Tips for Creating a Profitable Small Business

Photo by Jakub Żerdzicki on Unsplash

The statistics on small business failure are sobering. According to the U.S. Bureau of Labor Statistics, almost half of startups don’t make it past the five-year mark. The number one challenge is cash flow, which can stem from a lack of funding, poor budgeting, and inventory management issues, to name a few.

Learning this statistic can be scary when you’re trying to launch your own successful small venture. However, you may be in a good position to create a profitable business by taking note of these helpful tips:

Keep Your Costs Low

As tempting as it can be to sign an expensive lease agreement for a new building and hire multiple employees, such significant expenses can be challenging for a startup to manage. In fact, spending too much money in a business’s early days can often be what causes it to go out of business. Look after your bottom line by investing wisely.

For example, you might sign up with a virtual office provider like Davinci Virtual to create the illusion of a professional business location without the considerable expense. If you need help with daily operations early on, you can even explore virtual assistants to help with online tasks, rather than investing in a full-time employee. You should always be mindful of your spending in business, but even more so when you’re only just establishing a customer base.

Validate Your Business Idea

Thinking you have an excellent idea for a new business venture doesn’t mean you actually do. That’s why research is so important. Before spending all your savings on launching your startup, identify a pain point your product or service solves and test demand with pre-orders, landing pages, and surveys. You can also research competitors to find a gap or fill a niche.

Build a Strong Marketing System

It takes a while for customers to realize there’s a new business to buy goods and services from. This is especially true when that business doesn’t use any form of marketing to alert people. That’s why having a strong marketing system early on is crucial.

Utilize powerful platforms, such as social media and websites optimized with SEO, to identify and inform your target market. You can also use these same platforms to collect customer data, such as email addresses, and nurture those relationships with email marketing.

Prioritize Your Customers

When you think of profit and how to create it, you might think about setting high product and service prices and trying to spend as little as possible. However, prioritizing the customer experience is also a crucial component of turning a profit.

The more happy customers you have, the more repeat sales you often get, and the more you benefit from word of mouth marketing. Providing a great customer experience can be as easy as responding to feedback and messages quickly, and delivering ‘wow’ moments like discounts, loyalty perks, and even thank-you notes with orders.

Creating a profitable startup doesn’t happen overnight or by chance. It’s also not guaranteed! However, some of the tips above may be more helpful than you think in laying a strong foundation for business success.