After 2009’s financial crisis, small businesses significantly cut back on expenditures, opting instead to save during a time of financial uncertainty. Banks were also cutting back on their loans, slashing small business lending by $8 billion. At the time, the outlook on small business growth was bleak and unpredictable, and many entrepreneurs doubted the future of their enterprise.
But small businesses are proving their resiliency. While the past six years have been rocky, the economy has stayed on a healthy road to recovery. And for many small businesses, 2015 is proving itself to be the big turnaround year they have been waiting for. Consumer spending is up, unemployment is down, and a recent poll by Gallup indicates that small business owners are more optimistic now than at any time since early 2008. Recent aggregate data from receipt-tracking company Shoeboxed also reveals that small business spending has increased 22 percent over the last five years, a key sign that small business is on the rebound.
The country is finally emerging from a period of stifled economic activity, and for small business owners, it means they are poised to overcome the unique challenges of scaling a business. Growing pains are inevitable and will force owners to restrategize their approach in several arenas. If small businesses owners want to leverage a healing economy for profitability, they must remember the following three things that are fundamental to scaling a small business:
Hire the right team
Finding the right people to help take your business to the next level is key. With few employees, one bad hire can potentially harm the entire business, so it’s important that every new hire fits in with the company’s vision. This can be difficult when business is growing fast and there are several spots that need to be filled quickly. But with the right company culture, motivated and talented employees will be attracted to work for the company without any HR hassle.
In an excerpt from Rama Dev Jager’s 2014 book In the Company of Giants: Candid Conversations with the Visionaries of the Digital World, the great Steve Jobs addresses the issue of hiring in a small business by emphasizing that it’s the most important task: “Assume you’re by yourself in a startup and you want a partner. You’d take a lot of time finding the partner, right? He would be half of your company. Why should you take any less time finding a third of your company or a fourth of your company or a fifth of your company? When you’re in a startup, the first ten people will determine whether the company succeeds or not. A small company depends on great people much more than a big company does.”
Customers also tend to notice the happiness of employees, and having a good company culture with team members that mesh well together can drive quality work and a positive attitude. And as the old saying goes, good employees attract good customers.
Find new customers
This reminder is the most obvious, which is precisely why it’s also often times the most overlooked. Generating sales leads is a top priority for small businesses, especially during phases of accelerated growth and expansion. A larger marketing or advertising budget will not guarantee you more customers, though. Finding new customers doesn’t necessarily mean finding more of the same customers; it can also mean investing time into market research to find a new crop of target audiences.
“Attracting more customers is really about listening to their needs, not being a solution looking for a problem,” said Paige Arnof-Fenn, founder and CEO of a strategic-marketing consulting firm, in an Inc. article.
And, according to a recent survey from the The Hinge Research Institute, 72 percent of businesses said attracting and developing new business is the biggest challenge they face. Thirteen percent of small business owners also cite attracting customers as their “most important challenge.” Whether they’re struggling to manage marketing and advertising or facing competition in a crowded industry, small businesses are always trying to differentiate themselves to survive.
Luckily, it no longer takes a large advertising budget or traditional media placements to attract consumers. Small business owners have a plethora of free and low-cost tools to help them reach prospective customers and retain current ones. From favorites like MailChimp for email marketing to newcomer Squarespace for simple web development, even the least tech savvy small business owner can take their business online to acquire customers at low cost.
Another big challenge growing businesses face is managing paperwork. Bookkeeping and accounting are some of the most time-consuming aspects of running a small business; in fact, 40 percent of small businesses spend over 80 hours per year on accounting and taxes. And, with each added customer and vendor, the complexity of accounting increases.
In a survey by the NFIB, small business owners also cited taxes as being one of the single most important problems for their company. As small businesses continue to grow and spend more, they will be seeking new ways to organize expenses and leverage technology for smarter, faster, easier money management. The proliferation of cloud tools has allowed business owners to find relevant solutions to simplify and streamline the administrative side of their business, giving them more time to focus on growing their core business.
While small business owners will inevitably face these challenges as their business grows, 2015 is a great time to do so, largely because of new technology and a healthy economic environment. Using a combination of a unique company culture, new marketing tools and cloud accounting apps, small businesses can thrive and build the momentum needed to scale their company to new heights.