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Running a small business is hard. Sometimes, it can be very hard. And while luck plays a strong hand, there are still many things business owners can do to best position their businesses for success. Here are five of them.
1. Talk to your customers extensively
It’s very simple: your customers are your business. The old adage that the customer’s always right underpins the excellent customer service ethos of many successful businesses: generating repeat business and referrals. However, seeking rigorous customer feedback is just as important and more commonly overlooked. Small business owners should continually ask their customers what else they’d like to see from the business, what else they can do to generate their referrals, and what could jeopardize the business relationship. Customer conversations, surveys and focus groups are all great starting points.
2. Identify your strengths and double-down on them
Sometimes it's sensible to imitate competitors’ successes, but this strategy shouldn’t be adopted without consideration. Every business is different and what works well for one business - and their unique customer base - might not resonate the same way with yours. Rather than trying to do everything, find out what your customers really value about your business - what uniquely makes your business your business - and double down on that.
3. Don't be afraid to experiment with pricing
Pricing is your greatest lever in driving profits. Generally, it’s much easier to control than your costs. So, experiment with different price points and promotional offerings as it’s unlikely you’ll get it right first time. And remember, it’s a moving target. It’s not just that one business’s customers will have different price sensitivities than another’s – you also need to remember individual customers have different sensitivities to different components of your product and services.
If customers tend to buy a bundle of items from you, they may be sensitive to the headline price of the core item but less sensitive to the ancillary items. Try reducing the price of the former and increasing that of the latter. It’s not uncommon for pricing changes not just to generate more sales but to also increase the aggregate profitability of those sales as well.
4. Get involved with local networks
Successful small businesses cooperate with each other far more than they compete. Having a high density of high quality shops in the same area will generate more traffic. Referring business that you cannot fulfil to your “competitors” will result in a returned favour. Working as a group provides a louder voice for any lobbying. In short, there’s much to be gained from working together with other small businesses in your local area or industry. The sum is really greater than its parts.
