Tutorials & Teachings: 12 Traits of Successful Small Business Owners

1. <FONT color=#6666ff>Cater to customers.
2. <FONT color=#6666ff>Learn from mistakes (Everybody makes them!).
3. <FONT color=#6666ff>Do what they love.
4. <FONT color=#6666ff>Focus o­n their strengths, and hire out the rest.
   <LI type=a><FONT color=#6666ff>Hire an accountant!
5. <FONT color=#6666ff>Measure and monitor every aspect of the business.
6. <FONT color=#6666ff>Know when to hold 'em; know when to fold 'em.
7. <FONT color=#6666ff>Build a strong team.
8. <FONT color=#6666ff>Understand the value of what they sell, and price accordingly.
9. <FONT color=#6666ff>Attract, build, and maintain capital.
10. <FONT color=#6666ff>Commit.
11. <FONT color=#6666ff>Have charisma.
12. <FONT color=#6666ff>Know they will succeed.

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1. Cater to customers.
   <FONT size=2>The products and services of successful businesses improve people's lives. Period. No amount of venture capital can help a business if it doesn't at least do that.

   "Successful business owners make every effort to understand why customers do or don't come back. It is a part of their culture that goes beyond the annual or encounter survey. They somehow are able to put themselves in the shoes of their customer and say, 'What would I like to see happen here if I were the customer?' This ability to empathize with the customer helps them understand the real value in what they do for them." <P align=right>— Earle McEwen

   "If we aren't serving our customers, we're finished. If a business plan doesn't come back to making someone's life better, it's doomed." <P align=right>— Bruce Downs

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2. Learn from mistakes. (Everybody makes them!)
   <FONT size=2>We all make mistakes, but winners take them in stride and look at them as valuable lessons from the School of Hard Knocks.

   "Many of my customers have come to me after they've learned from experience that not paying attention to the numbers and not asking for assistance did not grow their business." <P align=right>— Laura Madeira

   "Eliminating errors and rework boosts your bottom line. Successful companies refine their processes so they can consistently handle transactions correctly the first time. They have a method or system that is capable of producing results with zero defects whether that is delivering an error free tax return or not getting your laundry confused with another customer's. Successful companies are constantly working o­n the process of delivering value to their customers." <P align=right>— Earle McEwen

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3. Do what they love.
   <FONT size=2>Starting your own business is risky. Running it is challenging. o­nly the thing you really love is worth it.

   "My first advice to people who come to me about starting a business is this: Don't do anything you don't have to. This, for me, is the litmus test. If you have to, you don't just want to, but you must, then go for it. Many people 'want to,' but few 'must.'" <P align=right>— Bruce Downs

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4. Focus o­n their strengths, and hire out the rest.
   <FONT size=2>In other words, don't try to do it all yourself. Be honest with yourself about what you're not good at. (Hint: it's often the things you hate to do anyway.) You'll free up your time for the things you excel at and love doing. Isn't that why you went into business for yourself in the first place?

   "When small business owners are first getting started, they're often o­n a tight budget, so they'll do without, and keep struggling along doing things the old fashioned way. I've helped so many of my clients improve their operations by adding technology to their system that eliminates the need for redundant data entry, and really frees up a small business owner to do what they do best. Usually, it costs a lot less money than they think they'll have to spend. Plus, o­nce you factor in the time-savings and efficiency gain, the hardware and software you buy pays for itself pretty quickly." <P align=right>— Sharon McCollum

   "I've met a lot of small business owners who won't admit that they don't know something and then won't admit the mistakes they make, but find ways to blame employees, customers, etc. Not o­nly is that not fair, it doesn't fix the problem." <P align=right>— Martin Shenk

   <A name=four_a><FONT color=#6666ff size=3 font><P align=justify>4a.    Hire an accountant!
   <FONT size=2>OK, so maybe our contributors are a little biased, but every Certified QuickBooks ProAdvisor we talked to stressed the importance of having solid financial information to guide a business's decision making.

   "Accounting isn't most small business owners strong point, but they do need to know where their money is coming from and where it's going. That's where we, the accountants, come in. The small business owner should work o­n what they're good at, and hire a professional to take care of their bookkeeping, tax preparation and financial planning needs. Even for mundane things like entering checks into QuickBooks, if they hire someone else to do that work, they can still get the important information they need from QuickBooks' many financial reports, while they continue to do what they like to do." <P align=right>— Erin Eckert

   "No o­ne ever really likes to do their books, but do yourself a favor and make sure you're getting at least the basic information you need to manage your business financially. Reports you look at monthly should include:
   

   <LI type=disc>Trended Profit and Loss by Month (or Quarter) <LI type=disc>Actual vs. Budgeted Profit and Loss for the Current Month (or Quarter) and Year-to-Date <LI type=disc>Forecasted Cash Flow and Profit Analysis <LI type=disc>Trended Balance Sheets (if you don't understand the Balance Sheet- talk to your accountant)

   
   These 4 basic reports can help you make sure you are o­n plan financially and give you the critical information you need to make informed financial decisions for your business. Also, make sure the reports are timely (within a few days, weeks of month end) and consistent. Reports that are inconsistent and months late won't cut it.
   
   Don't operate in the dark. <P align=right>— Ed Mulherin

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5. Measure and monitor every aspect of your business.
   <FONT size=2>If you're using QuickBooks, you have the means to measure and regularly monitor your business, from best customers to worst selling items to who's overdue in paying your invoices. Make sure you know what's going o­n.

   "The most successful business owners I know have a o­ne page "snapshot" of their business — and it varies from owner to owner. Depending o­n the business, sometimes it's yesterday's sales, recent deposits, open orders, shipped orders, new sales orders, current inventory, receivables, payables totals, etc. The important thing is that it fits o­n o­ne page." <P align=right>— Chuck Vigeant

   "I believe small business owners must constantly monitor against their business plan. This way, they know when things need tweaking. For example, if sales aren't as anticipated, an early warning gives the entrepreneur a chance to change the marketing strategy before the company is o­n the rocks." <P align=right>— Ruth Gitzendanner

   "To measure, you have to first know what it should be. Then, when you do the measuring, you'll know how far off you are from your goal (for example, a budget vs. actual report)." <P align=right>— Martin Shenk

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6. Know when to hold em; know when to fold 'em.
   <FONT size=2>Successful small businesses choose wisely, whether it's customers, location, product lines, employees, vendors, or jobs. Be willing to walk away from the o­nes that harm your business or take you in a different direction than the o­ne you want to go.

   "Successful companies know when it is time to drop a problem product and when it's time to fix it! They have a commitment to how they provide value and they don't quit until they achieve their vision.

   "There's a joke that Bill Gates, when he built his new home, designed it without windows because he was tired of paying for windows! That is an example of a company that had the cash to pay for their mistakes and continue to improve their product. It paid off because their vision was accurate. Unfortunately there are too many examples whose remnants are scattered all over Silicon Valley that should have thrown in the cards a lot sooner and not continued to pour money into a flawed product or a solution to a non-existent problem." <P align=right>— Earle McEwen

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7. Build a strong team.
   <FONT size=2>Small business owners can't do it all themselves, even though they want to sometimes. A better option is to build a team of smart professionals who know more than you do about their area of expertise.

   "Successful businesses have the right team: attorney, accountant, banker, etc. Not just any team, but the right team. You must be able to trust the advice they give you." <P align=right>— Suzi Graden

   "Build a strong team of advisors and mentors to work with, including at least a CPA, lawyer, banker, insurance agent, and a sales and marketing expert. Some business may have needs for other expertise. Spend the time to interview and find professionals that you have confidence in and enjoy talking to. Search out others in your industry and ask questions; people like to be asked their opinion. Then create a relationship. Have coffee or lunch periodically. Professionals are busy, but with email and voicemails you can ask quick pointed questions when issues come up and get outside input. You don't have to go it alone!" <P align=right>— Ed Mulherin

   "Don't hire cheap! Hire the best people you can afford, give them a goal and get out of their way." <P align=right>— Martin Shenk

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8. Understand the value of what they sell, and price accordingly.
   <FONT size=2>The purpose of your business is to make money. Make sure you price your products and services high enough so that you do make money.

   "Too many small businesses under-price their products because they are hungry for the work or timid because of lack of experience. The result is they don't make the profit necessary to pay their taxes and have cash for continued improvement in the company. The successful company has so differentiated their product that they can afford to charge a premium — or at least near the top of the pack — for their product because its quality is worth it. They have confidence in their ability to deliver value and are not bashful about charging for that value." <P align=right>— Earle McEwen

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9. Attract, build, and maintain capital.
   <FONT size=2>Even if you don't need money to get your business off the ground, building and maintaining capital give businesses security to weather a storm or invest in growth.

   "Cash in the bank is a powerful tool for success. Small businesses that have it can afford to fund long-term projects, say no to the less profitable clients, and survive the ups and downs of the natural business cycle. It is amazing to me how little debt there is in truly successful small businesses. Many didn't start out with lots of capital but getting out of debt was always a high priority for them. They understood how much freedom and opportunity they would have if they could work themselves out of debt." <P align=right>— Earle McEwen

   "It never hurts to have a rich relative! But seriously, it's necessary for any business to have adequate financing. Many run out of money just when they're starting to get a foothold in the market, or when they're trying to grow. o­n the other hand, too much credit can also allow entrepreneurs to be lax in collecting receivables, or to buy supplies before they actually need them. Good financing can also be the ability to work with your suppliers when you know you will not be able to meet the credit terms." <P align=right>— Ruth Gitzendanner

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10. Commit.
    <FONT size=2>Owning your own business isn't a hobby. It's a lifestyle! Sticking with it takes a strong commitment — and it's more than just hard work.

    "When my clients find the time to devote to a meeting with me behind a closed door, when they stop work, turn off the cell phone, leave the email behind, and talk with me, I can tell there's a commitment to the business. When there's a commitment, there's success. And that's true with all sizes of businesses, from the big guys to mom and pop shops." <P align=right>— Laura Madeira

    "The most successful small business owners I know work long hours — sometimes it seems like 24/7 — and they skip many vacations." <P align=right>— Ruth Gitzendanner

    "My most successful clients fall into two categories: sprinters and long-distance runners. Both can succeed if they know their style. If sprinters don't rest well between races they will burn out. Long distance runners tend to succeed slower, but they stick around longer. They're the o­nes who just keep putting o­ne foot in front of the next and keep going until they make it over the obstacles." <P align=right>— Bruce Downs

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11. Have charisma.
    <FONT size=2>Your potential customers want to do business with someone they like.

    "Charisma and people skills are so important. It's common to see two entrepreneurs in similar situations. o­ne is successful and the other struggles. Why such disparity? People want to do business with those that excite and invoke confidence." <P align=right>— Suzi Graden

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12. Know they will succeed.
    <FONT size=2>Why just hope your business will succeed? Instead, decide that it will.

    "Those who succeed know they will succeed. I see time and time again those who scrape by, nearly going broke to make it all happen. Some power from within drives them to push forward, no matter the consequence, because they believe they can make it happen. Without that drive no o­ne would choose or be able to stomach the roller coaster ride of starting a business." <P align=right>— Suzi Graden

    "Many people want to start small businesses. A much smaller percentage ever does — and from that percentage, the o­nes that make it to the next step have something else. They don't just hope it is going to happen. They know it — and there is a difference." <P align=right>— Bruce Downs