Owning and managing a small business can be quite a herculean task –but a fulfilling one as well. However statistics published by the US Small Business Administrations how that around a third of small businesses fail within the first two years, almost half will fail within five years and around two-thirds will no longer exist within ten years.
In spite of that, about half of all private sector employees are employed by small businesses, and the rate of growth of small business continues to rise, year on year. Owning and operating a small business can be very rewarding. More than 85% of small business owners take home a yearly salary of around $100,000 on top of any profit sharing, and 92% say they do not regret starting a business, according to a Fundera study.
A closer inspection of the numbers shows that the longer the small business exists, the better are the chances that it will survive the following year. Here are three key things that small business owners should be doing to ensure that they not only survive, but thrive:
1. Find a great financing partner
Cash flow is king, and when it comes to cash flow, it’s good to start thinking outside of the box. A study in 2007 by US Bank, and reported by then executive Jessie Hagen, said that more than 80% of small businesses fail because of financial problems, specifically problems with cash flow.
There are times when injections of additional working capital are required because business is lean or there are other contingencies to cover. Failure to get the necessary funds can lead not only to an operational bottleneck and lost opportunities, but also to lesser revenue and increased expenses.
Unfortunately, big banks only approve around 24% of loans for small businesses. And even if approved, the time to get the necessary injection of cash may be too long, and the terms and conditions for the loan may be very onerous.
That’s why it’s immensely important to find a partner like Beyond Merchant Capital through which loan repayments can be tied to revenue and the capacity to pay. Unlike other lenders, these ‘pay-as-you-trade’ financiers do not demand a fixed repayment each month.
Instead, they use a small percentage of credit card receipts as repayments against the loan, which means that in lean months, the risk of going in the red is lessened. Conversely when sales pick up, the loan repayments increase, and the loan is paid off faster.
2. Automation is your new best friend
While mankind has not reached the stage where robots are doing all of the work for it, there are many tasks these days that can be done automatically. Around 44% of small businesses still email clients individually, which can be a big time drain. Another 41% still use spreadsheets to document everything. This is also very labor-intensive.
Rather than have employees do these menial tasks, businesses should focus on more important tasks, like creating more value-streams or tweaking business processes. In fact, it is better to leave these kinds of work to programs. Human labor is prone to errors, especially if the work is time-consuming and repetitive.
Automation will ensure that no mistakes will be made. Automation also allows businesses to be scaledup, since the processes can be applied to more areas to achieve greater efficiency. There are many providers of automating processes that can help small businesses do this.
Investing in automated processes not only produces great cost to benefit ratios, but also provides business owners with more time to do higher level tasks.
3. Network, network and network some more
Business is a social interaction with buyers and sellers. Not only that, the logistics and operational sides of small businesses involves dealing with employees, suppliers, regulators, partners and customers. That is one reason why operating a small business can be quite a superhuman demand.
Not only that, but small business owners need to wear many different hats too. Juggling all of this can take a toll, mentally, physically and financially, and having a support network will help.A great way to start making those connections is to utilize what they already have. No need to go to a coat and tie event. Networking can start at the grassroots level.
These days one of the easiest ways to start meeting new people is through websites. Meet Up is a website that connects members to other people with the same interests. It may sound like dating site, but it’s not. It is much more than that. Meet ups can be organized to talk about about mobile apps, a daily jogging schedule, or a myriad of business related topics.
By reaching out to others with the same interests within the same profession or industry, small business owners can increase their potential network. This network can then become a great lead generator or just a wonderful support group.
There are many ways small businesses can be improved, but forall businesses, cash flowis king, so finding a great financing partner needs to be at the top of the list of the business priorities. Automation can provide time to focus on more important tasks and can decrease overhead expenses. Lastly, networking can provide not only important leads, but also useful support. Keeping those three strategies in mind helps to ensure that small businesses will thrive.