Updated: Apr 22
“Small businesses are not for the faint of heart. It is for the brave, patient and persevering. It's for the victor. " This anonymous quote perfectly describes the character of a successful small business owner. It requires more work than most people are aware of, and you have to be willing to plow through when it gets tough. Whether you're thinking of opening an ice cream shop or your own consulting firm, business owners need to be purposeful, open thinkers who are willing to dive headlong into the unknown.
That said, owning a business also offers a unique career path that allows for creative flexibility and the opportunity to be your own boss. To venture out as a self-employed entrepreneur, you need to develop a business plan and create a business website.
Do you think you have what it takes? Here's what you need to know to become a small business owner.
Who qualifies as a small business owner?
First, let's discuss exactly what a small business owner is. The boundaries between small and medium-sized businesses are sometimes blurred, and the official definition may vary based on your country.
In general, whether your business is considered a small business or not is based on various factors, including the average income of your business and the number of employees you hire. In the United States, companies that earn less than $ 7 million in revenue or have fewer than 500 employees fall into this category. In contrast, Europe defines a small business as having less than 250 employees, and in Australia it is less than 15!
But why are these definitions important? If you qualify as a small business owner in the United States, you may be eligible to apply for government loans from the Small Business Administration (SBA). These loans also come with other benefits like guidance and advice, lower interest payments and flexible overhead. SBA also offers funding for grants to philanthropic organizations as well as companies in specific industries, such as exports, science and research.
Small businesses and finances
Research shows that small business owners are the backbone of America, and are an important force in driving the economy forward. According to the Small Business Administration's Office of Advocacy, there are 30.2 million small businesses in the United States, representing 99.9% of all businesses in America. Small businesses are also responsible for creating 1.5 million jobs each year and account for 64% of new jobs created in the United States.
They have also been a factor in empowering people who have historically faced challenges entering the business world, such as women and minorities. Between 2014-2016, minority-owned enterprises increased by 11%. And in 2019, 9.9 million small business owners were women, compared to 7.8 million in 2007. These figures are telling and are proof of the progress being made in today's business world.
Pros and cons of being a small business owner
According to a survey conducted by the digital marketing company Constant Contact, 56% of small business owners feel that they can never be away from their businesses, and 84% say that if they could, they would start the business again.
Being a business owner obviously has its pros and cons. But most people agree that the pros outweigh the cons.
Why does someone decide to start a business? One of the main reasons is independence and autonomy to do things your own way. In fact, small business owners report that there are two driving factors behind their motivation: the ability to pursue their passions and professional flexibility. There is nothing like becoming your own boss and creating your own product or service. It's an even better feeling when customers are willing to spend their hard earned money to buy them.
Other benefits include hiring your own employees (and who doesn't want to choose their own colleagues?) And setting the tone for your company's corporate culture. Do you want to create an environment where people are expected to wear suits every day? Or do you want your employees to take their dogs to work and wear t-shirts and jeans? It's your decision.
It is also worth mentioning that because most small business owners register as sole proprietors, partnerships or joint stock companies (LLCs), it is easier to file taxes and business registration than it is for some other types of businesses, such as companies.
The disadvantages of being a small business owner are overshadowed by the benefits. Still, it's no secret that business ownership is not for everyone.
Small business owners work extremely hard and spend their own time and money running and marketing their businesses. Because of this, they can not make money for a while. They often have to say goodbye to a 40-hour work week, at least in the beginning. They often work 50-70 hours a week, which can sometimes make work-life balance almost impossible. And even after putting in the hours, 56% claim that they do not have enough time to get everything done.
Wearing multiple hats at once can also cause extra stress, anxiety and fear of failure. But do not let these factors make you create your own small business. Perseverance and determination are the secret sauce for success.
10 qualities for successful small business owners
This brings us to the next point: small business owners require a unique combination of certain soft skills to keep businesses going. Being comfortable taking risks and learning how to manage a budget are just two of the skills that are essential for business management.
With that in mind, here are 10 essential qualities for successful small business owners:
Be sociable and attentive
Be prepared to evolve
Know when to take a break
Dedication and perseverance
Stick to the budget
Look at the big picture
01. Be sociable and accommodating
Being kind to others may sound mundane, but making connections with your employees, customers, suppliers and even competitors can actually give you more business. It is a known fact that the more employees like and respect their employers, the stronger they get a sense of team motivation.
In addition, consumers do not make purchasing decisions based on a product alone; they are also affected by what a brand represents. If you are friendly to those around you, your customers will associate your friendly behavior with your product.
In fact, experts point out that kindness in itself is a powerful leadership strategy. You're more likely to have repeat customers who will tell friends and family to buy from you instead of the guy down the street. In turn, the bottom line will increase and people will get the product they need (and let's face it - yours is the best out there anyway).
02. Be prepared to evolve
Small business owners need to be prepared to roll over. The market will inevitably change over time, and business owners need to adapt to keep their product relevant. Refusing to change your approach to what consumers want or need will only hurt you in the long run.
An excellent example is the way some restaurants adapted to the changes caused by Covid-19. The Chicago-based three-Michelin-starred restaurant, Alinea, is known for its sumptuous, avant-garde presentations at the table. But after the pandemic hit, Alinea immediately switched gears and began offering delicious meals. Its ability to adapt quickly allowed it to stay afloat and let the audience enjoy the food - a win-win.
03. Take the risk
Mark Zuckerberg, CEO of Facebook, once remarked that "the biggest risk is not taking any risk." Starting a business always means taking a chance; there is no way to know for sure if it will work.
While successful small business owners make educated decisions and use market research to propel their ideas forward, it is impossible to know what the future holds. Investing your own time and money in a business is always a risk, but going hand in hand with being a business owner.
04. Be independent
The ability to think for yourself and make important decisions are both important features of entrepreneurship. Independence gives the drive to get where you want without affecting the opinions of others or noise outside. Maybe you have a unique idea for a product or service that has not been created before. Independence gives you the opportunity to put yourself out there and take the initiative to make it happen.
05. Be confident
Self-confidence and independence often go hand in hand. Having confidence in the business and financial decisions is crucial. Because your business lives and dies with you, you have to believe in yourself to move on and cope with the storm through difficult situations.
On top of that, trust instills respect and encourages others to see you as a leader. This can have a big impact on team management. Strong leaders are rewarded with increased productivity and creativity from their employees, which makes the business generally more efficient.
06. Know when to take a break
While it's true that small business owners work tirelessly, they also know when to take a break. Burnout is characterized by exhaustion, cynicism and inefficiency, and can lead to feelings of overwhelm and reduced motivation. The best way to avoid this is to incorporate certain successful habits into your daily routine, such as planning time away from your business.
Even if all you get is thirty solid minutes to focus on yourself or spend time with your loved ones, be sure to do so. And do not let yourself look at financial reports or emails during this time. Successful business owners understand the value of having time off from work, even if only for a short time each day.
07. Dedication and perseverance
Have you ever heard the expression that success is not linear? This is especially true for business owners. It usually takes time for any business to be profitable and solve all the cracks so that things go smoothly. You may not get it right in the beginning. You will most likely need to make adjustments along the way, such as pricing, your business model or even the product itself. But not giving up and sticking to it is what gets you through.
08. Stick to the budget
Overconsumption can be the death knell for your business. In fact, according to a study conducted by US Bank, 82% of small businesses fail due to poor cash flow management. When creating a budget and business plan, one tip is to overestimate expenses and underestimate revenue. That way, you will never be stretched too thin and always be prepared for unexpected costs.
More often than not, the number of things you have to do is overwhelming. If you work alone and have no one to delegate tasks to, this quality is especially important.
As a business owner, you need to hone your project management skills to find out which tasks have the greatest business value and which ones may fall lower on your priority list. A good way to start this process is by marking the list of tasks as important or urgent. As a rule of thumb:
Important tasks are those that are crucial to the company's long-term success, but which may not need to be done right away.
Urgent are those that require immediate attention and are necessary to keep the business going. These should always be prioritized first.
A handy tool for figuring out which tasks to prioritize is Stephen Covey's Time Management Matrix. This simple diagram can help you easily divide the list of projects into four main categories: urgent / important, non-urgent / important, urgent / not important and non-urgent / not important.
10. Look at the big picture
It can be easy to get caught up in everyday life. Any problems that arise can lead you to question why you started your business in the first place. But remind yourself of these reasons, and look at your overall success instead of minor pitfalls - that's what will keep you going in the long run.
Freddy Fix borrowed from Wix