One of the big advantages a CPA has working with small business owners is that we get to learn what makes them profitable and what makes them fail.
In a past blog I gave you a number of reasons small business fail. But while avoiding these reasons for failure is important, it is just as important to understand how to succeed.
Moya K. Mason released a paper years ago, What Causes Small Businesses to Prosper? (http://www.moyak.com/papers/small-business-success.html). In it, she writes, “What does matter, it turns out, is having a strong grasp of the business basics. Without exception, companies that outperformed their industry peers excelled at what we call the four primary management practices – strategy, execution, culture and structure.” My observation of small business owners who prosper agrees with her findings. To this I would add the following reasons that small business owners prosper:
- They have or acquire a strong working knowledge of business basics.
- They have a strategic profit plan.
- They build their strategic profit plan around a clear value propositions for the customer.
- They are committed to marketing and selling their product.
- They concentrate their sales efforts to a niche rather than trying to sell to every possible customer.
- They develop a way to make their product something their customer “must have” rather than something that would be “nice to have”.
- They continuously turn out innovative products and services rather than reacting to events.
- They deliver products and services that consistently meet and exceed customers’ expectations.
- They hold themselves and their people to a high level of performance.
- They empower their employees and managers to make independent decisions and to find ways to improve operations.
- They make it easy for their employees and customers to work with their organizations.
- They hold on to talented employees and actively work to develop more.
- They get a mentor on board.
- They practice the “Golden Rule” in all of their business and personal dealings.
- They develop a good accounting system that provides them with strong management reports.
