7 Key Characteristics in Successful Small Businesses
7 Key Characteristics in Successful Small Businesses
Small businesses make up a majority of the economy and employ more jobs than any other group in the United States, so why is their failure rate so bad? After working with over 11,000 small businesses across the country and rolling up my sleeves with hundreds of small business owners (literally, that’s me in the picture there helping a restaurant owner with her inside wiring). I’ve compiled a list of key characteristics in successful small businesses that stood out from the rest, creating the best sales and marketing systems in order to run a small business with long-term success.
I’ve been a Founder, President, and an Executive at multiple companies that have hit Inc. Magazine’s 500 Fastest Growing Company’s in the United States 3 different times. Our highest rank was #18 in the country with 8,417% three-year revenue growth ($13M in annual revenue). When I reflect on the times we were performing at our best, we were right in line with all seven of these key characteristics in successful small businesses. We constantly worked towards improving each characteristic in order to run a small business with long-term success and strived to create the best sales and marketing systems.
Small businesses aren’t going away anytime soon and honestly, we don’t want them to. Nobody wants to live in a world that only consists of Amazon, Walmart and chain restaurants!
After 12 years working with small businesses all over the country in almost every industry imaginable, here are the 7 key characteristics I’ve learned to help you create a successful small businesses. I hope you take these next few characteristics seriously and use them in your small business plans in order to succeed:
1. Solid leadership
Success starts at the top and in every small business with long-term success, there is a need for great leadership. Meaning, either a highly involved owner that is there daily, or a team of people that the owner has put in place to provide the leadership needed. Either way, the leadership needs to start with the main owner(s). If an owner doesn’t like to be involved with the day-to-day, it’s still their responsibility to put great leadership in place and communicate with the team clearly and often.
Famous billionaire, entrepreneur, business owner, and TV star on the show “The Profit,” Marcus Lemonis frequently says, “I look to invest in companies with great people, process and product.” It’s the leader’s responsibility to make sure they have great people in the right place. The people develop the culture to create efficient processes and great products. Especially in the small business world, the product begins and ends with the business owner. If a business’s processes aren’t rock solid then money and opportunities will be lost, that is something small businesses cannot afford to lose.
To be successful for the long-term, a business’s product must provide value or solve a problem. I’ve seen restaurants fail here often. When a restaurant first opens they become hyper focused on their recipes, the feedback they get from their customers, the cost of everything and the experience of their customers. As time goes on, the recipes don’t change much, the restaurant gets old, and they fail to look for new ways to innovate and stay relevant. Revenues decline or stay flat, and their passion dissipates. This is a nasty cycle that can send a business into irrelevancy, and irrelevancy is one step closer to the grave for any restaurant or small business.
Business owners have their own style of leading, managing, selling, and training. Turning the personal style of the business owner into formal processes is a key to growth and building a company to scale. These seven characteristics in successful small businesses are key, but great leadership is the building block of every great business.
2. Know the numbers that affect the business
If a business owner does not have a passion or stress the importance of the numbers that drive the business then they should not be a business owner. They should sell the business or just close the doors.
There is a winning “secret” in running small business with long-term success, but if it’s ignored you will pay for it financially (which I did). When my companies were operating at their peak I knew every important number to the business at all times. Knowing the numbers is more than just what payroll costs are or what the break even number.
This goes hand-in-hand with knowing exactly what you needed to hit your goals including; how many new leads you need on a weekly basis, how many calls you need to make daily, etc. I knew how each one of those numbers were trending month-to-month and why they were increasing or decreasing. These were our Key Performance Indicators (KPI’s).
Successful businesses know their KPI’s and watch their numbers like a hawk. This makes their business more predictable. Once a business loses sight of the importance of their numbers, they find themselves running into trouble.
Of the small businesses that fail, over 82% are struggling because of poor management of cash flows (Preferred CFO). If you want to have a successful business, know your numbers.
“If you aren’t able to understand and analyze the financial condition of your business on an ongoing basis, you’re like a pilot of a plane who doesn’t know how to read the gauges in front of him.” Business Mastery – Tony Robbins
3. Value the importance of branding
Branding is more than just a logo and a website. It’s the way your business is seen through the audience’s mind. The experience they have online, in-store, and interacting with employees outside the business all have an affect on the opinion of the customer. The business can’t control everything, but they should provide a positive experience for what they can control.
New businesses can’t afford to remodel, rebrand or re-launch every year, but they can stay relevant. The best way for a business to keep their brand relevant is to consistently communicate with new customers about their first impression of the business.
Businesses should always be creating every aspect of their company with branding. Find new ways to keep your brand new, exciting and relevant. Take the Fox Restaurant Concepts for example. They continue to develop new brands under their parent company by finding a creative way to take the successful elements of a franchise and launch a new brand with each new concept. Keeping a brand relevant is key to having a relevant business in your customer’s mind.
4. Culture is a priority
Creating a small business with long-term success and consistent growth can be accomplished through having a great team in place. The better your culture, the better the results. The production of many is always greater than the production of one. From an outsider’s view, if there is a culture problem, this is the easiest area to recognize. I’ve never been in a business that is consistently outperforming their competition with a negative culture. A negative culture is usually recognizable through angry or frustrated employees, poor communication, lack of passion, or employees underpaid, unappreciated and overworked.
The important thing is to avoid a negative culture, because it can affect your business in big ways. Impacting your customer service, sales closing ratios, employee turnover, and operational efficiency. Having a great culture definitely improves your chances of long-term success, so make it a priority.
5. Ability to bounce back from failures quickly
“Fail fast” is a hot term right now. To “fail fast,” means that something new is being tested and the organization needs to quickly determine if it has value. No matter how excited or confident they were in that new idea, if it doesn’t work or provide more value than it’s worth, the business must cut their losses, and make a change, or try something else. The faster they do this on a consistent basis the less time and money they’ll waste.
The important takeaway is that small businesses must continue to innovate. Failures do not define a business, but a lack of improvement can kill a business.
Most small businesses start with one great idea, product or service. That one thing won’t last forever. Just like large organizations, small businesses need to innovate in different areas of their business to keep improving.
If your product or service fails, then don’t waste as much money as you could and they move on to something new that will produce a positive result, as all successful entrepreneurs do.
6. Committed to being authentic
People enjoy doing business with authentic people. Employees feel good when their employers have integrity and authenticity.
Authenticity is the one common factor that can provide a great customer experience. This promotes more recurring customers and a higher percentage of raving fans. Raving fans can become your best marketing tool by posting 5-star reviews online and telling their friends about your business.
Authenticity = Great Customer Experience = Raving Fans = Long-term Success
Businesses that are successful for the long-term follow these key characteristics in successful small businesses and have extreme integrity, which is shown in their management, marketing, sales, follow-up, communication, pricing, and especially with customer service.
7. The best sales and marketing systems
A great product/service does not make a great company. A great product/service with the best sales and marketing systems makes a great company.
Most small businesses do not put enough time, effort, and money into creating the best sales and marketing systems. If a business wants to grow then an aggressive approach to acquiring new customers is necessary. Here are our suggested budgets for the best sales and marketing systems:
- If you’re a start-up then as much as 30% of revenues per month should be spent on sales and marketing.
- If you are profitable and growing comfortably then the business may be able to dial the budget down to 10%.
- All other businesses should make sure they budget for 10-30% of total revenues on sales and marketing.
The best sales and marketing systems we see today are made up of funnels, email automation, SEO, A/B testing, landing pages, Google Adwords and social media advertising. In the past, these tools were only available to big corporations with rich budgets or high priced marketing agencies. This is no longer the case.
The vast majority of businesses that try to build the best sales and marketing systems themselves fail because it’s too much to handle in-house. Most will read an article, participate in a Webinar or pay for some software tools, but the results do not come. Even if they budget appropriately, the business is doomed for failure and they will not see the ROI they deserve.
With the constant changes in technology and the amount of different tools needed to be managed, it’s impossible for a small business to build a system themselves or have one employee do it for them. Not only should you be following the key characteristics in successful small businesses but find an agency that has a team of people that is dedicated to producing a solution that drives a positive ROI for the business.
In order for a business to realize an ROI from their sales and marketing system, they must see positive sales results. Many products or agencies will tell a business that they’re delivering a certain amount of “clicks” or “leads,” but if those clicks/leads don’t turn into sales then there isn’t a positive ROI.
Bluume is a marketing and technology company that focuses on making our clients more money and implementing the best sales and marketing systems. Our clients success keeps us up at night. If our clients don’t succeed then we don’t succeed. To see if we’re a good fit for your company, book a free 5-minute consultation with us. We’ll show you everything we do for our clients at a fraction of the cost of most marketing agencies.
September 14, 2021