the slack.

Your Journey to Small Business Success

This has been a high-level overview of how to become a successful small business owner. You've learned how to get clear on your business's goals and your own strengths and weaknesses, how to fund your business, how to get the word out, how to measure success, and more.

We’ve touched on a lot of different topics, of course, and I’ve linked to more tutorials so that you can dig into the details in each area. I’d encourage you to read some of those tutorials to go deeper into the key subjects, and to subscribe to our newsletter (there’s a form down in the footer) to stay up to date with the latest business tutorials published here. We've got plenty more on the way!

Advertisement
Advertisement
Looking for something to help kick start your next project?
Envato Market has a range of items for sale to help get you started.