Owning a small business can be an exciting venture, as well as a risky one. The majority of small businesses fail within their first ten years. There’s one underlying theme that contributes to this downfall time and time again— and that is that most small businesses are lacking one or more of the essential elements needed to operate effectively, and ultimately succeed.
In this article, we’ll share the 6 key elements that every small business needs in order to not only survive, but thrive in today’s competitive marketplace.
Small Businesses That Are Successful Are Optimized To Run Smoothly
For a business to be successful, it needs to run smoothly. When a business is set up to operate seamlessly, it allows the owners and employees to focus on their core competencies and key tasks. When businesses don’t run well, owners become bogged down in the day-to-day operations, which leaves little time for strategic planning, growth, and other critical business functions.
Inefficient business operations can lead to a range of issues that can negatively impact the overall success of the business. For example, if a business owner spends all of their time putting out fires and dealing with operational issues, they won’t have the time or energy to work on other important parts of the business such as developing new products, creating marketing campaigns, or expanding their customer base.
In addition to that, when businesses don’t run well, they also struggle to scale. Scaling requires a streamlined operation that can handle an increase in demand. If the business is already struggling to keep up with its current workload, it’s nearly impossible to scale. This leads to missed opportunities and lost revenue.
By focusing on creating an optimized operation, businesses can accelerate growth and set themselves up for long-term success.
What Do Small Businesses Need To Succeed?
Donald Miller, author of Building A StoryBrand and creator of the Small Business Flight School program, often compares small businesses to airplanes. Just like an airplane needs 6 key components to fly safely, a small business also needs 6 key elements to operate well. Each of these elements are essential to the overall success of the business and require careful attention and management.
Think of leadership as the cockpit of the plane. Just as a pilot is responsible for the safe operation of an aircraft, a small business owner must provide effective leadership to their team.
A skilled leader should be able to articulate a clear direction for the team by conveying these 3 points:
- A mission statement that encompasses three economic priorities, a timeline, and a strong link to a larger purpose.
- Specific characteristics that every team member should embody.
- Essential actions that each team member can perform regularly to help the organization reach its financial goals.
Strong leadership is critical for ensuring that the business stays on track and is able to adapt to changing circumstances.
In an airplane, there are two engines that work together to generate sufficient thrust for takeoff and sustained motion. A small business also has two “engines” it needs to get off the ground.
One of these engines is marketing.
To effectively promote products and services, a business needs to clarify their marketing message. All marketing should be carefully crafted so that it conveys how the company’s product solves the problem of their ideal customer, and how it can help the customer survive and thrive.
Marketing shouldn’t be about trying to forcefully persuade someone to do something. It should be about clarity. When a business uses clear messaging to explain their offerings, it results in an increase in sales, improved cash flow, and accelerated business growth.
The second “engine” in a business is sales. A small business cannot survive without a consistent flow of sales. This is why Donald Miller suggests that business owners learn how to create a million-dollar sales message. This can be accomplished through the storytelling principles outlined in the StoryBrand Framework.
The goal of this million-dollar sales message is to position the customer as the hero of the story, the business as the guide, and the product or service as the solution to the customer’s problem. This eliminates one of the biggest pitfalls that businesses fall into, which is talking too much about themselves and their product, and not talking enough about the customer and what they want.
Think of products and services as the wings of the plane. Business owners must learn how to identify which of their products are the most profitable, and then direct all of their focus on those.
This can be done in 3 steps:
- Ranking existing products and services to identify which is the most profitable.
- Analyzing new product ideas to see if they are worth pursuing.
- Optimizing products to increase revenue, without increasing workflow.
It’s very important for a business to grow their products and services, without bloating the overhead.
5. Overhead and Operations
The overhead and operations represent the body of the plane. You want to keep the plane in the air, which means you need to keep the overhead as slim as possible.
Labor makes up the biggest expense for most small businesses. In many cases, when a business is struggling the first thing they do is start cutting positions to downsize. Although this is sometimes needed, there is a different way to go about this.
Instead of cutting positions right away, Donal Miller advises leaders in the company to first organize their team around a common financial goal. There are 5 different types of meetings that leaders can utilize to mobilize their team, motivate their team, and increase productivity. Every person on the team should have a solid understanding of how they contribute to the company’s goals.
6. Cash Flow
Last but not least, is the fuel tank of the airplane, which in a business is cash flow. Without a healthy cash flow, a business cannot survive. It’s essential for business owners to monitor their cash flow closely, manage their expenses, and have a solid plan in place for managing cash flow fluctuations. But without a proper cash flow system, this is difficult to do.
The simplest way to keep everything in order is by having separate checking accounts for each aspect of the business:
- Operating Expenses
- Investment Holding
By having everything in its own account, a business owner can more easily analyze the health of their business, as well as quickly make financial decisions.
Join Donald Miller’s Small Business Flight School
If you’re a small business owner who is tired of setbacks and ready to take your business to the next level, we invite you to enroll in Donald Miller’s Small Business Flight School. This 6 month program is designed to help small business owners double their revenue by focusing on the 6 key elements we’ve discussed here.
Over the course of 6 months, you’ll receive expert guidance and support as you focus on a different key area of your business each month. You’ll be provided with the action steps you need to take to improve each area. You’ll also receive guidance on executing those steps for maximum impact. This program takes just 5 hours a week over a 6 month period, making it an easy and manageable investment in your business’s future. It’s time to stop guessing at what you need to do to grow your business, and start taking action today.