Five keys to business success
Learn tips to help you avoid expensive mistakes and achieve business success.
Being an entrepreneur is the quintessential American dream. But when you put out your shingle that says, "Open for Business," it's important to know that you're taking on at least 10 jobs at once.
Running your own business also means there are many opportunities to make expensive mistakes. Here's five tips to help you avoid those mistakes and achieve business success.
1. Establish clear life goals — You have to figure out what you want out of life and build a business that supports your personal goals. Get clarity on why you're starting the business and how much money you need to make to maintain your lifestyle. Ask yourself if you can take leading the daily life of an entrepreneur. Can you handle working seven days a week for 21 months straight? For example, if you plan to start a catering business, what will your family life be like if you're catering weddings every weekend? Plan ahead to avoid starting a business that isn't a good fit for you or your family.
2. Strengthen your social networks — Many small businesses grow their business through referrals. Your network is your net worth. Before starting a business you must spend time cultivating your contacts. Spend at least 12 months building your personal network before opening your doors. To do this, start attending networking functions and consider joining a trade association in your industry. Also, let people in your local community know that you're starting a business by making business cards and giving them to all your regular vendors, such as your grocer, dry cleaner or office supplier. Another great place to network is at your child's school activities. Engaging with parents at these types of local events will help you get the word out about your new business.
3. Build your savings — In simple terms, there are three pots of money you need to have before you start a business. First, you should set aside 12 to 24 months of household expenses. It takes 18 to 36 months for a small business to break even, let alone provide a salary, so you must have money saved to live on during that time. Next, be sure you've saved the first year of operating capital, because this will be coming out of your pocket, as well. The third pot of money is the emergency savings account for your household. If your car breaks down or your child needs braces, you'll need resources to handle these unexpected personal expenses.
4. Define your target market — Don't just chase anyone you think has money. Take the time to identify a target customer for your small business. It's so much easier to develop a marketing plan when you know who you're trying to sell to. And people want to hire a small business that specializes in solving their specific problems. So, focus your limited time and resources on finding ways to meet their unique needs.
5. Maintain fiscal discipline — If you can't manage your household budget, you won't be able to manage a business budget. Learn how to make financial decisions based on up-to-date financial information. Don't spend any money that's not in a budget and don't rob the cash register when you're broke. If you base your purchases on a budget, and focus on monthly sales goals, you can make the necessary adjustments to your business activities if things aren't going as planned. Lastly, don't just talk to your accountant at tax time — treat this person as a valuable business advisor who can provide financial insights throughout the year.
If you make a habit of integrating these practices into your small business, you're far more likely to have a profitable enterprise.
Melinda F. Emerson, known to many as SmallBizLady, is one of America's leading small business experts. She is the bestselling author of "Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business That Works."