Getting a new business off the ground is an exciting time. If you've never before been at the helm of a company, even an established one, then learning how to run a business will involve quite a learning curve. Embrace this experience!
Entire books have been written on the subject of running a business, but sometimes, you just need a high-level overview of topics you should investigate further. Make a list of any areas about which you already feel confident and make a separate list of areas that represent weaknesses. There's always room for growth, but in the early stages, it can be helpful to devise a strategy in which you delegate your weaknesses and focus on your strengths.
You don't have to learn the ins and outs of how to run a business before you're allowed to get started. Do plenty of research for a boost of confidence, but then take that leap of faith and jump right into the process. You can learn plenty as you go along. Dedication and a willingness to learn can take you far as you become a business owner.
Plan How to Run Your Business
First, you need a road map for your business. A business plan is a document that outlines your business goals, puts those goals on a timeline and breaks down the steps that will achieve those goals. You can (and should) revisit your business plan periodically to make adjustments, but its primary purpose is to help spur you into action and then keep you on track. Write down your vision for the company, the values you want to uphold and what you want to achieve each year for the next three to five years.
Right now, you probably have a lot of ideas floating around in your head about what your business will look like when it's up and running or about people to whom you want to talk or managerial tactics you want to try. Get all of those ideas out of your head and onto paper. Then, organize them into a timeline and fill in the gaps of the plan that have yet to be considered. A successful business plan will also include a working budget that contains estimates, not necessarily precise numbers.
As important as a business plan is, however, you cannot make the mistake of getting too caught up in planning without ever executing your plan. If you're very detail oriented, it will be tempting to include every single aspect of the business plan, right down to the point-of-sale software you intend to use in a year's time. Try to get the details arranged for the next two to three months and keep the rest of your business plan high level. Every other week, spend some time reviewing the business plan and hammering out details if needed.
Understanding Business Accounting and Taxes
One of the first professionals with whom you'll want to team is a business accountant. Even if you feel comfortable working with numbers, having a third party examine your accounts is a wise decision. In particular, an accountant will help you understand your tax obligations as a business owner. Like individuals or families, business entities are responsible for paying taxes on federal, state and local levels, and it's important to set aside enough revenue for taxes each quarter.
Even if you don't have any employees, running your own business categorizes you as self-employed. The self-employment tax has you paying your own employment tax on top of your typical income tax. When you reach a point when you hire employees and build your team, you'll need to set aside enough money to pay their employment taxes too, which feed into Social Security and Medicare.
To make tax time go as smoothly as possible, it's imperative to keep clear and well-organized financial records. An accountant can help you devise and maintain a system. The legal business structure you choose can also impact the way your taxes are handled.
Performing Market Research and Staying Adaptable
Gathering facts before making a decision is imperative, especially when that decision is a high-stakes decision. Market research is the fact-gathering process to which you'll revert over and over again throughout your time as a small business owner. Market research can include qualitative information like customer surveys or quantitative information like sales data. The key is to constantly ask questions and then seek the answers.
You're starting a small business because you've recognized a gap in the market that you think you can fill. However, these market gaps are constantly changing, which means your business has to stay just as adaptable. A competitor might rise up and steal your clients, or a downturn in the economy might make people less willing to buy your business's luxury items.
What's going on in consumers' minds? Their worries, frustrations, joys, routines and goals all influence whether or not they'll seek out your business and/or purchase your product or service. Know their pain points and understand how you relieve them. If your product or service falls short, how can it be improved?
Making a Marketing Plan
A marketing plan will supplement your business plan and play an important role in the success of your business. You can do everything else "right" but experience poor sales because few people know your business exists. A marketing plan should include data gleaned from your market research, such as demographic details about the people who are most likely to be interested in your products or services. A person's age, gender, education level, income and marital status can all give you clues about which marketing channels will catch their attention.
For example, your marketing plan can include print advertisements if your target audience still reads magazines and newspapers on a regular basis. Radio and TV advertisements might be appropriate for some demographics, and there's a large chunk of the population who can easily be reached on social media platforms. Even in terms of internet marketing, you need to carefully choose whether you use Pinterest vs. Instagram, Facebook vs. YouTube, etc.
Ultimately, you should market your business in a way that brings results and increases sales. That's why it's so important to collect data on your marketing campaigns so that you can analyze their return on investment. Your business can have an in-house marketing team or contract with an agency. For small businesses with smaller budgets, an agency usually makes the most sense.
How to Increase Your Sales
The ultimate purpose of your business plan, market research and marketing plan boils down to one thing: sales. The more sales, the better, but how do you actually increase your sales? Although you can certainly pick up some tried-and-true strategies from business gurus, learning how to run your business like a well-oiled machine can and inevitably will require some strategic trial and error.
Market research should give you an understanding of not only who will want to buy your product or service but also why and when and even how. You can use all of this information to create a "sales funnel" that strategically outlines the process your leads — people who are potentially interested in purchasing from your business — go through before they finally decide to complete a transaction.
For example, no one can buy from your company until they know you exist, so awareness is at the top of this funnel. The wide mouth "holds" all the people who have ever heard of your company, and it's your job to coax enough people down the funnel and through the neck of the funnel — signifying a transaction — to meet your revenue goals.
Marketing strategies can accomplish this, but direct outreach through sales representatives is another smart approach in some industries, such as in the business-to-business sector. Strategies will change the closer and closer your leads move toward a transaction. For example, an automated email reminder — perhaps including an additional 10% off — could seal the deal when a shopper abandons his online cart without completing the transaction. Re-marketing and upselling are additional strategies that can increase sales, and it's important to become familiar with the vast sales toolkit at your fingertips.
Building Your Team
It helps to have a team of people on your side in the business world. Accountants, marketing experts, lawyers and even human resource managers can all work for you as independent contractors or freelancers, which means you don't have to worry about paying them a full-time salary or providing benefits. In very few circumstances can a small business operate without at least a few traditional employees who come in on a daily basis to perform a specific set of tasks.
Hiring full-time employees without having the finances to pay them will backfire quickly, but you also don't want to wait too long. It's smart to hire people before you're absolutely desperate for assistance because then you can take your time and make sure they're a good match. After all, skills and qualifications represent only part of the requirements for a great employee. The right personality makes a huge difference too.
Have a very clear idea of how much you can pay your employees and what kind of benefits you can offer them. If you can't afford to hire someone with relevant experience or education, be prepared to offer plenty of on-the-job training. You'll also build employee loyalty and satisfaction with an appropriate managerial style. Learn to delegate without hovering or nit picking and give your employees ownership of projects to let them show you of what they're capable.
How to Grow Your Business
You've done it! Your new business isn't quite so new anymore because you made it through all the stages of business development and are ready to take the next step. Now, your goal is not just to survive but to thrive. That means giving your business the capacity and ability to make many more sales.
Growing your business requires learning a new set of skills, but it all circles back around to having a business plan. Make a new one that outlines a strategy for the next three years or so. Does the business currently make enough revenue to reinvest in new employees? Before making any business decisions, do some market research to ensure they are viable decisions.
Sometimes, just hiring one new employee can help you grow your business because you can give each of your customers better attention and retain their loyalty for a repeat purchase, or it means you have an extra person working on increasing sales. Before hiring anyone new, analyze the weaknesses in your business strategy. Hire accordingly so that you not only grow your business but strengthen it.