Small businesses are a very important part of the economy on global, national, and local levels. Entrepreneurs have big ideas all across the world and are just waiting to share them. Due to the nature of niche interests, fast-changing markets, and low start-up costs, small businesses are often best suited for entrepreneurs. But being a little fish in such a big pond means many small businesses fail in their first five years. Entrepreneurs can increase the chances of success for their small business by seeking help from specialized organizations, forming a flexible and coherent business plan, and working to overcome stress and management problems.
Starting Out
No matter their experience, both new and existing small business owners need to stay one step ahead of the competition in order to keep their businesses afloat. This can be a natural talent for some, as entrepreneurs need to be creative, innovative, independent, and flexible. Small businesses are inherently on the more flexible side as they employ less than 500 workers, meaning the flow of command is much simpler. Small businesses tend to have less bureaucratic executive functions as well, which means they are better equipped to make quick decisions as the market shifts. Keeping the business flexible in its structure and policies is one way a business can work for greater success. Small businesses also have to be innovative. This means they must be creative in generating ideas. Small businesses produce more than half of innovation. Such innovation helps keep small businesses active in a competitive market.
Small businesses are difficult to run, but there are several organizations that are ready and willing to help. The Small Business Administration (SBA) is a department of the government designed to offer financial and managerial assistance to small businesses. They fund Small Business Development Centers (SBDCs). These centers are business clinics that provide counseling for free and inexpensive training for small businesses and are typically located on college campuses. Due to their affordability and ease of access, SBDCs are the most direct form of assistance the SBA has to offer. The most accessible and credible SBDC in the Lee/Collier County area is located at Florida Gulf Coast University and is accessible to everyone.
There are more SBA resources available than just the SBDCs, including the Active Corps of Executives (ACE) and the Service Corps of Retired Executives (SCORE). Both of these programs are designed to provide advice and are staffed by managers with high levels of experience willing to pass on their knowledge. The managers in both organizations are volunteers, meaning the immersive level of guidance that was once unaffordable to small business owners is now free. These programs are available all over the country, and they have numerous online resources such as training, workshops, courses, libraries, and webinars.
High stress is difficult for any entrepreneur to manage, especially one that is just starting out. Entrepreneurs typically have to sacrifice their money and time during the early phases of starting a business. High failure rates also lead to increased anxiety. Some of the best ways to cope with this on the entrepreneur’s part include seeking advice from professionals (such as volunteers from the SBA) or hiring consultants in areas they are unfamiliar with. The most common problem with this lies in management. Hiring a skilled and experienced manager to take care of book balancing, hiring, control, financial affairs, and negotiating can help solve this, thereby lightening the entrepreneur’s workload and limiting their stress.
Business Plan
A massive part in planning for small businesses is called the business plan. A business plan is a specific document stating what the idea behind a business is. It also provides an in-depth and step-by-step explanation regarding how the business will run and be successful. A business plan should work to guide a business without hindering their growth and flexibility. It allows a company to shift tactics when the market changes and can be modified accordingly to allow the company to assess the market, set prices, revaluate product selection, and better optimize growth. There are several elements of a business plan including the executive summary, industry overview, market analysis, competition, a sales/marketing plan, a management plan, an operating plan, a financial plan, and an appendix.
An executive summary should be a summary of the main points of the plan, almost like an abstract. It exists so higher ups in the company, such as CEOs and department heads, can get a quick overview of the business plan before reading the whole plan. If you need to send your plan to a bank, this is most likely the part they will focus on initially. It should be clear and to the point to avoid confusion.
An industry overview should focus on where a company is going to focus in the market. Small businesses typically focus on niche markets, meaning the industry is most likely going to be smaller. The overview should work to forecast supply and demand to help predict the company’s growth, get a general idea of the nature of the industry, and review the competition.
A market analysis works to give a general idea of the nature of the market the business is competing in. It should focus on target customers and how competition can affect the market. An industry overview and market analysis are similar in the way they draw attention to competition, yet they differ on which aspect they focus on. An industry overview focuses on more business vs. business competition while a market analysis focuses more on how this impacts the consumer and future growth in the market.
The competition section should pinpoint specific competitors with an analysis of their strengths and weaknesses against the entrepreneur’s business. This includes price, quality, speed, and service. Comparing all of these together allows for a better understanding of what the advantages and disadvantages are of the entrepreneur’s business.
A sales and marketing plan should focus on how the company is going to portray itself in the industry to the consumers. The marketing aspect should outline the business’s story and give it a sense of identity. The more a consumer can align themselves with the business’s ideals, the more appealing the business will be to them. The sales aspect works with promotion and is more quantitative data compared to the marketing aspect. Sales relies heavily on statistics and works to give a more numerical prediction of a company’s success.
A management plan works to outline the ownership and management of a business. It outlines risk management strategies, communications, and stakeholder management if it is a corporation. It helps outline who is responsible in case something goes wrong, such as a recession or bankruptcy. The management plan also establishes a chain of command to help prevent problems with the division of power in the future.
The operating plan works on a more scheduling basis. This means the operating plan should include a calendar of events, maintenance schedules, plans for training, facilities, and different consultation options. This helps the business organize when events are happening to get a better timeline on growth and development. This plan should include an overview of day-to-day operations as well as a long term operations plan.
Financial plans put out budget projections, investments, cash flow plans, and debts compared to savings. The financial plan relies on the other parts of the business plan, such as the market analysis and sales and marketing plan, to get an idea on what profits will be. It should also evaluate the overall financial situation and work to monitor progress.
Finally, the appendix is used to provide documentation for parts of the plan, such as financial statements and pieces of market research. It works to close out the business plan and provide any supplemental information and documentation that may have been missing or out of place in any of the other sections.
The interrelationships between the management, financial, and marketing departments of a company should be laid out clearly in a business plan to help create a better understanding of everyone’s roles and responsibilities in the business. The management works closest with the staff and handles employment such as hiring and terminating. It works with both finance and marketing to solve staff issues and fix over or underemployment. Finance works to keep track of the cash flow in and out of the business and payroll. It needs to work with management on this because payroll overlaps with staff responsibilities. Finance works with marketing since they fund the investments of that department. Marketing works to get the company name out to the consumers. It relies on management to hire the right staff for the job and finance to manage the budget accordingly. When all of these departments work together, a business will be much more likely to have a higher success rate.
The business plan plays a huge role in an entrepreneur’s success and can be used to greatly minimize risk of failure. Entrepreneurs can also reach out to local volunteer organizations run by the Small Business Administration (SBA) such as Active Corps of Executives (ACE) and the Service Corps of Retired Executives (SCORE). Both organizations are present in southwest Florida. Seeking help from specialized organizations, forming a flexible and coherent business plan, and working to overcome stress and management problems are the main ways entrepreneurs trying to run small businesses stay afloat.
