By Jim Giammarinaro
President & CEO of the MetroWest Chamber of Commerce
FRAMINGHAM – There are many challenges to being a small business owner. Most small business owners are very good at what they do but can be inexperienced in a variety of important aspects of running a business. Some specific areas which can be challenging are marketing/sales, finance, personnel decisions and weeding out activities that take up time but provide little value.
The areas of marketing and sales can be the most challenging for a small business. Many business owners rely on doing a good job and hope that word of mouth will increase sales. They may also take out traditional advertising and hope that people see the ad and then purchase an item or service. These techniques may work but would be considered a “reactive” approach to generating sales. I would recommend that a business owner take a more “proactive” approach to sales. It is important for any new organization to be proactive as they will need generate enough sales to get past break-even before start-up money runs out. One business owner may be in better shape than another when it comes to the amount of start-up money they have or may have a smaller amount of overhead expenses than another.
Regardless, any business owner must begin to turn a profit before they run out of cash. This makes sales and marketing the two most significant aspects to a business’s success. When messaging in the areas of sales/marketing it is important to focus on
1) Why people will want your product and
2) What makes you unique or the “only”.
It may not be good enough to communicate that you do everything your competitors do but you do it better. Everyone says that. It may not be enticing enough to tell people why they need you. It can be more appealing to convince people that they want you. It is human nature to be happier when doing what you “want” as opposed to doing the things you “need” to do.
There are various pro-active approaches which can be taken in marketing & sales. Which approach you take depends on the nature of your business. If your business relies on small purchases from the public (ie. a retail store with lots of different customers) then you will need to have an active social media program which can have a wide reach.
Effective social media can be challenging for a small business owner, so it will be important to have a professional social media person who knows how to reach
potential customers. We have all seen “bad social media” whether it is on Facebook, Instagram, Twitter or other platforms. Remember, for those who do not know you, the quality of your social media is reflective of the quality of your product. If it is bad, people will think that your product is bad.
If you have fewer customers who generate a large portion of your income (i.e. A Financial Planner) then relationship building becomes paramount. As a financial planner you should not expect to give someone a business card and expect them to give you a $1 million investment portfolio. You will need to develop relationships over time where a trusted colleague can refer you or you develop the relationship directly. People will need to know, trust and like you before they feel comfortable giving you their business. In this case it is important for you to be networking and meeting people so that relationships can develop. It is very likely that the path leading to this type of sale will take longer.
Many businesses may generate numerous small dollar sales transactions and have large customers as well. In this case they will need to have a strong social media presence as well as pursue relationship building. In either case, by pursuing these strategies you become more proactive in your sales efforts. Once you generate sales it is critical that you are customer focused. No customer, large or small, wants to feel like they are just a “transaction”. It is also important for any business to develop customers for “life”. This means showing customers you appreciate their business and that you will go the extra mile to insure they are happy with your product or service.
Another area that can be challenging for a business owner is finance. You do not need to be a “math whiz” but it is important to understand the important numbers for your business. You will want to know what you spend money on and how an individual expense relates to the overall profitability of your business. You do not want to spend money on anything that does not have a direct relationship to bringing in more sales. The unfortunate reality of spending money (whether it is related to equipment, marketing, or training) is that you only get better at it as time goes by. It is not uncommon for a business owner after being in business for a while to look back at things and state “I can’t believe we used to spend money on that!”.
As you become more experienced in operating a business, you learn what to spend money on and what is a waste. Sometimes the only way to learn is through trial and error, but the sooner you learn the more likely you are to remain solvent. When it comes to finance, the bottom line is that you need to know enough to make sure you are making good decisions related to spending money.
The decisions you make related to personnel is also critical in a small business. Many industries measure the success of an individual business by their “sales per employee”. Businesses with a higher sales per employee in an industry tend to be more successful than those with a lower sales per employee. How to you get higher sales per employee? You do it by hiring people who can function independently and treating them well, so they stay with you for a long time. As a business owner, if you have to watch over someone to make sure they are doing their job correctly you will not be able to focus on other aspects of your business (like sales & finance) to help grow your business. You may end up spending too much time “working in your business as opposed to working on your business”. If people are not able to work independently or you are not capable of “letting go”, even when you have good employees, it will be more difficult to run your business successfully. When you have a team that can operate efficiently and independently you will increase your sales per employee and be more likely to be successful.
The bottom line is that you do not want to spend any time in your business where you are not able to see where the value is added. You may want to step back and ask yourself, “Is what I’m doing right now going to increase sales, reduce costs, keep employees happy and working independently or keep customers happy?” If the answer is no you may want to reconsider how you are spending your time.
Editor’s Note: SOURCE and the MetroWest Chamber have formed a partnership. The Chamber’s column will run on Tuesdays on the digital news media outlet.