Barry is CEO of Deluxe, a Trusted Business Technology™ company helping businesses pay, get paid, grow & operate more efficiently. NYSE: DLX
I have the privilege of talking to small-business owners across the country whose strength and perseverance are truly inspirational. One of my favorite questions to ask them is: “Why are you doing what you’re doing?” Usually, the answer is: “I love what I do.” From designing jewelry and crafting furniture to fixing cars and building apps, the list is varied and impressive.
One resourceful business owner featured in the reality series our company produces, Small Business Revolution, was a devoted mom whose kids needed gluten-free products. Her “why” was that after having trouble finding healthy and delicious baked goods for her family, she decided to make them herself.
A fun, helpful or important hobby evolves into a business when you:
• Invest in commercial equipment to make things faster.
• Sign a lease.
• Quit your day job.
• Hire employees.
• Spend substantial sums with savings/personal credit cards.
A small business isn’t a business at all if it doesn’t generate a profit. That new business needs to return to being a hobby if it can’t generate a profit sufficient for the owner to profit from the investment of their time and capital.
In my most recent book, Small Business Revolution: How Owners and Entrepreneurs Can Succeed, I share that when you’ve passed enough of these markers, you’re considered a business. Becoming a small business is a big deal. Now, other people and families depend on you for their livelihood. You’re also taking on liability, if someone slips and falls in your establishment or a product you created gets misused.
As responsibilities increase, people need to ask again: “Why am I doing what I’m doing?” But the fact is, most people don’t ask. When they started the activity, their “why” was clear, and they gradually morphed into a business. However, nobody told them to periodically ask that key question.
Know Your Purpose
In addition to providing a living, a successful business needs to have a purpose. It also needs to be something you can sustain. The problem occurs when you’re running a business and reach the breaking point; people get overwhelmed and are not making enough money to pay themselves. For example, certain business owners are running today’s larger business with the same “why” or purpose from five years ago, when it was just a hobby.
The first tough question is why you want to be in business. You should also ask:
1. Is there truly a market for what I’m doing?
2. If there is a market, can I deliver the products or services profitably?
3. If so, how long will it take me to get there from where I am today?
Am I suggesting you step back and ask these fundamental questions while operating your business at the same time? Yes. You’ll stand the best chance of meeting your goal of making a living from your business, if you have a brutally honest review.
For example, one owner of a bridal boutique on our series defined the size of her target audience by researching the number of marriage licenses issued annually in her market. Next, when it comes to profitability, you need to know your numbers. What have been your most and least profitable products or services? Do you have a handle on the maximum profitability of your operation today? The third question requires a tough assessment of what the numbers tell you. Are you moving toward regular profitability? If not, it’s not game over, if you’re willing to adjust.
I’m the last person to discourage brave entrepreneurs from starting businesses. However, running a business is like flying a plane. If you look at commercial pilots’ cross-country routes, it’s never a straight line from takeoff to landing. They’re continually making adjustments to avoid other planes and skirt bad weather.
As a business owner, you need to get your bearings on a regular basis. Analyze where you are, where you’re going and what it will take to get there. Sometimes the current course will not allow entrepreneurs to make ends meet — no matter how hard they work. They may need to raise prices and/or find ways to trim inventory, menu items or services.
As a small-business owner, you continually have to navigate challenges:
• Can I afford to hire another person?
• How do I get more customers in the door and/or to the website without spending a ton on advertising?
• How can I compete with corporations that have moved into my market?
Your ability to respond to new circumstances is as crucial as the skills you bring with products and services.
Major Success Tip: Learn From Others
In business, the expense clock is forever ticking, and time is simply too short to make all the mistakes yourself. Entrepreneurs get hung up thinking, “I’m willing to learn from others, but my business is unique.” You have your own twist, but more than 90% of your challenges are not any different from what other businesses face. How you should post images on Instagram and leverage other social media platforms is no different, and how you make your website look appealing should follow design and marketing best practices. Successful business people look for similarities and what they can extract of value.
It’s common for small-business owners to not take a salary. They’re reluctant to charge more and are willing to endure long days and slim bank balances. Yet, this “flight” will run out of gas due to no funds, no life outside work, ruined health or some combination.
That’s when business owners must remember the airline safety briefing we’ve all heard a hundred times, “Put your mask on first, before helping others.” It’s not being selfish; it’s so you can stay healthy and functioning. Be a small-business champion by keeping the sign on your door “Open,” to serve your customers, employees and community.