Find out 3 fundamental tips to help you run a successful small business.
As a small business owner, you are always looking for new ways to build upon and improve your small business. While there is a lot of business advice out there, you may be surprised to learn that remembering some of the fundamental principles of business may lead to helpful tips for your company.
Here are three essential tips to running a successful small business, which include starting with a budget, creating a sound business plan, and working with engaged employees.
1. Start with a sound budget for your small business
Keeping track of finances is one of the most important parts of running a small business. Managing costs can be a challenge for any small business owner, which is why creating a realistic budget and sticking to it may be one of the top pieces of advice for running a successful small business.
According to a study by CB Insights about the most common reasons startups fail, 29 percent of startups failed because they ran out of cash, which was the second most frequently cited reason for failure.
Here are several ways a small business owner may avoid having to deal with budget overruns:
- Reduce unnecessary expenses – Examples of cutting out unneeded spending include minimizing overhead costs, managing inventory efficiently, and maintaining equipment to reduce the likelihood of expensive repairs. Technology upgrades may also help reduce costs for a small business owner.
- Be prepared for unexpected costs – Even with a well-planned budget, unexpected costs can appear. Be sure to leave enough room in your small business budget for unanticipated expenses, or have back-up funds available in reserve in case of financial surprises.
To avoid budget mistakes which may prove costly in the long run, it may be advisable for a small business owner to work with a tax, accounting, or legal advisor who can help his or her small business navigate financial questions.
2. Achieve focus with a solid business plan
Besides staying organized with a budget, having a specific business plan that outlines key objectives serves as an essential component of running a successful small business. Taking the time to create a business plan provides structure, clarity, and focus for a small business owner navigating the opportunities and challenges of entrepreneurship.
According to the U.S. Small Business Administration (SBA), there are typically two categories of business plans that may be used by a small business owner:
- Traditional business plans seek to be comprehensive reports of how a business will operate and function, including what product or service is offered, how the business’s strategy shapes its sales and marketing initiatives, whether additional funds are needed, and financial projections.
- Lean startup business plans provide a summary or high-level view of a business. They are often presented as a simple chart or similar visual form in order to present the essentials of a company, such as its unique value proposition, customers, structure, and revenue streams.
Here are some tips on how to use a business plan to run your small business more efficiently.
- Set out clear goals – By clearly defining quarterly, annual, short-term, and long-term strategic goals for your small business, you can create useful benchmarks that allow you to track progress, avoid distractions, and compare and analyze initial expectations to actual results.
- Focus on one value proposition – A small business owner may lose his or her way by spreading resources too thin and trying to do too many things at once. Specializing in one product or service may allow your business to achieve recognition in a specific expertise that meets market demand.
- Understand customer needs – A business plan can allow a small business owner to set out how exactly they will appeal to their target audience. By understanding what customers are really looking for, a small business may be able to create better client experiences and relationships.
Overall, a well-constructed business plan can help a small business owner by providing both foundational guidance and a point of reference as the company continues to expand and grow.
3. Surround your small business with the right employees
Staying within your budget and following a focused business plan are among the most fundamental elements of running an effective company for a small business owner. Yet in order to achieve your goals, your small business will often need motivated and skilled employees to take action and implement them.
Having engaged employees who care about their work, and who view their occupation as more than just a job, is often the key to realizing a successful business. According to Gallup, engaged employees are those with significant involvement, enthusiasm, and commitment to their work and workplace.
Here are a few tips to help a small business owner cultivate greater employee engagement.
- Foster a positive company culture – Creating a company culture is about developing a unique, positive, and open environment that helps employees grow and thrive. Whether company culture takes the form of company traditions or shared office tasks, it helps small businesses by supporting greater teamwork and better cohesion among employees. Additionally, a great company culture may be able to reduce turnover and inspire greater employee retention.
- Offer employee benefits – One way a small business owner may be able to attract the right talent is by offering popular employee benefits such as group health insurance, retirement plans, and vacation days. According to a 2018 eHealth report, 66 percent of small business owners offer health insurance in order to recruit and retain the best employees, while 27 percent felt that providing health benefits to their workers helped encourage productivity.
As a growing small business, don’t underestimate the importance of highlighting your health insurance benefits and other highly sought-after employee benefits in order to attract quality workers.
Although all businesses have unique strategies and different needs, understanding fundamental tips such as creating a budget, following a business plan, and working with motivated employees are all excellent ways to help you run a successful small business.
To learn more about small business health insurance plans, visit eHealth.com or speak with one of our licensed health insurance agents.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.