The United States is home to over 32 million small businesses. With such a high number, you’d think the country was a paradise for small-scale entrepreneurs. On the contrary, small businesses have a high failure rate, with only about 30 percent of small enterprises remaining in existence longer than ten years.
Still, there couldn’t be a better place to start and run a small business. With the right idea and proper execution, you can transform a small business into a multi-billion-dollar company.
To increase your chance of getting there, there are small business essentials you must have right from the first day.
Eager to know what these essentials are? Keep reading!
1. Business Plan
You’ve probably heard of successful entrepreneurs who started their companies without a business plan. Maybe you also think you can do it.
You might, but the truth is the odds of failing increase significantly. 25 percent of businesses that start without a written plan fail within two years. And, if you were to investigate further, you’d likely learn that those entrepreneurs who started without a written plan had the plan in their minds!
A business plan is a roadmap that guides the operations of the business. It fleshes out the structure, strategies, and other key details that the business will follow, regardless of who is in charge.
When you’re starting a small enterprise, the temptation to skip drawing up a business plan is strong. After all, there isn’t much to plan in the first place.
Well, regardless of how small a business is, failing to plan, is planning to fail. Soon enough the business will start expanding and without a plan on how to take it forward, you could make costly mistakes.
You can draw up a plan on your own, but it’s best to hire a business consultant to help you, especially if you’re starting a capital-intensive business.
2. Adequate Capital
Speaking of capital, most small businesses that fail do so because of cash flow challenges. It’s not uncommon for businesses of any size to run into a cash crunch, but what makes the difference is how they navigate their way out of it.
As a new, small business, you’ll likely run out of money if it takes longer than expected to start generating sustainable revenues. Without money at hand, you cannot fund your everyday operations, and the business will grind to a halt.
Yes, you can rush to your bank and other lenders and secure emergency working capital loans, but you’ll pay a heavy price. To prevent this situation, it’s imperative that you start your business with adequate capital in the bank.
When you draw a business plan, there’s a section for financial projections. This is where you’ll know how much you need to get the business off the ground, how much the business will be making at various times, and how long it will take the business to break even.
Use this information to secure working capital enough to run the business for far longer than it was forecast to be sustainably profitable.
3. Business Bank Account
Most small business owners (96 percent) have business bank accounts. Just in case you’re among the few that use a personal bank account for business, or you have a separate business account but sometimes mix up your finances, here’s a reminder that you’re making a mistake that could cost your enterprise big money.
First, mixing business and personal finances makes it difficult to track expenses and income. Even if you’re a sole proprietor, you still need to account for the business’s finances.
Second, when tax season rolls around, you could fail to make the most of the tax deductions available to small business owners. Without a proper record of business expenses and revenues, it’ll take a lot of time to pour through a year’s worth of bank statements and receipts.
Find a bank that caters to small businesses in your region and open one or two accounts; a checking account and a savings account. Besides the regular commercial banking services, you’ll gain access to merchant services and more.
4. Digital Marketing Strategy
One of the biggest challenges most small businesses face is excessive market competition. In your region, there are probably hundreds of businesses offering the same product/service as you. There could even be a large, dominant player that controls most of the market, leaving whatever little that’s left to small businesses.
There are several steps you should take to tackle marketplace competition. Having an effective digital marketing strategy should be top on the list.
Almost everyone is shopping online or using the internet to find products and services. Whether you’re a B2B or B2C company, you need a solid digital presence.
A website optimized for search engines is a must-have. Your business must also have an active presence on social media. Other digital marketing strategies such as email marketing and search engine advertising should be in your plan.
5. Physical Address
Gone are the days when every business has a physical location. With computer technology and the internet, now anyone can run a business from anywhere.
However, while it’s true that some online businesses don’t need a physical location, all businesses should have a physical mailing address. It gives your business a professional image and makes handling business mail more efficient and convenient.
Plus, you don’t have to open an office to have a physical mailing address. You can get a virtual mailbox with physical address at a fraction of the cost.
You Need These Small Business Essentials
Running a business isn’t for the faint of heart. There are many hurdles to overcome and achieving small business growth can be an elusive goal. No one can predict the future, but if you have these small business essentials in place, you’re in a good position to create a successful future.
How’s your experience as a small business owner? Leave a comment below and get the conversation going!