For over 25 years, I’ve helped small business owners start, run, and grow their companies. I’ve worked with all sizes of businesses: from one-person micro-businesses to companies with hundreds of millions in revenue. I’ve consulted with companies in all kinds of industries. Some served consumers; some served other businesses. There were start-ups and long-established entities. I’m a small business owner myself as well.
Dealing with all these different types of small businesses, I’ve learned certain realities always apply. I call these “Rhonda’s Rules.” These rules are keys to small business success. Ignore these rules at your peril: I’ve seen many new entrepreneurs fail because they ignored one or more of the following business basics.
Here are 10 of the most important “Rhonda’s Rules” for small business success:
1. Go small to grow big. One way to fail in small business? Try to sell to everyone. A key to small business success is carving out a niche—a particular specialty or narrow market segment—rather than competing for every customer. Don’t just be a marketing consultant: be a marketing consultant for a certain industry. Don’t be a general store—focus on a specific type of product or customer. Small businesses just don’t have the resources—of time or money—to be a generalist.
2. Take care of your bread-and-butter business. Entrepreneurs have lots of good ideas, but those can distract you from your core business. Before you consider new directions, clearly define what part of your business brings in the money that pays your bills. Concentrate on those first.
3. “Make sure the dog will eat the dog food.” That’s a quote from pioneering venture capitalist and my mentor Eugene Kleiner. What Kleiner meant was that no matter how good your ideas appear to be, you have to make certain you’ve got a product or service that customers really want.
4. You can’t reach a goal you haven’t set. Entrepreneurs like to get right to work, but taking the time to develop a business plan is crucial for success and survival. I’m not talking about writing out a 50-page document. It’s the planning, not the plan that matters. Developing a business plan forces you to think through the fundamentals of your company: your market, competition, industry, and your unique strategic position.
5. Clearly define your target market. Analyze the characteristics of your customers so you understand exactly who buys from you. Having a clear target market enables you to be much more effective and efficient in both your product development and marketing efforts.
6. Build one business at a time. Entrepreneurs see opportunities to grow in many directions. I’ve seen business plans that combine many businesses in one–a combination Laundromat, bar, babysitting service, and bookstore for instance. Most of us aren’t that scattered, but it’s still important to concentrate on only one new direction—product or service line, target market, distribution channel—at a time.
7. It’s easier to get a piece of an existing market than to create a new one. Although small businesses are the engine of creativity for our economy, remember that creating a market for a brand-new type of product or service is difficult, time-consuming, and expensive. The iPod wasn’t the first digital music player; Google wasn’t the first search engine; Facebook wasn’t the first social media platform. There are lots of advantages to being a follower.
8. Things take longer and cost more than planned. Entrepreneurs are naturally optimistic–especially when starting a business. But whether you’re launching a new business, creating a new product, doing a project for a client, creating a new website, it’s best to double the estimate of the time and money you originally think you’ll need.
9. People don’t read. It’s a fast and cluttered world out there. So when designing anything you want others to read—your website, brochures, newsletters, ads—keep things short and snappy and use lots of photos.
10. People do business with other people. All of us prefer to do business with people we like and trust. Your customers and prospects do too. Get to know your customers; find out about their businesses or families. Let them get to know you. Small businesses can compete with the big guys by building strong customer relationships.
Copyright, Rhonda Abrams, 2016
This article originally ran in USA Today on January 15, 2016