Whether you're planning to start a business or in the process of building one, you need to know these seven steps to establish the foundation of your enterprise and avoid pitfalls.
Creating a successful small business isn't easy at any time, but after businesses worldwide took a hit during 2020, it may seem even more difficult these days. But don't let timing hold you back – 2021 is just around the corner, and while there may be more challenges ahead, there will also be more opportunities.
These are some common pitfalls in starting and running a small business that can keep entrepreneurs from success:
- Running out of money or not having an adequate budget
- Losing customers to the competition
- Not building name recognition
- Not interacting with the target audience
- Not creating brand loyalty
- Unforeseen issues that impact business – like a pandemic
Luckily, for every obstacle, there's a way to build a bridge over it, around it or even through it. While there are plenty of individual, unique problems for each basis – and individual, unique solutions – many of those solutions can be distilled into seven building blocks that will help to cut problems off before they occur:
- Find enough backing.
- Know your audience.
- Build your brand before you launch.
- Use social media marketing.
- Tell your story.
- Focus on customer service.
- Be adaptable.
Let's look at those key areas and how they can pave the way for success for your business this coming year.
1. Find enough backing.
Financing a business venture can be tricky right out of the gate. You must have a clear idea of what the company will do and what the demand is. You must also package that awareness in a way that convinces investors that your small business has real potential to survive and grow.
Depending on the type of business, of course, your initial investment needs will vary. But it's important not to write off the possibility of backing simply because you feel that your company is too small to warrant outside investment.
Even if you plan to run a small company offering products that you can guarantee yourself, there are other aspects of success that require money, such as marketing and branding (more on those later).
According to business investment and economy specialist advisors MaRS, most of the main barriers to starting up and successfully running a small company involve backing money. Basically, without adequate backing, you may not be able to get your company off the ground. Even if you are able to launch it, you may not be able to pay for the overhead, marketing, employee training and other necessities to keep the business from drowning. The time to secure adequate funding is before the business launch, in order to ensure that the company doesn't falter at any point during the all-important first year.
You have several options to find financing, such as turning to friends and family, finding an angel investor, and the increasingly popular choice, crowdfunding. But this only really becomes a building block for business success when it is done at the right time, to the right degree. [If you're ready to look for outside financing, you can browse our reviews of the best alternative business lenders and financing options.]
2. Know your audience.
Whether your business has already launched or you're still putting it together, demographics are a key part of research and success. Figuring out who your target audience is before you launch your business may seem like a no-brainer, but the impact that this has on other factors can't be downplayed.
With a clear idea of your audience, you can:
- Streamline your products and services to make sure they appeal to that target demographic.
- Put your marketing budget where it will do the most good.
- Pinpoint sections of the target audience that provide the most potential for growth.
- Reach out to your consumers in the ways that appeal to them.
- Build on what you know about your audience to create a connection and build brand loyalty.
The importance of the personal touch is at an all-time high. Knowing basic facts about who you're reaching out to makes every effort that much more effective. [Read related article: How to Reach Your Target Customer]
3. Build your brand before you launch.
Marketing and branding experts talk a lot about the importance of branding. But when is branding most effective?
Here's a statistic that might help you discern the answer. According to research, around 86% of consumers state that authenticity is a key factor in their decision to support a brand. How is that authenticity determined? It's a matter of whether the brand's projected image matches what the brand actually does. This requires your branding efforts to be underway before the actual launch of the brand.
It isn't just a case of marketing (though that's important too; we'll talk about that next). It's a case of coordinating your branding – your promise to your customers – across all channels, and making sure that all of your messaging is on point. That means everything from your carefully designed logo for your brand identity to your purchase follow-up. Every aspect of your branding should align with what you have promised your customers, and the authenticity will resonate, helping your company to grow.
One of the main sources of branded content, of course, is a company's website. As you follow a throughline with your cross-platform marketing, make your site the hub of all your content, and build links back to content to direct traffic to the pages that really matter. Remember that your branded visuals, like your logo, should be prominent on your website as well. Try to stick to a visual style and color palette in harmony with your established branding; that's the best way to identify your site as the real "home" of your business.
Obviously, continuing to build the brand after the launch is important as well. To hit the ground running, though, you need to do everything you can to set yourself up for the race.
4. Use social media marketing.
Here's one you've probably heard before: Put your brand on social media.
Just because you've heard the advice doesn't mean that it's readily obvious why it's so important. Why does marketing firm after marketing firm talk about the use of social media? Well, nearly 50% of the world's population uses social media every day. That's a huge resource for marketing.
Social media users can often be broken down by demographic. Certain ages are more likely to be active on Facebook, others on Instagram, and so on. That's a boon to targeted marketing.
More than half of social media users turn to their platform of choice to research brands they're not familiar with. Basically, not making your company accessible through social media lowers your chance of success as a small business.
As this study and others have found, social media marketing has a big impact not just on brand awareness, but brand loyalty. Ultimately, we're pack animals, always in search of a team or a group to belong to. Putting your brand on social media and letting those pathways be significant marketing outlets gives your company many more opportunities to fill that need for your consumers.
While we're talking about marketing, here's an aspect that may not have occurred to you as important to creating small business success: story time.
Your company has a story. You may not think of it as being particularly dramatic, but the drama isn't the important part. Again, this connects back to authenticity and how important that is for consumers. It's about the connection you create with your audience, and telling the story of how your business started is a fantastic way to do that.
This factor could be even more important for a small business. Even if you secured a good amount of financial backing, your resources are likely going to be more limited than larger businesses' are. Making a personal connection with every one of your customers can make up for that lack, because it increases the likelihood that your customers will spread the news about your business by word of mouth.
If your customers like your brand – not just your products, but your brand – then they will invest themselves in it, build their own loyalty, and continue to contribute to your growth and success.
Tell your story in whole and in part. Include a well-written, touching, heartfelt and maybe even entertaining complete version of it on your website. Use anecdotes, vignettes and quotes in your social media marketing. Draw people in by letting them see the people behind the brand; person to person is what makes a connection that lasts.
5. Build a great team.
Your business is built on a great idea, but its success depends on how you interact with your audience. Ultimately, a successful company is built on the strength of its employees.
We all have those experiences of going into a big-box store, asking an employee for help or guidance, and not getting much in return. Maybe the employee hasn't been trained very well. Maybe they've just fallen through the cracks. Maybe they figure it's a minimum wage job and it doesn't really matter what they do.
Regardless of the reason, companies take a huge hit from weak employee performance. Putting time and effort into building an excellent team, passionate about what they're doing, is a vital building block of small business success.
This does require thinking outside the box. Not only will you have to conduct extensive, smartly executed interviews and be selective in hiring, you first have to attract those people to your business. This can be difficult if you're going through the hiring process before the business is open, as often happens.
That's where employer branding comes in. Build your brand as an employer by amplifying the goals and values your company is built on, packaging them in a way that appeals to your ideal candidates. You're looking for like-minded people, so put yourself in the shoes of your employees. What would you look for in a job?
Effective employer branding requires these actions:
- Target your specific audience among job seekers.
- Develop an employer branding strategy, just as you would a marketing strategy.
- Promote your company's values.
- Recognize value in your employees and reward it. Happy employees are the best resource both for hiring others and for spreading word of mouth about your business to customers.
- Reach out and be visible in your community, promoting interactions and conversations.
Many of the same things that attract customers also attract employees. Put your best foot forward from the very beginning, and you can build an employee team that will actively contribute to the success of your company.
6. Focus on customer service.
Here's another key point that might seem obvious to you: Make sure your customer service is the best that it can be.
This is another point that's all the more important for a fledgling business. People expect good customer service from a small business; they have higher expectations because they know the stakes are higher for the business. And it's true – you simply don't have the resources that a larger or more established company has. You have to fight to hold on to your customers.
That being said, it isn't always a case of just providing a listening ear. Sometimes, the customer service that has the most impact is the service that provides an unexpected solution. Train your customer service representatives to think outside the box. Make customer happiness a company policy, not just customer satisfaction.
Even if you're not putting out fires from a disgruntled customer, reach out to offer bonuses, incentives and rewards to your loyal customers. Don't miss any opportunities to show them how valued they are.
Your customers are the building blocks of your successful small business. Don't ever forget that.
7. Be adaptable.
A final key is adaptability. After the pandemic hit this last year – and as it rages on in certain areas – many small businesses (and some larger ones) were sunk simply because they were not set up to adapt. Adaptability isn't a case of being ready just for expected changes, like those projected by business forecasts and trendsetters. Adaptability means you're ready to roll with whatever happens, whether you saw it coming or not.
A great example is the rush to offer online services we saw in the spring of 2020. As businesses closed their doors and stay-at-home mandates were handed down, the switch to online sales was the only way for many businesses to survive. As they made the change, they saw that they could sustain it. Offering more online services became more than a survival technique; it became a way to enhance their customer service, enhancing their reputations and brands in turn.
That's just one example. As uncertain as the global business scene is now, the only thing we can be sure of is that more unexpected events will occur. Truly adaptable companies will be able to overcome, survive and even thrive, come what may.
With these seven critical building blocks in place, your company has all it needs to see true success in 2021 and beyond.