Entrepreneurs are superheroes as they all take the leap of faith and embark on a journey into the unknown. It takes a certain type of person to take on the responsibility of founding a company or working for a startup. The nature of a startup is one that contains sacrifices, emotional and physical investment, and pressure to perform.
On average, nine out of 10 startups go out of business, and the remaining that are able to survive and succeed are the ones that capture the qualities outlined below.
11 Reasons Small Businesses Succeed
Part of why small businesses succeed may be due to sheer luck, but there are also ways that entrepreneurs can set themselves up for success. Here are 11 reasons why businesses succeed.
1. Passionate leadership and a strong “why”
A key component in why a small business will succeed is its leadership and their vision. A well-defined vision is a skill or gift that every company leader needs in order to cross the finish line. It will be the major force behind an entrepreneur’s success and will serve as a compass in tough times. A startup needs to envision how to monetize from the very beginning. The first dollar counts, especially for potential investors.
2. Good management team
Even with passionate leadership and a vision for what the company needs to accomplish, good management will make or break a small business. Managers are the people in place who take the established strategy and delegate tasks to the right team members to get it done. A good manager cares more about the health of their team than their own ego, and it shows. As Marcus Buckingham’s adage from First, Break All the Rules goes: “People leave managers, not jobs.”
3. Company mission and vision statement
Small business success can easily be traced to a clear company mission and vision statement. It may sound simple, but a company that knows why it exists and is able to say so in a concise, clear way will succeed far more often than others. A company mission and the vision statement to go with it helps guide employees in their decision making and inspires them in their day-to-day work.
4. Unique value
A successful business knows what it offers its customer base. New businesses that turn into successful companies are able to differentiate themselves by adding a unique value to their customers’ lives. You don’t need to have a completely new business idea; even if you’re able to provide an existing product or service but in a better way, you can provide unique value.
5. Good market fit
Beyond providing customers with a unique value, successful entrepreneurs are able to find a good fit for their business in the marketplace. There are as many types of businesses as there are small business owners in the world, but knowing that there’s a need for what you do — especially a need that can grow — can help set you up for success.
6. Sound strategy
A successful small business is built on a sound strategy. While you can’t plan for every possible bump in the road, a roadmap (teamed with that mission and vision statement) will guide your decision making to keep you on track. A solid business plan can also help you lock in small business loans down the road.
7. Marketing budget
Gone are the days when a small business owner could start a healthy business without budgeting for marketing. Nowadays, a marketing plan contributes to your business’s bottom line by bringing in new customers and helping keep current customers informed on what you’re doing. To succeed in business, social media marketing, advertising, word-of-mouth marketing, content creation, and more need to be part of your business’s plan from day one.
8. Strong financial planning and good financial health
A successful startup is efficient in managing its finances and able to operate very lean. Every angle should have its own budget assigned and unnecessary expenses should be avoided. It’s important to know what the company needs in order to accomplish milestones and budget accordingly. When resources are limited, and time is of the essence, companies need to master the skill of doing more with less.
9. Access to capital
Being able to get financing when you need it is by far one of the most important and difficult aspects of small business ownership. Unfortunately, access to capital is also often part of your existing network, business history, and ties to financial institutions, which means access to it can be harder for historically excluded groups.
According to research by the Ewing Marion Kauffman Foundation, 83% of entrepreneurs don’t have access to capital like bank loans. But there are companies like Nav that are trying to change that. By providing Nav with some data points on your company, we can help you find the best business financing options for your business’s needs, including tips on how to open up even more opportunities by improving things like your business credit scores.
10. Empowered employees
A successful business is chock full of employees who not only do their jobs, but do them with passion and engagement. Seeing your employees as business partners is a great way to ensure that your employees are empowered to do their work. Just like in Jim Collins’s Good To Great, if the right people are seated in the right seats of the bus, the startup will eventually find its direction towards success.
According to 6Q, disengaged employees can do more damage to your business than you might expect, through bad customer service, a tarnished reputation, and even by making other employees miserable. You can encourage your employees to do their jobs well by providing mentors, encouraging new ideas, and addressing micromanagement and other burnout factors before they become real problems.
Business leaders recognize that surrounding themselves with people who will just agree with their line of thinking is no way to succeed. Getting a diverse array of thinking in your small business can help you identify problems and their solutions in ways you may never have considered. This is why diversity isn’t just a “woke” buzzword — it’s a way of life for companies that want to adapt, increase productivity, and be successful in the long term.
5 Reasons Small Businesses Fail
Business failure can come down to a number of factors, some of which are out of our control. But here are five reasons small businesses fail that may be completely up to their owners.
1. Financial insecurity
Cash flow is the bloodline of any business. This means that businesses can be ruined with inadequate capital. Successful startups are the ones that have sufficient capital to run their business operations. The primary duty of a startup CEO is to be able to raise capital, whether through angel investors, crowdfunding, or business financing.
2. Bad financial management
Just having capital isn’t enough to make a business successful. Managing that funding is just as important as getting it in the first place. One good first step is to get a business bank account to separate your personal finances from your business finances and help you get a clearer picture of what money you actually have. Other financial no-nos that may spell doom for your business include not having a budget, spending too much, and even spending too little.
3. Ignoring marketing
You may know that you have a great product or service that meets a market need and offers unique value, but how are your prospective customers supposed to do that? Businesses of all sizes and types ignore marketing at their own peril.
4. Lack of competitive awareness
A company that operates in its own bubble and ignores what competitors are doing is bound to fail. In order to succeed in business, you need to know what your competition looks like. You don’t need to do much in terms of market research, either — regularly checking competitors’ prices, advertising, and social media can give you insight into their strategy and plans. In many industries, collaborating with competitors can even increase your market share as well.
5. Failure to pivot in unpredictable times
Yes, having a strong business plan and a solid strategy with a well-thought-out roadmap is extremely important to business success. But when major changes happen (like, say, a huge economic recession or a global pandemic), a good business leader will be able to pivot. Many brick-and-mortar companies that didn’t turn to e-commerce through the pandemic in 2020 missed out on new revenue streams and went under as a result. Truly successful startups are always looking for opportunities to do something better by thinking outside of the box and constantly questioning the status quo, and this is even more true during unpredictable times.
Entrepreneurship is a great skill, and setting businesses up for success is one of Nav’s top goals. If you’re looking for business financing or business credit cards, we can take out the guesswork by providing you with options based on your business’s needs and unique situation. Sign up for a free account to see your options today.
Photo credit (Getty Images/Andrew Rich)