Your small or medium-sized business is more than a pet project. It’s your livelihood, and you want to ensure it sticks around for years. If you have employees, they also depend on the strength of the company and its ideas. Ensuring your business’s continued success is up to you and the team. And it goes beyond launch parties and celebrating each new milestone.
At the core of SMB success stories are crucial factors that propelled those companies forward. These factors might seem basic, but they’re also where companies can fall apart if they’re not mastered. Let’s look at four of them below.
1. Strategic Alignment
Your business started as a concept on paper. But to make it real, you had to flesh out your idea with a plan. You had to come up with a strategy aligned with the market’s needs and opportunities. Once you get going, though, it can be challenging to keep your strategic focus.
As the company grows, so does the rank and file. Each employee comes to the business with new thoughts, goals, perceptions, and backgrounds. And each of them fills a role with evolving responsibilities, which may get lost in the shuffle. Yet maintaining strategy alignment is critical to success regardless of a company’s size.
Without it, individual contributors don’t know what their priorities are. There’s no North Star to steer toward. Employees jockey for position and fight over what direction the company should go. Work might get done, but it usually ends up becoming wasted time. To keep your business on track, communicate its priorities and align responsibilities with strategic objectives.
2. Unique Value Proposition
Your business’s unique value proposition is how you’ll stand out from the crowd. Small businesses may have the “support small, support local” hook. However, it’s not enough to keep the lights on. What differentiates your company from its competitors will be a significant factor in whether it continues to thrive.
Ideally, you discover your niche during your market research and before you launch. Your unique value proposition should align with your target audience’s motivations and needs. The distinct value your brand offers becomes central to its identity. Once developed, your niche also communicates why your target audience should choose you over the competition.
However, unique value propositions can adjust as new competitors emerge and market dynamics change. Shifts in consumer behaviors, economic conditions, and market saturation levels may impact your niche’s value. That doesn’t mean you always have to reinvent your brand. But it does mean you should keep a pulse on audience reception, industry trends, and outside factors.
3. Internal Processes
Process design goes hand in hand with strategic alignment. If you don’t have standard operating procedures for things you should, your operations can quickly fall apart. For starters, employees won’t know how to tackle tasks. When they’re not urgent, it may not matter that much in the moment. Eventually, however, those non-urgencies will become “emergencies” because of a lack of planning.
Plus, the true urgencies will become all-consuming. Without standard operating procedures, it will be clear to your customers that something is amiss. Say you’re a local internet service provider, and your business keeps experiencing service outages. You don’t have a systemized way of communicating when and why those outages are happening. Customers are left in the dark, wondering why service availability seems to be a constant struggle.
While you can implement crisis communications plans to your heart’s content, you’ve already burned some bridges. You’ve also eroded trust. Long-term effectiveness comes from thinking through how to respond to multiple types of scenarios. This mix includes routine, likely, and one-off probabilities. Knowing how to spring into coordinated action ensures you can meet market expectations.
4. Finances
The reasons small businesses fold tend to be similar across industries. One of them is running short on cash. You can experience financial problems because you don’t secure enough capital from the start. Other reasons include overestimating market potential and likely revenues.
Calculating when you’ll break even isn’t an exact science when you’re just starting out. It’s why establishing a contingency fund and planning for the worst-possible scenario can help you avoid cash flow problems. Worst-case scenarios combine factors like runaway inflation, sluggish sales, and little outside funding. While these may not happen, putting financial contingencies in place can keep your business afloat.
Solopreneurs or home-based businesses may not have the same level of overhead as medium-sized ventures. Nevertheless, you need to be sure you can cover your expenses in case your cash flows are less than expected at first. For small companies with more overhead, it doesn’t hurt to have two years’ worth of operating expenses in the bank.
Vital Capabilities for Small to Medium-Sized Businesses
From the outside, business success seems to just happen. However, the truth is it takes careful planning and execution to pull it off. While every SMB will have a different definition of success, not having a plan is like betting you’ll lose. There’s a small chance you’ll scrape by, but the odds aren’t in your favor.
It all begins with a strategy. From there, communicate your company’s priorities so everyone’s on the same page. Individual roles, marketing initiatives, operations, and finances should all align with your North Star. By having one, your small business will have reason — and a way — to succeed.