The U.S. Small Business Administration’s 2018 small business profile reported roughly 30.2 million small businesses and 58.9 small business employees across the country. In fact, the profile also noted that about 99% of businesses in the U.S. that year, were indeed small businesses.
So what is a small business and what qualifications are required to fit under this category? While the technicalities can differ by industry and by agency, the U.S. Census Bureau classifies small businesses as those having 500 or fewer employees.
And most of these business owners don't make it overnight, with very little actually making a successful business long term. Only about half of small businesses make it past the five-year mark, according to the Small Business Administration (SBA). And after that, only about one in three survive to the tenth year.
Running a small business can require specific knowledge; everything from how to become a successful business owner to how many hours a small business owner works. Here are some tips for small business owners and character traits that can help individuals succeed in the sector.
Part of the appeal of owning a business can be the potential freedom that can come with being one’s own boss. In fact, studies show that most Americans want to start their own business than work for someone else. But this freedom and lack of concrete guidelines can be a risk for individuals who are not used to setting their own boundaries.
According to common definitions of the term, self-motivated individuals are able to accomplish tasks due to their own enthusiasm and interest, rather than relying on pressure from others. Business owners who are able to maintain discipline through self-determination may be able to accomplish more success in the long run, compared to those who may be unable to push themselves.
Many businesses fail due to a lack of appropriate financing plans. In fact, studies show that one of the top 10 reasons individuals report a failed business is due to a lack of cash (29%) and pricing or cost issues (18%).
Being transparent about one’s business finances and having set monetary limits can be the difference between success and failure. Individuals who are at the start of their business endeavours, or who may be struggling with current financial imbalances in their companies, can consider applying for grants for small business owners and small business startup loans.
The SBA works with various organizations that can help provide funding to eligible small businesses. They also offer grants for research and development purposes, for those whose businesses might benefit from such resources.
Individuals can also consider applying for microloans from non-profits or turning to local organizations that may offer additional funding to minority community members who want to start a business. These short term business loans can be beneficial to those who are disproportionately disadvantaged and may not have access to many financial options.
Many business owners cite accountability as an integral part of operating a successful enterprise. Accountability can not only mean a business owner is able to own up to mistakes and hold themselves up to a higher standard, but also ensuring that one’s employees are also able to take responsibility in this way.
Experts have reported that 93% of employees do not understand what their company stands for and are therefore unable to align themselves with the organization’s goal. Further, 85% of company leaders do not adequately define goals for their employees, while 84% avoid discussing accountability with their team.
Being accountable can be beneficial to a company in the following ways:
● It can enhance a company’s culture
● Successful accountability can improve employees’ performance
● When necessary, it can generate stronger productivity and compliance
● Employers can devote more time to grow their business if everyone is on the same page
Making everyone in a company take responsibility for their respective actions may often require those in charge to set guidelines and clear expectations to follow. Making such adjustments where necessary can have positive impacts on a business in the long-run.
As noted prior, operating a business can often mean inevitable preliminary failure. This means that an owner needs to be prepared for such highs and lows upon embarking on a small business venture.
In fact, many entrepreneurs and business owners have had to fail numerous times before finally achieving success: individuals such as Walt Disney and Thomas Edison to more contemporary business people like Steve Jobs and Oprah Winfrey.
Resilience is the ability to withstand hardship and recover from difficulties and trials. Being able to bounce back from a challenge in this way can not only speak to an individual’s ability to handle difficult circumstances but can also point to the potential of long term success.
Starting a business can be daunting and lack of experience can cost individuals money, resources and time while trying to grow an enterprise. Individuals can consider the past mistakes of entrepreneurs to ensure that those same errors do not compromise their own success. Here are some common mistakes:
● Owners try to do it all: With limited resources, many entrepreneurs try to wear a lot of hats and take on the roles of many positions. Experts advise those who are just starting out to identify a few talents they are able to manage themselves and begin with those. After more resources are garnered, it is then important to build the company on the strengths of others who can do specific jobs, as a part of a larger team.
● Not having a clear marketing strategy: A marketing strategy is a company’s set of goals compiled into a comprehensible plan. Those who fail to outline clear objectives from the beginning of their projects can appear to be operating their businesses haphazardly and may run the risk of detracting potential investors or customers. Having a clear and concise marketing strategy can help individuals better effectively present their products to the target audience, can help business owners better understand their customers, and can also help to better brand a business.
● Trying to get rich overnight: Starting a business can take anywhere between six months to two years, depending on the sector; and after that, it can take two to three years before the business is fully profitable. In fact, some larger, well-known businesses have taken as long as 10 years to succeed. Experts advise new owners to adhere to smart business strategies, rather than focusing on the immediate cash flow. This can determine greater success in the long-run and greater financial yield as time goes on.
● Ignoring the competition: Most new business will not typically have a monopoly on the market, and will indeed operate within a system of competition. Understanding competitors can help make an individual’s products and services stronger and better catered to customers. Competitors can also pose threats to the wellbeing of other similar agencies or companies. This makes it important to consider all various contenders within one’s intended industry of operation.