March 10th, 2021 | Updated on April 22nd, 2021
The biggest challenge in running a business lies in finding steady work to reach profitability. Everyone can have an idea, but not every o sells.
You see, to be profitable, your income must exceed your expenses, which is not a simple idea but, then again, not that hard to begin with.
You need to have a proper strategic plan for your business that can help you bridge the knowledge, process, and funding gaps in your business and some of those plans can be found at Scaling Partners.
So, how do you build up a profitable small business?
Here are many other tips and tricks that can help you build up a profitable small business and we are going to help you out.
1. Start With A Few Extra Funds
When you do a calculation on how much money you’ll need to start, you should also take into consideration that it might be months until your business is profitable.
Up until that point, your business will lose money. You see, your income is not sufficient enough to be self-sustainable. Even if it is, it’s barely enough, which means that every additional expense will put you in serious trouble.
That is why it’s a good idea to overestimate the amount of money you need and start with a bit more. It is crucial to know during your fundraising.
2. Start Modestly
If your expenses are low, running a profitable business will be a lot easier. So, it’s not a good idea to start a tad more modest enterprise to test the waters.
There’s only so much that a business plan can do. It’s vital that you burn cash to grow your business but overinvesting is a horrible idea. For instance, imagine having storage that can fit 100 boxes of X material.
In the time to come, you might need more than that but making a storage that can take 1000 boxes before you even start might be a bit of an overkill.
3. Find A Partner
To start a business on your own sounds like a good idea on paper. However, in practice, it might be quite hard to pull off. It’s not just about equity.
As an owner, you have the type of motivation that the majority of your workforce will lack. Well, obvious reasons.
Having someone that shares your interests is always a plus. That is especially true if this is the person that you can share administrative tasks with.
Just keep in mind that finding the right partner is not easy. Only because you share an interest with someone doesn’t mean that you share the same vision.
4. Find Something Niche
A lot of people have problems out-competing those who entered business before them. That is mostly due to their inclination to play it safe. Remember that there’s no such thing in the business world.
If there were, no one would ever lose money. What you need is an opportunity and means to an end. Also, you can overcome any restriction when you start observing things from the right angle.
For instance, let’s say that you want to start producing organic food, but you lack space to grow these vegetables, herbs and ingredients.
In that case, starting a hydroponic farm would be the right move. All you need are some hydroponic supplies and some serious research on this topic.
5. Don’t Quit Your Job So Easily
As we’ve already mentioned, it might take a while for your business to become profitable; therefore, the safest course of action would be not to rely on this income too much.
In other words, don’t quit your day job just yet. That is also why some of the most successful small businesses started as hobbies or part-time occupations.
It allows you to make some money and learn the ropes without exposing yourself to too much of a risk. It also helps you check out whether you have the passion necessary to make it in this field. You can also spend this time to become a proper expert on this topic, through concepts like e-learning.
6. Diversify Your Offer
Keeping all your eggs in one basket is never a good move. So, to avoid this, you need to learn how to properly diversify your offer.
In theory, having several products/services to offer would be enough, but the truth is that they need to be as different as possible.
Two products within the same category only give your audience more options to choose from, but this is not what you were aiming for; it doesn’t bring you closer to fulfilling your strategic task.
Having a diverse offer also allows you to pivot in the future, which is a massive boon on its own.
7. Hire The Right People
A small business operates with a small workforce that means every single employee counts. The worst thing you can do is hire someone who’s not the right fit for your enterprise or hire someone who’s not fit for teamwork, to begin with.
Not every employee is deficient because they underperform. For instance, emotional vampires and backstabbers aren’t necessarily doing an inferior job. However, they’re making everyone else underperform and making your enterprise into a hostile work environment.
8. Set Realistic Expectations
The simplest way to disappoint yourself is to set unrealistic expectations. Comparing your productivity to teams that are longer in business (even if they’re of the same size) is unrealistic.
Believing that your financial projection will hold in practice is also not a good idea. Additional expenses might end up being too much to bear if your budget is already strained. While optimism is essential, sometimes pessimism might help keep you sane.
At the end of the day, while it may take a while for your business to become fully profitable, the truth is that this is the formative period in your enterprise that you can’t skip.
Decisions (good or bad) that you make here will remain with your enterprise for months (even years). So, make sure to think about the long-term strategy.
Still, as a small business, a more pressing matter will be your day-to-day survival. Fortunately, these two can easily go hand in hand.
Alison Pearson is an interior design student. She is a writer and designer, but her ultimate passion is design and creation. She is also a bibliophile and her favourite book is “The Sound and the Fury” by William Faulkner. Follow her on Twitter.