What Is a Small Business?
According to the law, if the number of employees of a company is 100 or less (500 for manufacturing and mining companies); and if the annual average revenue does not exceed $6 Million, that company is considered to be a small business.
Three criteria are used to define small businesses: the number of employees, net sales revenue, and the total of the financial balance sheet. Such definitions can be useful both in applications for various support programs by the state and can be taken into account in certain criteria set by the state for various issues such as taxes, insurance, and fees.
Small businesses are businesses that are more energetic, dynamic, and open to innovation. Therefore, they have the potential to become leading companies in the field. A small business is one with a smaller revenue and size compared to other firms. However, this situation may vary according to the evaluation criteria. For example, a 100-employee firm may be said to be a small business compared to a 500-employee firm. However, a company with 500 employees is considered to be a small business compared to a company with 5000 employees. The concept of small business differs according to the perspective.
Businesses that have dreams, know that there is a way to reach their dreams, and hope for guidance on how to get there, is generally defined as small businesses. Prosoftly Business Management Software helps you to achieve your dreams.
How to Grow Your Small Business?
In order for a breakthrough in small businesses, managers should have a clear plan for development, growth, and progress. In addition, a determination to work is indispensable to achieve this dream. There are 9 basic strategies for growth;
Ask Your Current Customers Why They Prefer You
This approach is very effective and result-oriented. Firms that have not reached their dream figures in terms of revenue, the number of employees, and their jobs should be in contact with their customers who prefer them. In this way, they can determine why they are preferred, thanks to the feedback of their customers. If a customer has bought the product or service from your company, there is definitely a reason why they prefer you. By learning this reason, you can improve yourself and your company in that area.
If you do not implement this strategy, you cannot understand how and why you satisfy your existing customers. For this reason, it is possible that you risk losing your competitive advantage. This situation is kind of like surfing. When you find the right wave, you use the wind wisely and you surf successfully. But if you cannot use the wind, it is inevitable that you will hit the shore. For this reason, you can get the healthiest feedback about why they prefer you and what you can do to improve yourself by keeping your communication closer with your customers.
The feedback you receive from many of your customers will surely converge with each other at a certain point. As soon as you see these, you will be able to understand your customer's reason to select you over others and invest in that cause. In this way, your number of customers will increase exponentially and you will start to grow.
Play on the Value You Created
Let's divide small businesses into two sectors that appeal to the end consumers (B2C) and to other businesses (B2B). Especially companies operating in the B2B sector make purchases when they see value and benefit in the product or service offered to them. At this point, small businesses need to focus on the value they create. For example, consider a small business that manufactures a chemical that is used during casting and provides crack protection. This company has not yet discovered;
- Possible problems caused by cracks
- The value of preventing cracks
- The cost of preventing cracks
- Cost of alternative solutions.
As a result, it is unaware of the value of its product. The business may be selling its product at a low price. Maybe it is unable to position the product where, so overvalues it. Hence, the key to business management is to discover its value.
The next step after discovering your value proposition is to play on that value you have created. In this way, small businesses can have a significant place in the market. Thus, it can ensure that its current product or service is preferred in other areas.
Be Aware of the Influence of Testimonials
Every customer of small businesses is valuable. For this reason, requesting a testimonial from customers provides a correct perspective for potential customers. Growth often brings more customers, and testimonials are very important to achieve this growth.
It is not a sustainable method to increase the awareness of the company by getting support from friends or family. Because there is a bond of affection that makes these people buy from your company. The main customers, however, are those who are satisfied with the product and service they have received and come back again. Since these customers form the basis of a sustainable business structure, their testimonials are also very important.
Small businesses may ask the customers they do business to recommend or refer to them to other companies. There is no harm in doing this. Most importantly, they must do this systematically. Referencing is an important process in the workflows of small businesses. This strategy can increase sales by up to 50%.
The most important point to be considered is the fact that the current customers’ competitors should not be targeted. Small businesses may see every company in the market as a potential customer. However, there is competition among some companies in the market. In general, customers may not want their competitors to reach the service, product, or technology they receive. In light of this, the buyers of the product and service you offer should be chosen correctly within the framework of the strategy. When any customer realizes that their competitor has accessed the same service, they will start looking for different ways. Most importantly, for small businesses, customers' trust in the firm will decrease.
Invest In Digital Marketing
Today, the power of digital transformation is undeniably important. It is possible to see an advertisement of an old woman living in a village and selling bread on social media. Everyone first searches for their needs on the internet. In the light of this data, everything from social media to web browsers can be advertised. Small businesses can use this power very cleverly to reach customers across the country and expand their service zone. Digital marketing increases their awareness, expands their customer portfolio, helps them improve themselves, and sees their needs.
Being digitally accessible to everyone is a golden opportunity for small businesses. If this opportunity is not used, the company cannot improve itself. Because it cannot predict what the market wants and where and when its potential customers will be. This brings with it incomplete strategy and business processes. Therefore, the most important issues that new and small businesses should pay attention to are digital power and the correct use of this power.
Don’t Be Restricted With a Single Customer
One of the most important criteria of small businesses that determines their future is revenue. Revenue can lead that business to grow or shrink. Small businesses can tend to go wrong for the sake of income. One of these mistakes is to stick to one customer. This is one of the biggest mistakes made.
Customers who want all of your time, workforce, and performance to offer a great income in return are sort of a trap for small businesses. The small business will thus increase its annual earnings exponentially. Naturally, this cash flow can be confusing. However, it should not be forgotten that such customers may quickly leave your company as they have come. So what happens to a small business when its most important customer leaves? Unless a great chance knocks on the door, unfortunately, it will be doomed.
The thing to do here is not to reject the offer from such customers. These offers can greatly affect the growth of small businesses. But being dependent on that customer should not be accepted. In such cases, it should continue to serve other customers and work without restricting the business field.
If dependence on a customer is accepted, that customer can use this situation in his favor, knowing that he cannot be given up and that all income depends on him. This causes the small business to gradually disappear. Therefore, by applying the balancing policy, businesses from different sectors should be included in the business.
Don’t Hire Relatives
Almost 90% of the companies in the US are family-owned businesses. Small businesses have a shortage of salaries when choosing the employees to hire in the first place. Since they are yet to grow and they do not have enough customers, they don’t have the resources to hire experienced and reliable people with them. In such cases, business owners turn to relatives first. There may be no problem at first. However, when this relative hiring starts to become a vicious cycle, then the problems emerge.
When this starts to turn into a cycle, the idea of hiring a stranger runs counter to other working relatives. The new employee is selected from friends and other relatives. At the end of the day, the founder of the small business ceases to be the decision-maker and everyone finds the right to be involved in all business. The incident gets out of hand and can become unattended. Relatives who are not even competent may start to speak out on the extremes at the end of the day. The owner of the business, on the other hand, may cause the business to become smaller instead of growing, by keeping his voice out of fear of misunderstanding by the family.
In such cases, it would be wiser to include new graduates, people who are open to innovation, who can be educated, and who learn fast, rather than employing relatives.
Don’t Invest in Luxury, Invest in People
Growth in small businesses can occur rapidly and unexpectedly. That’s why it may bring the illusion of the business owner that she has achieved her goals. As a result, the desire to make great unnecessary changes in a short time may rise. Small business owners who earn well in a short time may find a new office, new furniture, or new decoration, etc. attractive. However, investing in luxury does not guarantee future revenue. In contrast, investing in knowledge and people does.
Small businesses can achieve real success if they invest money in knowledge and people, rather than spending money to show off, while they are growing. Then it can be guaranteed that more of that money can be earned. Investing in a more competent, educated, knowledgeable employee with up-to-date ideas is more important than new furniture. Everyone has dreams, obviously, about the things that they will do with the money they will earn. But the priority is to grow the business and use the money earned as an investment in its further growth. In this way, dreams can be reached with more confident steps and the security of the current situation is ensured.
Otherwise, if the flow of money is not invested in the business, there is never a guarantee that the next business will be sustainable. For a small business, investment in knowledge and people is important. After the system is established and some things are guaranteed, it will be the healthiest way to go to innovation.
Establish the Structures and Processes From the Beginning
A strategic plan is important for businesses to sustain their development. That plan ensures that everyone is aligned, and structures and processes are clear. Small businesses do not go through long and complicated processes when they are first established. This situation seems to require no planning, which is a mistake. Planning processes such as procurement, production, marketing, and sales and distribution play an important role in small businesses. In this way, growth can be scaled and maintained. Otherwise, as things get complicated, growth may go unnoticed and possible opportunities may be missed. To read more about organizational design, see our blog.
Try and Make Mistakes
Small businesses shouldn't be afraid of experimenting and making mistakes. Trying is the key to success and each attempt is a step forward. Each error is a way to fix and continue. It’s important to remember that you cannot measure the success of things that you didn’t try. However, the success of a failure can be measured.
In small businesses, an error is a phenomenon that is feared to happen and dreams are abandoned in order not to make a mistake. This perception is very wrong. What needs to be done is trying every way for the sake of the goal and accepting that even if it is unsuccessful, success has been achieved in different areas with the experience gained.
You can use Prosoftly Business Management Software to organize and grow your business.