Some small businesses and startups seem to have a knack for constantly growing and improving, while other similar businesses stagnate with revenues that are flat or falling. What sets the successful businesses apart from those that struggle?
Here are six things that the owners of the successful businesses did that helped them fuel that success:
1. Planning Ahead: Business owners who grew their businesses no matter what the economic conditions were adept at planning for what might go wrong as well as what might go right, rather than simply reacting to trouble. When times were good, these well-prepared businesses squirreled away cash reserves and opened credit lines that helped them weather tough times without having to make cutbacks. In contrast, owners with declining revenues seldom engaged in long-term planning and often found themselves madly rushing to slash expenses whenever sales slipped.
2. Borrowing Strategically: Growing businesses understand that borrowing can be a good thing – especially when rates are low like they are now (plus, business interest is tax deductible) – if the funds are put to good business use and the credit is managed responsibly.
The use of borrowed money that has paid off best for many high-growth firms is research and development. About 58 percent of high-growth small business owners report that R&D type investments – for new products, services or technologies – yielded the best overall returns.
On the other hand, borrowing to open new offices, build production facilities or add new capabilities was more likely to correlate with a drop in revenue than an increase in sales. Likewise, borrowing to add staff has generally turned out to be a money-losing proposition for most small businesses.
3. Sharpening Management Skills: Professional and specialized skills development also leads to faster business growth. Business owners who improved their skills at strategic planning, money management or technology implementation, for example, had a better chance of achieving rapid revenue growth than those who didn’t.
But perhaps the most dramatic results came from those who got better at hiring the right people. Team building skills, it turns out, are great for boosting the bottom line at a small and growing business.
4. Getting Good Advice: Business owners have always relied on advice from friends and fellow entrepreneurs. That never changes. But the best of them also make sure they plug into a savvy accountant, financial advisor, marketing guru or mentor, such as your SCORE mentor, to provide the kind of professional advice that every business needs, no matter what size.
For example, 68 percent of businesses with rising revenues sought out financial advisors, while only 51 percent of those with declining revenues took that step.
5. Being a Strong Communicator: There’s also a strong correlation between success – in terms of revenue growth, at least – and business owners who were strong leaders and communicators, adept at sharing their vision with employees, partners, investors and others. In addition, it was critical for business owners to demonstrate vision and commitment to the business in order to inspire their teams (staff or otherwise) to perform at their highest level.
6. Balancing Business and Life: The best revenue-boosting business owners are not completely consumed by their businesses. Sure, they work tremendously hard and are totally devoted to what they are building. But they’ve also learned to balance involvement with family, friends and their communities.
In short, they run their businesses – not the other way around. Conversely, business owners whose revenues stay flat or decline tend to be more fiercely independent and obsessed with their companies at the expense of other parts of their lives.
If your business isn’t growing the way you think it should be, take these differentiators to heart as you assess your path forward. By following in the footsteps of success, you’ll have a better chance of growing your business and increasing revenue no matter what’s happening in the competitive environment around you.
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