The Business Development Bank of Canada has released a new report on how to be a successful small business, with advice compiled from the most prosperous of more than 1,000 ventures surveyed. The researchers also identified trends among the not-so-prosperous.
If you're running a small- or medium-sized business, here are a few tips from that report — tips on how to be successful and tips on how avoid common pitfalls.
Top 5 dos
1. Innovate, and don't get too comfortable
The most successful businesses surveyed offered new products and services more often. They adopted new technology more quickly.
2. Ask for outside advice
Use formal tools, like advisory boards or external consultants. Successful businesses report that they also use networks as informal sources of advice.
3. Have a solid plan and measure progress
Set clear goals and devise a plan; track your progress. More than 70 per cent of the most successful businesses surveyed had some sort of medium-term business plan and roughly a third of these had a detailed roadmap for future growth.
4. Hire quality staff and keep them engaged
Balance the need to immediately fill a position with the desire to find the best people. Successful businesses are more likely to wait longer to hire new employees, sometimes several months. Paying for good workers is important, but so is ensuring their work environment is stimulating.
5. Build strong relationships with key suppliers
A successful business doesn't just build good relationships with customers, it works closely with suppliers, too. A third of the successful businesses surveyed said supplier relationships were vital to their success.
Top 5 don'ts
1. Don't rely on too few customers
Diversify your customer base. One in six firms that reported running into financial difficulty said the trouble came when they lost a single big customer.
2. Don't underestimate the importance of good financial management
The lack of financial management expertise is probably the single most common factor that causes otherwise successful firms to run into difficulties. Financial management experts can be readily found outside your organization.
3. Don't leave back-up planning until it's too late
Are you prepared if your business loses key employees, if the cost of materials increases, or if a unique supplier pulls out? Many businesses that struggled failed to plan for the unexpected.
4. Don't ignore what's going on in your market
Markets change. Technology and production techniques and consumer preferences shift. Failing to adapt can sink a company.
5. Don't wait too long to get help
If you run into trouble, finding help quickly can turn things around. Don't try to manage everything on your own until it's too late to turnaround.
For the dos, the Business Development Bank of Canada analyzed the 1,139 responses from a survey it sent to small and medium-sized companies. It compared common characteristics from the 20 per cent considered most successful.
For the don'ts, the organization looked at 118 well-established companies in its portfolio that had run into financial difficulty, identifying common trends.