By: Dan Miller, CFP®
"Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference."
Starting your own business can be like having a baby — a very important life decision that might not always be a rational one. 9 months into your 9-5 maybe “dull” job and you might decide to take the proverbial exit from the freeway, onto the smaller more challenging road less travelled.
But it’s not always smooth sailing. Like raising a baby, your business is bound to give you many sleepless nights, demanding all your attention and testing your resolve at every stage. Persevere, and you shall be rewarded.
While watching your business take its first steps towards success will fill your heart with joy, there are a few steps you must take in order to witness this. Here are a few healthy business practices every small business owner must practice —
1. Assess your product
As a businessman, one must always strive to deliver products/services of the highest quality. You need to ask yourself several questions before starting your business — will my product fulfil consumers’ needs? Is there a market for the product/service I’m delivering? Is the pricing right? A thorough SWOT analysis of your product will shed light upon different aspects of your product, and will help you identify key strengths and weaknesses, and how they can be overcome.
2. Gauge the market and your competitors
He business environment can be like a warzone, you often don’t have complete control, and your fate depends on the exterior environment, your enemies, and your comrades. There can be landmines everywhere, so one must tread with utmost caution, or result going kaput. It is imperative for a businessman to have adequate knowledge about the market his product/service exists in and the competitors in that market. This knowledge is indispensable for a businessman. It serves as a crucial decision-making factor in charting the growth route of a business. The product/service should be strong enough to be able to withstand blitzkrieg marketing campaigns by competitors.
3. Evaluate yourself
A successful small business owner always monitors the value of his business. The value of a business plays a fundamental role in making future business decisions and financial planning, especially when matters such as the sale of your business or an insurance evaluation are at hand.
With BizEquity’s business valuation software, valuating your business has never been easier. A detailed 29 page report elucidates the different aspects of your business and determines its total worth through a seven step process.
Make sure to keep a record of all financial transactions undertaken by and for the business. In an environment where fraud and lawsuits are rampant, being transparent will add credibility to your business, and create a favorable perception in the minds of the consumers. Maintain the transparency of your business like a ruby smitten by the Sun, and it’ll go a long way in adding goodwill to your business, ultimately leading to a gradual increase in equity.
5. Set realistic expectations
Don’t expect to go win 8 Olympic golds like Phelps in 2008 in the growing stages of your business; it’s important to set expectations that are reasonable and achievable. Don’t trudge into waters deeper than you can survive in. Typically, you should give about 12 months before starting to see a customer bring more value to your business than how much it cost you on-board that one customer. It’s essential to take in as much as you can handle, and no more. If not the case, you might end up compromising on the quality of your product/service, and this can have a detrimental effect on the credibility of your business.
While starting a business is a path several people have chosen to tread in recent times, sustaining it and maintaining its viability are the biggest hurdles. The mentioned business practices will help you take obstacles head on, and ensure a first place finish in this ultra-marathon.