Small businesses are essential for economic growth, accounting for 99.9 percent of American businesses and employing almost half of all U.S. workers. But the sheer number and scope of SMBs pose challenges for long-term success. While 80 percent of companies survive their first year, only half make it to five years and just over 30 percent hit the 10-year mark.
What’s the secret? What sets apart successful businesses? Here’s a five-step survival guide to help get your SMB off the ground — and keep it in the air.
Step 1: Find Your Market
If your business doesn’t have a clearly defined market segment, it won’t survive long. While the rapid expansion of Internet-based opportunities — such as e-commerce websites, consulting firms and niche goods manufacturing — demonstrates the viability of virtually any enterprise, new SMBs often struggle to find their ideal market space.
Here, two factors play a critical role:
- Population — How many other companies are operating in the same segment? Is the number increasing or decreasing? Rising populations mean opportunity, but demand market distinction to stand out from the crowd. Falling business numbers present advantages if you can find and correct current market problems.
- Potential — Are you going to improve on current marketing offerings by boosting product quality or ease of use? Or will your company innovate by changing the market itself? Both routes are viable; improvement requires clear brand differentiation while innovation demands a unique value proposition.
Step 2: Make a Plan
Great ideas launch SMBs, but plans keep them in business (and help secure funding). While there’s no hard-and-fast rules for writing your business plan, it’s a good idea to include:
- High-level summaries — What’s your mission statement? Your core product? What sets you apart from the competition?
- Market analysis — What opportunities exist for your product or service on the market? How will your company leverage them?
- Product or service descriptions — An explanation of what you offer, who it benefits and its growth potential over time.
- Marketing outlook — Who is your target audience? What methods will your SMB use to reach new customers and keep existing customers satisfied?
Step 3: Get Funded
Even if you’ve found the ideal market and created a standout product, your business won’t succeed without enough capital.
When it comes to funding your SMB venture, you’ve got three basic options:
- Self-funding — Online-only service companies often can get off the ground for just a few thousand dollars in website hosting and advertising. In this case, self-funding may be a viable option.
- Bank loans — Traditional lenders are often willing to finance small businesses if you have a well-written plan and clear market potential. The caveat? Money must be paid back even if the business isn’t profitable.
- Investors — Investors are often willing to fund SMBs for a portion of business ownership. While this eliminates loan payments, it grants investors a measure of control over all operations.
Step 4: Hire Great Help
SMB owners can’t do everything themselves. Notorious for not taking vacation and working excessive hours to get their business off the ground, this model isn’t sustainable as a business grows. Develop clear hiring guidelines and vetting policies, and seek employees that are similarly passionate about SMB success.
Step 5: Leverage the Right Technology
Technology is now critical for SMB success. Why? Because consumers expect even small businesses to act — and react — like top-tier enterprises when it comes to shipping, customer service and ongoing support. The result? It’s worth spending on technology where it delivers revenue returns. Your best ROI bets:
- Reliable, robust internet connections — Speed matters. Not just bandwidth to handle traffic at the website level, but last-mile service to ensure your team can get work done on time.
- Remote collaboration solutions — SMBs often lack centralized offices but require on-demand access to documents, presentations and product specs. Cloud-based, mobile-friendly collaboration tools allow staff to work wherever, whenever.
- Business phone systems — Traditional landline phone systems are reliable but inflexible. Business phone systems that leverage unified communications as a service (UCaaS) solutions can bridge the gap between current needs and evolving communication requirements.
While best-fit technology differs depending on your business needs, there’s a common thread: SMBs are often best-served using third-party IT experts to plan, install and deploy new solutions.
The Secret to Long-Term Success
No SMB is immune to market forces, but companies can boost their staying power in five simple steps: Find the ideal market, make a plan, get funded, hire great people and leverage best-fit technology.
Author bio: Jessica Paxton is a marketing representative for TelWare, an industry leader in business telecom technology. She has 10 years of marketing and customer service experience across multiple industries. Paxton specializes in helping businesses communicate better using cloud technology and as-a-service solutions.