Top tips for small business success

Small businesses can be exciting, hands-on places in which to work with a great deal of passion invested in them – but their modest size can make them more vulnerable to market shocks. Here Ruth Brooks looks at some top tips from the experts on how to run a small business that not only survives, but also thrives.

What is a small business?

From microbreweries and craft bakeries to tech startups and green energy companies, small to medium sized enterprises (SMEs) make up 99% of all businesses in the UK. But it’s not always clear what counts as an SME.

“Small businesses are the backbone of the UK economy – helping to provide jobs and support to spending on both a local and national scale - but it can be difficult to determine exactly which firms fit into the SME category,” says Les Roberts at Bionic.

SMEs are broadly defined by the UK government as either microbusinesses, with fewer than 10 employees and annual turnover under EUR 2 million; small businesses with under 50 staff and EUR 10m or less turnover; or medium-sized businesses with up to 250 employees and an annual turnover of less than EUR 50 million.

Small business management strategies

“Starting and growing a small business is a journey filled with excitement and challenges. It's a path that presents both opportunities and obstacles, but with the right strategies in place, your chances of success can be significantly enhanced,” says Jorge Bassante, owner of Horizon Air Solutions, a leading US-based heating, ventilation and air conditioning company.

Bassante suggests five key management strategies for small business owners:

Cut down on overheads. Minimising your overhead costs in the first few years of running your own business is critical to being able to weather economic downturns and other shocks during the nascent stages of your business. Steer clear of things you don’t need, for example consider homeworking instead of hiring a big office space or outsourcing services instead of hiring full-time employees.
Reinvest everything back into the business. When the business starts to bring in profits, it’s important to resist the temptation to spend on personal indulgences. Instead invest the funds in business needs and opportunities for growth to ensure sustainability and long-term success.
Provide performance-related incentives: by offering commissions and bonuses to employees based on their actual contributions to the company’s success (on top of a base salary to cover their basic needs) you’ll be aligning team members’ interests with yours in focusing on business growth, rewarding effort and fostering a results-driven work culture.
Put time into customer relationships: “Happy customers are the lifeblood of any successful business. Make customer satisfaction a top priority by actively seeking feedback from your customer base and addressing concerns promptly. Implement customer feedback surveys, conduct follow-up calls and encourage online reviews and testimonials. Show your customers that you value their opinions and are committed to delivering quality services” says Bassante.
Put marketing before branding. Connecting with your new customers in the early stages through direct marketing strategies, e.g. social media messaging, can yield better return on investment in the earlier stages than glossy branding and advertising.

Develop a solid business plan

All business owners, for organisations great and small, need to develop a carefully considered business plan at the outset. The idea of a business plan is to outline what your business does, and what it won’t do, and what you’re trying to achieve. It also explains what the market opportunity is that you’re pursuing, what your company’s unique selling point is, who your competitors are and how you’ll make the business a success. It also needs to include financial forecasts and projections and funding requirements.

According to Startup Donut, writing a business plan will also help you:

check that your business idea makes sense
plan your sales, marketing and business operations
identify potential problems and how to overcome them
set out your objectives and the financial return you expect
work out what financing you need
convince other people to back your business.

Don’t skimp on financial planning

Small business owners need to keep a hawk-like eye on their finances to ensure that the business stays healthy. This should include creating and sticking to a budget to control expenses, monitoring cash flow to ensure there’s enough free cash to cover your expenses and regularly reviewing your financial statements to make well- informed decisions.

Max Freedman from Business News Daily has these words of advice for helping small business owners to stay on top of their finances.

Don’t be afraid to take advantage of loans to purchase equipment, grow your team or boost your cash flow so that you can be sure to pay employees and suppliers on time.
Keep your credit in a healthy state as the company grows because you’ll need good business credit, for example to acquire more property and insurance. Pay off company credit cards regularly and ensure that you can afford the interest rate on any loans you take out.
Have a good billing strategy to manage your cash flow effectively: for example, to tackle those inevitable late-paying customers or clients you can consider offering a 2% discount on the bill to those who pay within 10 days.
Avoid nasty surprises with your tax bill by spreading your tax payments - perhaps by making monthly payments and including them in your monthly operating expenses.

Develop your brand and marketing

As the business becomes more established, small business owners can begin to invest more in marketing and branding. Effective marketing can help you attract new potential customers and aid retention of a loyal customer base as well as reaching new markets. This may include:

Developing a strong brand identity that reflects your business values and resonates with your target audience.
Using digital marketing strategies such as search engine optimisation (SEO), content marketing, and social media marketing (eg on facebook, instagram or LinkedIn) to reach your audience.
Networking: by attending key industry events you can network with other business owners to build relationships and partnerships and gain referrals.
Investing in a Customer relationship management (CRM) - a system for managing all of your company’s interactions with current and potential customers, with the aim of growing your business by improving relationships.
Using automation to affordably streamline your marketing, customer management, by using AI chatbot and automated website functionality.

Managing a small business is exciting, but it is no walk in the park. To do it successfully takes a wide-ranging approach including good leadership, strategic planning, careful oversight of the business’s finances and making customer satisfaction a number one priority. But if you can put all of these things together you’ll be able to build a solid foundation for your business and improve the odds of weathering difficulties – from downturns to pandemics – and achieving long-term success.

Bolster your business skills with an MBA

Whether you’re a small business owner or senior manager in a major corporation, in today's dynamic and competitive business landscape, organisations require versatile and visionary leaders with the diverse skills to navigate complexities, drive innovation, inspire teams, and steer towards success.

The 100% online MBA from Queen Margaret University is designed for busy working professionals looking to advance their careers and deepen their knowledge in strategy, marketing, operations management, accounting and finance, human resource management, leadership, business analytics, and entrepreneurship. Enrol on this master’s degree and you’ll develop into a future senior manager, director or CEO who is socially responsible and capable of driving positive change.

The 100% online course, which can be studied from anywhere, also offers established industry connections worldwide and features regular guest lectures by experts from all over the world to enhance your learning experience. Find out more