3 things every small business needs to survive and thrive

Running a small business can be very challenging.

And the most annoying part is that if you don’t run the small business well, it will fail to grow, become stunted and eventually collapse. It is no wonder about 90% of small business started fail before they reach their tenth anniversary.

Even though we usually talk about the failure rate of small businesses, what we usually don’t talk about is the success rate of the other 10% that succeeds. Many giant businesses today were started very small and tiny.

But those small businesses survived the storms and eventually became successful. So, the question we need to ask ourselves is not why small businesses fail, but rather what are the things every small business needs to survive and thrive in these turbulent times.

Combing through the management archives of Peter Drucker in his book ‘The Essential Drucker’, he talks extensively about the three things every small businesses needs to survive and thrive in business today to eventually become a ‘flourishing large business’.

So what are these things?

  1. Market Focus
  2. Financial Foresight
  3. Top Management Team

Market Focus

I personally believe that lack of market focus is the number-one cause of business failure. After my first three start-up businesses failed, I learned this vital lesson. I learned that every small business needs to build into its faculty the quality of being market-focused.

If you’re not market-focused, your products and services will fail in the market. You will not be able to attract customers, you will not generate sales, and your business will not make money. So, you always have to be on the lookout in the market.

You must constantly scan your target-market, salespeople and competition.

You must be clear on which products your customers are buying, which are they not buying, why they are buying, what your customers are using your products for, how to promote the products, and successfully sell the products and services to generate cash flow in business.

Financial Foresight

Financial foresight is where many small businesses miss it. When it comes to financial foresight, my uncle Mr. Edmond Nartey – CEO of Crest Finance House advised: “Keep an eye on the numbers”. Many small businesses tend to be greedy so they just focus on profits.

But the fact is that a business can be very profitable and still fail. In fact, all my businesses that failed did not do so because there were not profitable. They failed because I was engrossed in the day-to-day operations to the point that I lacked financial foresight.

For a small business to survive and thrive in the marketplace, there is a need to focus on these three essential elements that gives financial foresight and vision to the entrepreneur/founder or management team:

  1. Cash Flow—this requires a regular need for cash flow analysis, cash flow forecasting and cash flow management. And cash flow is different from profit. It is the measure of how cash is flowing in the business.
  2. Capital—this requires the continuous demand of raising funds through customers by selling, reinvesting back into the business and through outsiders to expand and grow the business.
  3. Controls—this requires the act of cautiously controlling expenses, inventories and account receivables. Your business can be profitable in the book but broke on the ground! So you have to exercise financial controls!

Because many small businesses do not hire a bookkeeper or accounts clerk to help them with the financial foresight, they tend to lack financial foresight in their business. They are doing business, but they are not doing well financially! And the problem is that they don’t know what the problem is!!!

Top Management Team

Every business needs a team to grow.

‘Top Management Team’ is a three-word combination. The last word is ‘team’, followed by ‘management’ and then ‘top’.  So a small business first needs a team, then groom part of the team into a management team; and then finally hand over the management responsibility for them to run the entire company with or without the entrepreneur.

A small business may not need a ‘top management team’ at the beginning, but it is very essential to build a top management structure so that the top management team will eventually emerge when it is needed.

You must also know that a team is different from a union.

Oftentimes many small business owners don’t run as a team; rather, they run as a union. The barber brings other barbers to help him and the fashion-designer brings in other fashion-designers to help him! That is not a team! It’s a union! Peter Drucker said “The founder has to learn to become the leader of a team rather than a ‘star’ with helpers”.

A team is a group of people with different skills and abilities having similar shared values working toward a common goal. That means having someone responsible for the key critical success areas of your business, and devising means to compensate them for their efforts.

Over time, your team will grow and you can nurture some of them into the ‘top management team’ to run the entirety of operations in your business. This will enable the entrepreneur to focus on a core area of the business to promote growth and development!

Conclusion

In conclusion, to take your business to the next level in these turbulent times of massive competition, overflooding of products in the market place and high rate of business failures, you need to put systems in place within your business for market focus, a financial team, and a top management team.

Market focus will enable you to serve and attract customers for your business. Financial Foresight will enable you to keep track of the financials and improve your bottom-line. And then a management team will ensure your business runs very well to survive and thrive!

About the author:

Francis Sabutey is the Founder and CEO of Think Expand Limited, a digital marketing and business development company in Ghana. He is a digital entrepreneur, digital marketing & business blogger, digital strategist & trainer, content writer and an author. His core value for delivering his professional services is simply delivering “excellence on time!”

You can follow his blog at expandgh.com, connect via LinkedIn or Facebook.