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As rewarding as entrepreneurship can be, it takes a lot of hard work to start, run, and grow a successful business. About 20 percent of new small businesses close within their first year, and only 30 percent stay in business long enough to celebrate their 10-year anniversary. Some of the more common reasons companies fail include financial hurdles such as poor cash flow and bad spending habits, business management challenges — and amidst COVID-19 — failure to pivot.
While this is certainly discouraging when you’ve put all your time, money, and energy into pursuing your entrepreneurial dreams, following several best practices can help to improve your chances of business success. Here are five keys to small business success, according to LEO Digital Marketing.
1. Choose the Right Legal Structure
Choosing the right legal structure is one of the best things you can do for your business, as certain legal entities will benefit your company better than others. The most common types of legal structures include sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and S corporations.
Sole proprietorships, for instance, are the easiest type of entity to form — but they don’t offer the same tax advantages or level of liability protection as LLCs and corporations. As a sole proprietor, you (the business owner), could be held personally liable in the event that your business is sued by a customer, supplier, or employee — while operating as an LLC or corporation would protect you from personal liability in this type of situation.
Moreover, fewer financing options are available to sole proprietorships and limited liability companies. LLCs and corporations are more likely to qualify for small business loans, but corporations also have a better chance of securing funding from angel investors.
That said, your business structure isn’t set in stone and you can typically change it at any time. However, it’s a good idea to speak with an attorney about changing your legal entity to ensure you’re choosing the best option for your small business.
2. Build an Eye-Catching Website
Every successful company needs a great business website, especially in the age of COVID-19. A business website is a place to share information about your products, services, and prices; connect with your customers; and reach your target audience — and creating one increases your company’s:
Online and offline sales.
Contact LEO Digital Marketing to learn more about how creating a professional website can benefit your business throughout the pandemic and beyond. The marketing experts at LEO can also help with other essential services such as branding, social media, search engine optimization (SEO), photography, and video.
3. Manage Your Business Finances
Many companies face financial challenges at one time or another, but how you manage your business finances plays a major role in whether your company fails or succeeds in the long run. If you’re not effectively managing your finances, you may run out of money, miss important payment deadlines, forget to collect payments from your customers, and acquire more debt than you’re prepared to repay.
Fortunately, lots of tools and apps are available to simplify the process of managing your small business finances, preventing cash flow issues, and paying off debt. Accounting software like QuickBooks and Xero are two great options for tracking sales, expenses, invoices, and bills, while OnPay, Patriot, and Intuit QuickBooks take the hassle out of processing employee payroll.
Additionally, you can use Plaid’s liabilities and loan API (application programming interface) to control your business debts and conveniently retrieve important financial information. Since Plaid products connect to thousands of different banks and financial institutions, Plaid Liabilities can be used to review the terms of your current loans and securely manage your credit cards, mortgages, and other business debts. You may even enable access so that your employees and other end-users can link their own financial accounts.