9 Tips on How to Make a Small Business Successful

1.Develop a thorough business plan.

The kind of cash flow analysis you do upfront will determine -- to a large extent -- how well you can weather variations in sales, inventory, and customer interest. You can compile a business plan yourself or outsource the job to a professional company.

With a profit and loss statement, a budget, and a projection of cash flow in place, you can figure out precisely how much money to allocate to various strategies and systems, and buffer yourself against new competitors and industry changes.

2. Concentrate on your core competency.

According to the book “Good to Great” by world renowned analyst Jim Collins, the most successful businesses -- large and small -- focus on doing one thing extremely well as opposed to many different things moderately well. Collins describes this competency as the business’s “hedgehog concept." This comes from a famous Aesop’s fable about the Hedgehog and the Fox. As the story goes, every morning, the Fox attacks the Hedgehog in a different way. And every morning, the Hedgehog defends himself by rolling into a tight ball. The Fox never actually succeeds in hunting the Hedgehog. The moral of the fable is: “the Fox knows many little things -- the Hedgehog knows one big thing.” Statistics bear out that enterprises that focus on a single Hedgehog concept tend to succeed more often.

3. Get the right people on your team and the wrong people off of your team.

As a small business owner, you work intimately with your employees. It can be difficult to let go of people who have served you loyally for years. However, if you have inadequate, inexperienced, or otherwise incompetent people working for you, your business will inevitably suffer. Conversely, if you have great employees who understand what your business is about, how you intend to optimize strategic opportunities, and what your end-goal for company is, you are much more likely to do well over the long-term.

4. Shield your personal cash and assets.

If you start a business from home, for instance, consider incorporating. If you are going to be outlaying your cash upfront for start up costs and the like, going corporate will help shield your assets if your business fails, if your company gets sued, or if your business incurs other significant liabilities.

5. Generally, keep things small until you can prove concept.

Even if you have a big loan to jump-start your business, work to keep things as frugal as possible -- particularly in the first six months. The vast majority of small businesses fail at start up. Even the most insightful and well-prepared entrepreneurs fall flat on their faces now and again. Give yourself room to fail, and you will be far less likely to get stressed out about the day-to-day numbers coming in and far more likely to take the smart but necessary risks you need to bootstrap your way to success.

6. Get critical contracts in writing.

Sure, you can do some business based on a handshake. However, your company will likely (hopefully!) expand in the near-term. Contracts worth just a few hundred dollars today could easily balloon to 20-50 times that much within a year or two. Getting in the habit of creating a sound paper trail will protect you against liability down the line and help you make a more organized transition to a medium sized corporation.

7. When it comes to customer service, under promise and over deliver.

When canvassing for new clients, it is tempting to make grandiose promises of low costs, fast delivery, and super high quality. But if you break your back (or your company’s bank) meeting these promises, you are not doing yourself any favors. Set modest expectations for your customers, and then strive to beat those.

8. Treat your employees as well as or better than your customers.

This may sound counterintuitive. But some studies suggest that putting the employee, rather than the customer, first actually makes businesses operate smoother. Ironically, this also appears to contribute to better customer service. The reason is that employees who feel like that they have some ownership in a company tend to take more responsibility for their behavior, pass along good “word of mouth” advertising about your brand, and forge more personal relationships with your customers. The In-N-Out burger chain in Southern California has succeeded for decades by pursuing this classically counterintuitive customer relations formula.

9. Stay out of debt, and keep all financial maneuvering above board.

By keeping up good credit, paying your state, local, and federal taxes on time, staying up to speed on payroll, paying your insurance and mortgage payments precisely when they are due, and otherwise successfully juggling your assets and liabilities, you’ll have a much easier time adapting to vacillations in the market.