Small businesses play a crucial role in the economy as they are responsible for creating a significant portion of new jobs, around 66%. However, it is also noted that a large number of small businesses, approximately 20%, do not survive their first year according to the US Bureau of Labor Statistics.
The pandemic and subsequent events have put additional pressure on small and medium-sized businesses (SMBs) to adapt and stay competitive in an ever-changing market. Like larger businesses, SMBs can no longer afford to make mistakes with the added uncertainties of inflation, supply chain disruptions, and rising interest rates.
In this challenging environment, as an owner or operator of a small business, how can you maintain a mindset for growth? One approach could be to emulate strategies used by larger businesses.
Big corporate leaders have emphasized the importance of agility, flexibility, and scalability even in uncertain times, and small business owners and operators can benefit from adopting these same principles. Implementing the best practices listed below can help SMBs maintain smooth operations and free up time to focus on growth objectives.
Embrace the Process
Starting a business can be overwhelming with many tasks to prioritize. Often, businesses focus on getting their product or service out to the public as soon as possible, neglecting to take a step back and focus on the operations of the business itself.
Large companies have well-established and documented processes in place for all their operations, such as hiring procedures, product development, sales, and financial planning. These processes are continuously evaluated for opportunities to increase efficiency and improve operations.
As the owner of a small business, following this example by implementing well-defined and documented processes can help increase efficiency, provide consistency for customers and employees, and ensure that tasks are performed to the same standard every time. In the following best practices, we will explore financial and operational processes that can benefit small businesses.
1) Prioritizing Building the Right Team
Having the right team in place is crucial for achieving business goals and large companies understand the importance of investing in creating a strong team. This doesn’t mean hiring the person with the most experience but rather looking for individuals with skill sets that align with your business values and add value to your company. Seek employees who are eager to learn and willing to contribute their own ideas. Big businesses understand that investing in the best talent and providing training for them is necessary for success, even if it requires spending more money.
Small businesses can also benefit from implementing workforce planning processes to identify necessary skills, create an onboarding process, and determine ongoing training needs. This will ensure that the company is prepared for future challenges and that employees are satisfied in their positions.
2) Invest in Technologies
According to Salesforce’s 2021 Small and Medium Business Trends Report, 71% of expanding SMBs reported that digitization helped them survive the pandemic. In August 2021, 42% of those growing SMBs said they had accelerated their technology investments over the previous year.
The top reasons for increasing technology investment were improving business agility (59%), increasing productivity (58%), and increasing data security (52%). 28% cited wanting data to be stored in a central location.
Large companies recognize that the right technology can improve workflow efficiency, reduce the risk of human error, and support the implementation of defined processes. While a small startup might be able to manage files manually, that workflow may not be scalable as the company grows.
3) Eye on the Prize
Large companies have well-defined goals and use key performance indicators (KPIs) to measure their progress toward achieving them. They are constantly strategizing on how to improve performance and achieve goals faster, and then set new ones.
In recent years, large companies have recognized the importance of keeping goals and the processes that support them flexible, so they can adapt to changing market, industry, and business demands. They use scenario modeling to prepare for future possibilities and real-time data and rolling forecasts to keep their budget aligned with current business needs.
SMBs also need strong goals and the ability to adapt quickly. The processes and technologies implemented today can help SMBs stay agile in the future, just like large companies. Utilizing processes such as scenario modeling and rolling forecasting can be key to the ongoing success of SMBs.
Large businesses have achieved success not only by having a product or service in high demand, but also by mastering the art of driving growth, measuring performance, and selecting the right people, processes, and technology to help them achieve their goals.
Small and medium-sized businesses can learn from the same best practices used by large companies as they strive to expand their own businesses. By adopting a growth mindset and emulating the strategies of big businesses, SMBs can increase their chances of success as they scale. It’s important to think big from the start if the goal is to continue growing the SMB.