There is no question that running a small business is both a challenging and rewarding experience, one that involves commitment and hard work to succeed. But according to an Industry Canada study, 30 percent of small businesses won’t make it to two years, and only 50 percent will survive to see their fifth anniversary.1
How can you beat the statistics and run a successful business?
Develop a strategic plan
Many businesses begin with the spark of an idea and a passion to make it happen. That’s great, but to build that idea into a viable business you need a plan. Start with your why — the fundamental reason you are in business, how you benefit your customers, and what you want to accomplish.
“Why we do it is really what drives our overall strategy,” says Becca Perren, Co-Founder and Co-CEO of Pehr, a line of home décor and children’s products. “Why we are here today, why we’re going to be here in 50 years. The why leads the strategic decisions.”
Some small business owners may approach the business day-to-day without having a plan in place. But according to Cam Heaps, Co-Founder of Steam Whistle Brewing, a good strategic plan can make daily decisions easy. “The stronger the plan — a good plan, really — just makes day-to-day decision-making simple, easy and efficient,” he says. “So you can see everyone’s going the same direction.”
“You can spend — even waste — a lot of time on a day-to-day basis if you’re not all going towards the same direction,” says Cam. When faced with a difficult situation, ask yourself, “Strategically, will this advance my business plan,” and if the answer is no, don’t do it.
Manage your time
The life of a small business owner is hectic – you’re likely wearing numerous hats and have many situations pulling you in different directions. You may spend your day putting out fires or being tempted by a new opportunity, and the next thing you know the day is over and you didn’t cross off a single item from your to do list.
The key to managing your time is to focus on the areas that will move your business forward. To do this, refer to your strategic plan with weekly, monthly, quarterly, and annual goals. When a situation arises, ask yourself if it will contribute to your bigger plan. If not, leave it until you have more time to think strategically or be prepared to let it go.
If your business is large enough that you have a staff, consider delegating the project to an employee to investigate — they can spend time doing the legwork and present the proposal to you. To be able to delegate these types of projects, put your people first to ensure they have the tools they need.
“A lot of my time is now spent with people, managing people, having meetings,” says Becca. “[I’m] making sure they’re able to get done what they need to do and get my input, and that I’m training them sufficiently.”
Control your growth
Trying to develop too many products too quickly is a mistake many small business owners make. When seeing positive growth, rather than focusing on their core products or services, many business owners try to be too many things to too many people, which can negatively impact the quality of their core business.
If you want to expand your offerings, consider all aspects – production, people, marketing and sales, target customers as well as timelines – and build these thoughtfully into your plan.
“The greatest risk any of us probably took is starting our own business,” says Cam. “Once you’re in it you’re in it, and I’d do it 100 times over.” But once your business is established, you may think you have too much to lose and shy away from risk. But risk can lead to reward.
When assessing a risk, refer back to your strategic plan and consider if it is in line with your goals, is manageable, and could move your business forward. If the answer to all questions is yes, it may be worth taking a chance. If it does work out, that opens up a whole new opportunity for growth. In the event it doesn’t work out you can learn from the experience and make another decision to continue on your path.
“The worst decision you can make is not making one,” says Becca. “Sure we’ve made mistakes, but we move on.” Cam agrees. “Think big and go for it!” he says.
Create a positive work environment
Many entrepreneurs get so focused on building their businesses that they forget about work-life balance. Working too many late nights and weekends can lead to burnout, not only for you and your employees but it could also negatively impact your family, and that’s not good for anyone.
The most successful small business owners create a positive workplace. Offer flexibility, support your team, give them respect, and reward successes.
“My partner and I believe in work-life balance. We promote people enjoying work, but also getting home and enjoying their families,” says Cam. “If you’re not having fun, your balance is off.”
The better the work environment, the happier and more loyal your employees will be – and that’s good for business.
Starting any business is a learning experience, and you will make mistakes along the way – and that’s okay. Having a strong strategic plan, managing your time, and planning your growth are all keys to small business success.
And be sure you’re having fun!
For more tips on mistakes to avoid, visit #RBCSmallBiz Panel Discussion – Managing Your Business Growth.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.