Starting a small business is a gratifying endeavor. You can control how you work, design your dream company culture, and create the product or service your customers are missing. And when you run your business right, you can see tremendous financial growth at a rate unparalleled by any salaried job could offer you.
At the same time, it’s hard work and it’s risky. You never get to be fully “off the clock” from your business; even if you’re not doing actual work, you’re probably thinking about it. Any problem that arises at the business is your problem. Perhaps most daunting, that potential for financial success is matched by its potential for financial loss. Even immensely successful businesses see their profits rise and fall dramatically from year to year.
While you can never fully eradicate the threat of unforeseen struggles in your business, by tweaking your behavior and your mindset as a business owner, you can make major strides in protecting yourself and your team against hardship. Entrepreneurship is a long-haul effort, so making small and consistent changes is often more important for your success than intense bursts of effort. It’s better to change your routine behaviors — your habits — and see how they improve your life and your business over time.
To become the best possible business owner, you need to know what to work on. Fortunately, there are a few traits that successful business owners share that help them achieve as much as possible. Read on to learn how to improve your business practices and yourself.
1. Minimize repeat expenses
No matter what type of business you own, there are bound to be repeat expenses you incur for basic operations to run. You can’t run a restaurant without paying for ingredients, utilities, and rent, just as you can’t operate a remote software company without paying for your technological devices and internet services.
There’s no way to escape putting some money towards a functioning business, but a good business owner knows how to keep those costs to a minimum. You should consistently question whether you’re getting the best deal for your business that you possibly can. If the answer is no, either negotiate for a cost reduction or take your business elsewhere.
Many of the routine expenses that people believe are non-negotiable can actually be brought down. In certain states, you can negotiate with your utility provider to reduce the cost of your energy bill. Phone bills and internet service are often negotiable. If you have a company website, you can put a little extra effort into finding a better web hosting site that reduces costs and serves your company’s needs.
While larger companies often have cheaper production costs for their services, don’t ignore the benefits of working together with other small businesses in your area. If you purchase certain goods and services from other small businesses — such as vegetables you may buy directly from a grower or marketing campaigns from an agency — you can often work out a cheaper agreement that leaves all parties happy. These businesses want to reduce costs and maximize routine customers just like you, so finding a way to offer each other what you can is beneficial to all.
2. Plan what you can
From recessions to new inventions to changes in your personal life, you can never be fully prepared for the curveballs that get thrown into your business. Still, having clear short-term, medium-term, and long-term goals for operations is a great way to ensure that you’re ready for whatever comes your way.
As a business owner, you probably have a mission that led you to put all your effort into starting a business. You may even be something of a dreamer. But the only way to execute your big goals is to have clear plans of how to put them into action. That requires closely tracking revenue and projecting your company growth, having a clear business strategy in mind, and having clear expectations and growth trajectories for your employees. You need to have expectations for what your company will look like in one year, five years, ten years, and beyond.
It’s also incredibly important (and possibly even more important) to have a clear organization for day-to-day and week-to-week operations. There’s nothing worse than running out of necessary supplies to keep your doors open or leaving your employees without a weekly schedule until 10 PM on a Sunday. You may need to delegate these responsibilities to a manager, but making sure that your operations are scheduled in advance is essential for running a profitable and professional business.
3. Keep it professional
Being a professional business owner is key to gaining the respect of your employees, customers, and even competitors. If you present a professional image, you show the world that your services are reliable. Clients will offer return business and feel comfortable referring you to their friends and associates.
Investing in a polished storefront, website design, and marketing materials will help catch customers’ eyes and get them in the door. The last thing you want is for potential customers to pass you up because your operation looks sketchy or sloppy. This is especially true for businesses offering creative services, in which poor marketing design reflects poorly on the quality of your services.
Professionalism is also key to successfully running internal operations. Many small businesses fall into the trap of overly familiar relationships between managerial staff and lower-level employees. While it’s fine and even positive for coworkers to be friendly with one another, when work relationships become too casual, things can get messy.
You may not be conscious of workplace power dynamics, especially as an owner, but they’re present. Being too casual at work can make it difficult for employees to advocate for themselves and their rights. It sets a bad example of how they should treat each other and behave around customers. Rigid hierarchies can create poor workplace culture as well, but setting clear norms at work sets the tone for positive interactions among the staff.
4. Use finances to your advantage
Successful business owners don’t only find ways to save money; they also find ways to earn back some of their expenses through financial programs. One of the best ways to do this is to be deliberate about what credit cards you use.
Before turning a profit, you inevitably make big purchases as a business owner. And if you put those purchases onto credit cards, your statements may be massive. While this can be daunting if you’re in credit card debt, if you make your payments on time, you can also use this to gain significant cash back or mileage rewards.
Credit cards, and especially business cards, vary widely in terms of the cash back programs they offer, so doing some research into the best cards for how you spend money in your business is wise before opening a new line of credit. The difference between 0.5% cash back and 4% cash back may not feel like much, but after spending tens of thousands of dollars, it adds up quickly.
While no one wants to think about taxes, smart business owners know how to use tax write-offs to their advantage. Save receipts of your business expenses, and consider working with a tax professional to make sure that you’re taking full advantage of favorable tax policy. Just be sure that you have a strong understanding of the savings and tax deductions you can claim – corporate crime can be a serious legal offence.
5. Pick your loans wisely
When you’re borrowing many thousands of dollars to start your business, the difference between a 4% and a 6% interest rate is massive. It may be tempting to work with the first bank that approves you for a loan, but shopping around for the best small business loans first can save you and your business a lot of money in the long run. Smart small business owners take their time when picking out loans. They make sure that their interest rates are as low as possible, competitive with other banks, and, most importantly, realistic to pay.
Before applying for loans, you should also meticulously calculate how much you need. Overestimating a loan will leave you paying more in interest than you need to while underestimating will cause difficulties in getting your business up and running.
As badly as you want your business to work, you need to be realistic about how much money you’ll make and the amount of debt you can afford to go into to get it off the ground. Compare prior earnings at other business ventures or market averages to get a solid understanding of what you can expect to profit and, subsequently, what you can expect to pay back.
Set your business up to thrive
In his bestselling book, Atomic Habits, author James Clear writes: “Habits are the compound of self-improvement. The same way that money multiplies through compound interest, the effects of your habits multiply as you repeat them.” When you choose to practice the right habits to achieve your business goals, you set yourself up for major success.
Being on top of your business’s finances, understanding the future of your organization, and prioritizing a professional and reliable atmosphere all initially require small changes to your behavior, but they have monumental effects in the long run. Creating positive habits will improve your chances of succeeding as a small business owner.