Starting a business is one of the most difficult decisions in anyone's life. In addition to having to generate funds, you also have to concern yourself with scaling the business, especially since stagnation is a leading cause of business failure. According to the U.S. Small Business Administration, there were over 32 million small to medium-sized businesses in the US. Out of which, a whopping 20% would likely fail at the end of the first year, with almost 50% failing within 5 years.
With this survival rate, the odds are stacked against any business owner. Therefore, business owners must commit to constantly improving their businesses while avoiding common pitfalls in the first few years. Here, we will be showing you some of the most effective ways you can improve your business. Let's get into it:
Hire the right people
Staff is a vital part of any successful business. With competent employees that buy into the vision of your business, you are already on track to having a resilient business. Conversely, workers that lack the necessary skills and are unmotivated could doom your business, even if you have a great business model.
So, you have to find employees with the right set of skills. To achieve this, your recruitment strategy must be well thought out and reflect what you are looking for in your business's human resources. It would do you more harm than good to hire people who, while competent, aren't very enthusiastic about your business or work well in a team.
Another thing to note is that top talent is scarce, which means you also have to put in the effort to make your business appealing. It could be in the form of having industry-standard salaries, rewards & recognition policies, etc.
Plan for growth
It's important to always take out the time to strategize, particularly in the early phase of your business. You do not simply want to spend your entire time working. A good approach is to adopt the 60-20-20 formula. You spend 60% of your time on regular daily work, 20% making plans regarding your business, and another 20% strategizing.
This way, you are not stuck focusing on short-term tasks in your business. Instead, you also spend time on activities that can potentially catalyze growth and expansion.
Build lasting relationships with customers
Strong customer engagement is a necessity if you are trying to maintain strong growth for your business. The reason is simple - customers are the major driving force of success. However, many businesses place so much focus on expanding their customer base while neglecting customer retention.
It's the wrong way to approach things. You see, acquiring a new customer is much more expensive than retaining an existing one. Every time you let go of a customer, you have to spend money that could otherwise have been saved or directed to more productive uses. Hence you should focus on developing strong relationships with your existing customers. You can do this in various ways. For instance, invest in quality customer service or leverage email lists to constantly communicate with them and remain on their minds.
Manage your risks
One way resilient businesses differ from weak ones is that the former take risk management very seriously. At every point, running a business comes with risks. That's particularly the case for new and small-scale businesses. Many of these risks can be existential in that they can result in the complete failure of your business.
So proper risk management is non-negotiable if you want to build a thriving business. The first step is identifying these risks. They exist in various categories, such as operational, reputational, and macroeconomic. You should thoroughly evaluate your business model, industry, and geographical location to determine the risks that apply to you. You can also conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis to understand your business's internal and external threats.
Once you've identified your primary risks, you can then formulate a strategy to mitigate them. Some risks, for instance, can be significantly mitigated by getting relevant insurance. Similarly, certain risks may require the diversification of a business's product and service offerings. Other risks, such as theft of data and cyber-attacks, require specific actions like instituting a stronger data protection framework.
Reward your employees
As mentioned earlier, your human resource plays a major role in the success of your business. That's why it's important to find ways to motivate your employees. This way, they can put in their best work and help your business stay resilient. Apart from the direct impact unmotivated and unhappy employees can have on your business, they are also more predisposed to leaving, and if they do, you will have to conduct a costly recruitment process and expend resources in training their replacements.
To avoid such a situation, you can offer various incentives that appeal to your employees. For instance, you can have a bonus system based on performance targets. Similarly, you could consider suitable employees for leadership positions within your business.
Another way to reward your employees is by leveraging recognition software. An app for recognition enables your employees to appreciate each other. Managers can also recognize and reward the performance of employees through the software. Recognition software also allows you to explore different rewards for employees, such as badges, points, and other incentives.
Reinvest in your business
The early phase of your business is a period where you should focus on investing and expanding your business’s capabilities. It could be in the form of infrastructural development or recruitment of critical human resources. It might mean you'll have to endure a small profit margin in your early years, but it's certainly worth it in the long run.
By reinvesting your profits into the development of your business, you'll be able to accelerate growth in the first few years and reap the benefits later. Notably, you should be strategic when reinvesting in your business. Determine what areas require the most development and invest accordingly.
Small and medium-sized businesses generally have a hard time attaining sustainability. That's why it's crucial to explore various ways to improve your business in terms of capacity and resilience. Hopefully, the tips mentioned above will help you get on the track to a successful business. Good Luck!