More than a few of our clients at Glassman Wealth Services are small businessowners and entrepreneurs, so I’m often asked to give advice on ways to improve their businesses or share ideas that will give them a competitive edge.
As a small business owner myself, I know first-hand the challenges that many of my fellow small business owners face. But there are some smart things that small business owners should consider doing now. Here’s my top 3 tips:
1. Access Capital Now
We’re five years out from the Great Recession and the start of the financial crisis that all but dried up access to capital especially for small businesses. That’s changing now as banks have money to lend and more of an appetite to lend it. The requirements are still the same like having good credit and a solid business plan, and you may need to be prepared to personally guarantee the loan. Most small business owners should consider accessing capital for three reasons:
Expanding your business by buying another company, launching new products or services or hiring new employees
Refinancing any old debt at today’s lower interest rates
Establishing a line of credit (LOC) for a rainy day. You may need the liquidity a LOC provides to occasionally meet day-to-day business obligations like payroll or temporary cash crunch needs.
2. Engage Rather Than Employ
Working in Washington, D.C., we’ve been known as the lawyer capital, but today, this area is also known as being rich in consultants. Fortunately great consultants exist in many parts of the U.S. So rather than hiring for a position that may be just part-time, like a marketing strategist or legal counsel, instead, consider retaining a consultant that is an expert in their field.
Keep in mind that many of these consultants left big companies to start businesses of their own. We use consultants in our own business to fulfill many of our business functions. In fact, we outsource most functions outside of our core business. To learn more about outsourcing, read: Make Outsourcing a Competitive Advantage.
The best benefit to hiring a consultant is that they cross-pollinate. What I mean by this is that they work with dozens, maybe hundreds of other businesses and bring a perspective and advice formed by best practices from working with many clients. This insider’s view can help you avoid costly mistakes and enhance any number of areas of your business.
3. Have a Lean Start-Up
I recently read a fantastic book, The Lean Start-Up by Eric Ries which is a must-read for all businesses regardless of size. The main point of this book is that if you’re starting a business or launching a new product, you don’t need to start with the grandiose office or spend years developing a finalized product or service before you launch. Instead, this book champions the idea of testing your vision by launching a more rudimentary form of your concept to gain interest and feedback.
Companies like Starbucks or Proctor and Gamble test new concepts on smaller markets before launching their products worldwide. Small companies can learn from this approach. Develop a prototype to get the product out, launch it in smaller markets, test it, get feedback, pivot, and then refine it. By using this cost-effective process, you’ll have a refined product or service designed to the taste and needs of potential clients because they told you what they liked and wanted along the way.
As the economy continues to improve, small businesses will have more opportunities to expand and grow. By taking advantage of opportunities that exist now, you’ll improve your chances of success.