Launching your very own small business can be exciting. However, there’s no denying that small business ownership is challenging and you’ll have to learn many new skills. While some people you know will be busy reading “10 Reasons Why You Should Date Someone Who Owns a Small Business“, you’ll be reading accounting textbooks trying to make sense of your new world. You’ll have to reprioritize your time to handle business matters and put out fires in multiple areas of your business.
Despite these challenges, small business ownership is extremely rewarding. You get to be your own boss, have full control over your finances, and get to own a highly profitable asset. Here are 4 things you must know about becoming a small business owner.
Technology is your friend
Technology has advanced to the point where you can run businesses with minimal human intervention these days. While you can never fully do without human employees, employing automation software and other tools to manage your tasks is a great choice.
For instance, scheduling, booking appointments, and invoicing are tasks that typically conjure images of manual labor. However, many apps automate this process, synchronizing your calendar and availability with client bookings.
Invoicing might sound complex and something best left to accountants. However, free software helps business owners create fully compliant invoices and export them to an accountant’s software platform. As a result, the cost of employing an accountant decreases, boosting business profits.
Other tools such as productivity software, time management apps, and automated email replies help you focus on getting work done with minimal distractions. Embrace technology since it is your best friend as a small business owner.
Learn the numbers
Small business ownership is all about numbers and math. You’ll have to deal with cash flow figures, revenues estimates, working capital needs, and financing options that would make a regular person’s head spin. All of this is before considering taxes and deductions.
While accounting for these numbers might sound intimidating, the fact is that these numbers will make sense intuitively to you once you begin running your business. For instance, accounting definitions of working capital as the difference between current assets and liabilities might leave you with a headache.
However, once you run your business, you’ll understand that it’s simply the cash you need to execute daily operations. Similar accounting terms such as profits, revenues, margins, and capital expenditures will make sense to you once you begin running your business.
If numbers intimidate or scare you, hire someone who can help you make sense of them. As a small business owner, you cannot escape numbers and what they mean for your business. Some owners go into business anyway and try to ignore numbers, running their operations by “feel.” This is a bad decision and will most likely lead to business ruin.
People matter a lot
As a small business owner, you will be interacting with several people. Your employees will typically interact with you the most, and you must treat them as your most valuable resource. Many unsuccessful small business owners try to execute everything by themselves and don’t trust their employees to execute tasks.
If you’re hiring highly-qualified people and not letting them work, you’re going to run out of energy and lose money. After all, what’s the point of paying someone to not do a job? Allow your employees the room to make mistakes and trust them to get the hang of their job over time. You’ll find that they’ll help you push your business to new heights.
The other group of people that matter are your customers. You’ll probably interact with them a lot since small business owners tend to take an active hand in sales and marketing. Always keep their needs in mind when creating new products or offering services.
Take an active interest in customer service and ensure your employees in that division are well trained. Your customers will reward you with repeat business that future-proofs revenues.
Plan for a rainy day
Business is inherently risky. You must plan for the unexpected by securing a rainy day fund equal to at least 6 months’ worth of operating expenses. Emergencies can come from anywhere these days, and business owners who don’t prepare tend to face closure and mounting debts.
Design a margin of safety into every process in your business. For instance, when projecting budgets and spending, account for the worst-case scenario at all times. Sure, you might leave some profit on the table but in the long run, you’ll weather more storms. Running a business at maximum efficiency is not always a good idea, as counterintuitive as that sounds.
For instance, leaving cash in the bank for emergencies is probably not the best use for that resource. Many business owners will put it to work to generate a return. However, when an emergency hits or some unforeseen disaster strikes, that “inefficient” use of cash will save your business.
Many challenges, many rewards
Small business ownership is a challenging endeavor. However, if you execute your operations well, you’ll earn outsized rewards. Pay attention to the tips offered in this article, and you’ll manage to run a successful business you can be proud of!