8 Tips for Small Business Owners
Starting a business is grueling, but staying in business is more challenging. About 20% of ventures last more than 20 years. Four in 10 enterprises fold within the first 36 months. During the pandemic, approximately 40% of businesses closed shop.
Such a survival rate can be scary. However, a company becomes more capable of avoiding its demise whenever it successfully weathers a financial or economic storm. Use these eight tips to ride out turbulent times.
1. Stick to the Facts
Going through a downturn is nerve-racking, but avoid worrying about imagined concerns. Many small business owners freak out over worst-case scenarios and fixate on possibilities instead of probabilities.
Blowing a trying situation out of proportion creates unnecessary anxiety. Paranoia compels entrepreneurs to prepare for the worst. But being level-headed is more critical than being fearful amid uncertainty. It’s hard to get a good handle on what’s happening to make sound decisions when everybody’s overreacting.
Rumors make some issues sound worse than they are, so separate fact from fiction. Know the details of a story and study the vital numbers to paint a clearer picture of the situation. Understanding its severity allows reason to take the wheel and lets emotion take a backseat.
2. Keep an Eye on the Big Picture
A leader who can’t see the forest for the trees can’t meaningfully solve anything. Not everything is as it seems, so concentrating too much on the details inhibits wise decision-making.
Some problems are just a symptom, not the disease. Fixing a mess without addressing its underlying cause won’t yield positive results over the long term. Poorly thought-out solutions can breed new problems, too.
For example, a diner owner discovers a staff member puts too many ingredients when cooking. This mistake ruins the flavor profile of dishes and eats into the company’s margins. The restaurateur’s initial reaction may be to let the erring employee go.
However, it may be more prudent to investigate how well the branch manager trains and supervises crew members. If the manager is at fault, this shortcoming may be grounds for termination. The manager is a beloved figure among regulars and has generated tons of revenue for the restaurant through stellar marketing. Will firing such talent be wise?
The most sensible move to address this hypothetical predicament is to retrain and remind everyone of the drawbacks of excessive use of ingredients when preparing meals. Jumping the gun on firing the guilty employee or manager can lead to dire consequences worse than the original issue.
Step back and analyze the whole situation as if it’s a chessboard. Get to the bottom of the problem and determine the likely reaction for every action to avoid compounding an unpleasant situation.
3. Touch Base With Nontoxic Peers
Small business owners may compete with one another, but all are in the same boat. When the economic climate is unfriendly, everyone may suffer. Consulting friends in the community can provide fresh perspectives on various subjects and inspire creative solutions.
Beware of entrepreneurs who are full of doom and gloom, though. Not sugarcoating a terrible situation is essential when facing challenges head-on. However, hearing nothing but negativity is exhausting.
Constant exposure to misery is like being in psychological quicksand that turns a zealous problem-solver into a chronic whiner. Be with business owners keen on doing better to avoid self-sabotaging mind traps — such as black-and-white thinking, catastrophizing and negative filtering.
4. Think Like a Contrarian
Contrarians go against the flow. They study the industry, look at the pieces making it up, figure out what’s broken, and think of ways to fix it. These mavericks identify time-honored but anachronistic rules and change them.
The best modern examples of contrarians are Netflix co-founders Marc Randolph and Reed Hastings. They couldn’t beat Blockbuster in its own game, so they developed a new standard for media consumption — streaming — and revolutionized the entertainment industry.
Netflix saw the internet’s potential and invested tremendously in research and development, while Blockbuster was busy being complacent. When the video rental giant finally pivoted to streaming, it couldn’t compete with Netflix, which enjoyed the first-mover advantage. And the rest is history.
Adopting a contrarian mentality can be risky. Doing the opposite of what everyone’s doing for the sake of being different can do a business more harm than good. Be honest with observations, and hear opposing views.
The stars have to align to pull off what Netflix did. Still, responsibly embracing the contrarian philosophy can revitalize a company and discover new opportunities to beat the competition.
5. Find a Mentor
Having a personal oracle can give any struggling small business owner relief. It helps reduce the pressure of needing to figure things out independently and shortens the process of trial and error.
Mentorship can bring out the best in an individual. No wonder 80% of mentees feel motivated in what they do because they get to have authentic conversations with someone they trust about business, careers, skills and life decisions.
6. Focus on Customer Retention
Inflation was at its highest in 40 years in 2022. Chasing new business in an inflationary environment is like fighting a losing battle. Instead, do everything to keep current customers to generate regular sales and maintain positive cash flow.
Self-respecting entrepreneurs never stop promoting their businesses. However, retaining customers is cheaper than acquiring new ones. When company coffers are stagnant and access to capital is limited, spending available resources wisely can spell the difference between survival and failure.
7. Recalibrate Operations
The onset of a slow period is an opportune time to re-evaluate everything. There’s less incentive to rock the boat when business is booming. But being at a crossroads allows small business owners to examine what works and what doesn’t.
The goal is to increase operational efficiency while reducing costs without sacrificing quality. Attaining this threefold objective isn’t a walk in the park, but scrutinizing payroll is a no-brainer. Lean times generally require less staff. Letting go of low-performing talent may be in order.
8. Invest in Self-Care
Prioritizing the well-being of everyone in the company in the middle of a tough time goes a long way. Professionals with solid work ethics will soldier on in high-stress workplaces. Still, everybody’s human with limited bandwidth.
Conducting activities aiming to improve physical and mental health can boost employee morale and make the office a happy environment despite the turmoil. Business leaders should be kinder to themselves and find time to take the load off to avoid reaching their breaking point.
Hard Times End, Persevering Entrepreneurs Last
Companies can go out of business when most ventures can do no wrong. Some organizations thrive during crises. Small business owners will experience peaks and valleys regardless of the economy’s health. Prepare to correctly navigate inevitable business hardships to come out the other end unscathed.