Starting and running a small business is often a hugely rewarding undertaking, both financially and personally. However, not all of them are successful.

According to Investopedia’s analysis of Bureau of Labor Statistics data, about 20% of small businesses fail within the first two years of opening. Still, 80% is a decent success rate.

This number drops significantly after five years though. The same analysis found that:

• 55% remain in business for at least five years
• 45% remain in business for at least 10 years
• 25% remain in business for 15 years or longer

So, while starting a small business is a considerable challenge in itself, operating one can be even more difficult.

That’s why, in this article, we’ll cover all the key aspects of how to run a small business.

We’ll begin by exploring how to start your small business, move onto tips for long-term operational success, and close with some common pitfalls small business owners should avoid.

Key Takeaways

• Although many businesses do not create a business plan, you should at least write a marketing plan and set a budget aside. It’s the bridge between product and revenue.
• It’s vital to set goals and track them with key performance indicators so you can make progress toward those goals and create sustainable success. A business that doesn’t know its numbers does not succeed.
• For your small business to make money, you need to minimize costs while maximizing revenue.
• Incorporating comprehensive technology solutions, like Coast 2 Coast Payroll & Payments' credit card processing and over a dozen POS solutions, is critical for keeping up with your competition and streamlining operations to make the most of limited resources.

Coast 2 Coast Payroll & Payments is the largest brokerage for payroll and payments in the USA.

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How To Start A PROFITABLE Small Business

If you haven’t started your small business yet, don’t worry! We’re here to help guide you through the process.

On the other hand, if your business is already up and running but you’re looking to optimize your operations, skip ahead to the next section.

Develop A Business Plan

Starting your own small business requires you to come up with an idea, analyze the market, write your business plan, and select a location.

Think of a Small Business Concept

To launch your own small business, the first thing you need to do is come up with a concept.

Small businesses can encompass anything from a brick-and-mortar coffee shop to services you provide at your location or onsite at a client’s location, as well as an e-commerce apparel retailer. (If you are looking to become an online coach or digital creator, visit krisforddigital.com and watch the free training.)

To figure out which idea will work best for you, think about your skills and passions. Your idea should be something you’ll be able to stay interested in long-term, as well as something that aligns with your areas of expertise.

Also, consider how you can solve a problem. Is there a lack of Mediterranean restaurants in your area? Maybe you can start a Mediterranean restaurant. Or, is there a lack of reliable car detailing services in your city? Then you might think about launching your own mobile detailing service.

Whatever concept you go with, be sure to consider how you can stand out from the competition and provide a unique product or service.

Conduct Market Research

Once you have an idea, or several ideas, you should research your market to get an idea of trends, demand, and the potential for growth.

Additionally, you’ll want to determine your target audience. This will allow you to tailor your products, services, and branding to a specific group of people, helping build a deeper relationship with them. Ultimately, this will result in more repeat business, which is key for sustainable business growth.

Lastly, study your competition to identify their strengths and weaknesses and find gaps in the market.

For example, say you want to start a Mediterranean restaurant in your area. If there are a few competitors nearby, but none of them offer vegan options and there’s a significant vegan population in your area, maybe you could start a vegan-focused café.

Choose a Location

If your business operates online, focus on optimizing your web presence, including website design and social media. For brick-and-mortar businesses, choose a location with:

• Convenient access for customers (e.g., parking, proximity to complementary stores)
• High foot traffic
• Costs that fit your budget

Write a Business Plan

A business plan refines your idea and is essential for securing funding. Key elements include:

• Your product/service offering
• Target market and competition analysis
• Marketing, branding, and sales strategies
• Financial projections and funding needs This plan serves as the foundation for your business’s success.
• CHATGPT can be a great resource to help you create this- you can simply fine time the areas you need to adjust based on you niche and your goals.

Choose a Legal Structure

Your business structure impacts taxes, liability, and funding. Common options include:

• Sole Proprietorship: Simple, but full personal liability.
• LLC: Offers liability protection with flexible taxation.
• S Corporation: Passes income through to owners while avoiding double taxation. Register your business with the IRS for an EIN and with state/local authorities as needed.

Fund Your Business

Depending on your business model, you may need capital. Common funding sources include:

• Self-Funding: Full control but personal financial risk.
• Bank Loans: Fixed repayment terms but requires good credit.
• SBA Loans: Favorable terms, but a lengthy application process.
• Angel Investors/Venture Capital: Access to significant capital but requires giving up equity.
• Crowdfunding: No debt, but success depends on strong marketing.
• Credit Card Business Capital click this link if you are an existing business who has run credit card transactions- you may be eligible for our business loan.

Set Up Your Operations

After securing funding, focus on operations:

• Business Bank Account: Keep business finances separate for easier accounting.
• Lease: For physical stores, ensure favorable terms and account for utility costs.
• Licenses & Permits: Ensure compliance with local regulations based on your industry.
• Insurance: Protect your business with relevant coverage like general liability and property insurance.

If applicable, establish relationships with suppliers and manage your inventory effectively to ensure smooth operations. You can also search online for tradeshows to attend or AmericasMart for retail supplies.You can also look for products on AliExpress & Alibaba where they can custom make items to fit your brand.

Firstly, it’s essential to build strong relationships with suppliers to ensure timely deliveries, high-quality products, and competitive pricing. Evaluate potential suppliers based on reliability, product quality, communication, and service terms.

Secondly, efficient inventory management is crucial for success. For food retailers, overstocking can lead to waste, but managing inventory properly is important for all retailers to avoid excess costs or missed sales due to stockouts. Implement an inventory management system to track stock levels in real time and manage reorders efficiently.

Team Members/Employees

While some small businesses are solo operations, many will need to hire employees. Be clear about job responsibilities and provide thorough training to ensure they perform well. Continuous development opportunities can enhance skills and employee satisfaction, giving you a reliable team for future growth.

Also, managing payroll, benefits, and scheduling is essential. Implement C2C’s comprehensive payroll and scheduling system to streamline these processes, ensure timely payments, and communicate effectively with your team.

Online Presence

As you launch your business, your online presence is critical. Focus on building a professional website with key features like:

• Showcasing your products/services
• Providing business details (hours, location)
• Offering easy ways for customers to contact you or make purchases- this is called using Call To Action buttons (CTA) Buy Now, Grab Your 20% OFF, Book Now, etc.

Use social media platforms like Instagram, Facebook, and TikTok to build your brand, share updates, interact with customers, and promote your offerings. A strong online presence is crucial for both online and brick-and-mortar businesses. (Join the Foot Traffic Accelerator to learn how to use social media to target your competitors customers)

Building/Design

Your physical space should reflect your brand identity and make customers feel welcome. Consider:

• Ergonomic layouts
• Aesthetic appeal
• Functional efficiency

Your storefront design should also align with your brand and entice new customers to visit. A well-thought-out space can help build customer loyalty and encourage repeat visits.

How To Run A Small Business

Running a small business can be overwhelming, but staying organized is key. Let’s explore a few critical areas to help optimize your operations.

Management Practices and Tracking KPIs

Effective management requires clear communication, leading by example, and setting measurable goals. Track key performance indicators (KPIs) like:

• Sales Revenue: Total revenue over a specific period, useful for tracking financial performance.
• Operational Costs: Track all expenses, including rent, utilities, payroll, and COGS (cost of goods sold), to manage your budget effectively.
• Net Profit Margin: This combines revenue and costs to show your profit. While businesses may not be profitable initially, this is a vital indicator of financial health.

• Customer Acquisition Cost (CAC): This metric tells you how much, on average, it costs to acquire a new customer. By refining your marketing strategies and targeting the right audience, you should see this cost decrease over time.

• Customer Retention Rate: Retention is the percentage of customers who make repeat purchases. A high retention rate indicates customer satisfaction and can help build a stable, loyal customer base.

• Inventory Turnover: Detailed sales reports can show which products move quickly and which don't, helping you manage stock levels effectively and forecast demand.

By consistently tracking these KPIs, you can refine your approach and improve overall business performance.

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Budget Effectively

Financial management is crucial to running a successful business. There are two primary ways to increase profits: boost revenue or reduce operational costs. Consider these strategies to reduce expenses and increase profitability over time:

• Strategic Lease Management: Negotiate lease terms that align with your growth plans. Look for rent concessions, tenant improvement allowances, and favorable escalation clauses.

• Energy Efficiency: Invest in energy-saving technologies such as LED lighting and smart HVAC systems to reduce utility costs and improve your bottom line.

• Supplier Partnerships: Develop strong relationships with suppliers for competitive pricing and reliability. Regularly review contracts to ensure you’re getting the best terms.

• Lean Inventory Practices: Use demand forecasting and just-in-time delivery strategies to reduce carrying costs and prevent overstocking.

Proper budgeting is key to freeing up resources for revenue-generating activities, such as marketing and advertising.

Refine Your Brand and Marketing Strategy

Investing in your marketing efforts is one of the best ways to attract customers and boost sales. The return on investment (ROI) for digital marketing can be significant, with pay-per-click (PPC) advertising often yielding $2–$8 for every $1 spent, and email marketing driving $36 for every $1 spent.

Here are a few marketing strategies to consider:

• Data-Driven Marketing: Use customer analytics to tailor your marketing campaigns for maximum impact.

• Brand Building: Invest in initiatives that build your brand identity and resonate with your target audience. Consistent messaging and storytelling help strengthen brand loyalty.

• Audience Segmentation: Segment your audience based on behaviors, preferences, and demographics to create targeted marketing campaigns that increase engagement and conversions.

• Strategic Partnerships: Collaborate with complementary businesses or influencers to expand your reach and attract new customers through co-marketing efforts.

• Community Engagement: Build connections with your community through social media, local events, and partnerships with community organizations. Engaging authentically with your audience strengthens loyalty and encourages word-of-mouth referrals.

Regularly analyzing your marketing data will help you refine your strategies, target the right customers, and improve your ROI.Join the Foot Traffic Accelerator to learn how to build and grow your local small business

Increase Average Order Value

There are several ways to increase your revenue beyond attracting more customers. One key strategy is increasing the average order value (AOV) for each transaction. Rather than simply raising prices, consider the following techniques:

• Upselling and Cross-Selling: Train staff to suggest complementary or higher-end products. Present related items to customers, encouraging additional purchases.

• Premium Product Offerings: Introduce exclusive or premium products that cater to higher-margin customers. Highlight unique features to justify a higher price point.

• Bundle Offers: Create special bundles or discounted packages that incentivize customers to purchase multiple items.

Testing various approaches and analyzing your sales data will help you determine which strategies work best for your business.

Promote Customer Retention

One of the best ways to boost your small business revenue is by improving customer retention, a critical KPI. Retention measures how often customers make repeat purchases within a specific period. The more frequently customers return, the more revenue you generate.

To enhance customer retention, consider the following strategies:

• Loyalty Programs: Implement a tiered loyalty program that rewards repeat purchases. Offer exclusive discounts, early access to new products, or personalized rewards based on purchase history.

• Personalized Marketing Campaigns: Use customer data to tailor promotions and product recommendations based on past behaviors and preferences. Send targeted offers or reminders to encourage repeat purchases.

• Enhanced Customer Experience: Focus on delivering exceptional service and memorable interactions at every touchpoint. Build rapport with customers through personalized communication, proactive support, and seamless transactions.

By delivering more value and keeping customers engaged, you increase the chances they will make more frequent purchases.

Manage Your Staff

Effective staff management is essential for both optimizing your budget and providing exceptional customer service. Cross-training employees across various roles can increase flexibility and improve responsiveness, ensuring gaps are filled seamlessly if someone is unavailable.

Additionally, advanced scheduling tools can help analyze historical data and forecast demand. For instance, if your store is busier in the afternoons, schedule extra staff for peak hours and fewer for quieter times.

Remember to treat employees with respect, support their skill development, and encourage long-term employment. This helps build a reliable, skilled workforce that can grow with your business.

Ensure Legal Compliance

Legal compliance is crucial to your business’s long-term success. Failing to comply with laws and regulations can result in fines and damage to your reputation.

To ensure compliance:

• Compliance Automation: Use software to track regulatory changes and automate compliance tasks, minimizing risks of missed deadlines or overlooked requirements.

• Holistic Legal Review: Regularly review all permits and licenses to ensure they align with current operations and expansion plans.

• Outsourcing Expertise: Partner with specialized firms for accounting and legal services, allowing you to focus on strategic growth while ensuring accuracy and compliance.

Proper legal compliance helps avoid costly penalties and protect your business’s reputation.

Use New Technology

Technology is critical to any small business’s success. The U.S. Chamber of Commerce reports that 95% of small businesses use at least one technology platform, making it essential to remain competitive.

Here are some tech solutions to implement:

• Integrated POS Systems: Coast 2 Coast Payroll & Payments offers over a dozen POS systems to ensure a perfect fit for your business. These systems streamline operations, provide real-time data insights, and optimize sales tracking, inventory control, and customer management.

• Compliance with Payroll: Paying yourself can seem simple- until you run into tax and compliance issues. Don't get burned by late fees, tax errors or worse- an audit. Use a trusted payroll source that will manage your payroll, state, local and federal tax laws. Learn more about our payroll options

• Cloud-Based Solutions: Embrace cloud technology for scalable and secure data management. Cloud-based software allows for seamless integration across multiple locations and quick responses to market changes. We integrate with over 100 software systems including Active Campaign, Shopify etc.

• Automation of Processes: Automate routine tasks such as inventory management, order processing, and customer service inquiries, freeing up staff to focus on customer engagement and strategic initiatives.

• Data-Driven Decision Making: Use analytics software to monitor KPIs and identify areas for improvement. Real-time insights help you make proactive adjustments to enhance efficiency and minimize costs.

By incorporating these technologies, you can streamline operations, improve decision-making, and enhance your customer experience.

Continuously Improve Your Operations

To maximize profits, continuously seek ways to improve your operations. Consider optimizing your store layout by analyzing foot traffic patterns or experimenting with strategic product placements.One example is louder music that fits the niche of your brand allows consumers a more private shopping experience and are likely to spend 30% more than expected.

Exploring new revenue-boosting strategies while keeping costs down is crucial for long-term success. By tracking KPIs and analyzing your data, you can refine your strategies and ensure ongoing growth for your small business.

5 Common Mistakes to Avoid When Running a Small Business

Finally, here are five common mistakes small business owners should avoid:

1. Neglecting Market Research: Failing to conduct market research can lead to misalignment with customer needs and ineffective marketing strategies.

2. Underestimating Financial Planning: Lack of proper financial planning can make it difficult to manage expenses and cash flow.

3. Ignoring Digital Presence: A strong online presence is essential, as 76% of consumers search for a company online before visiting in person.

4. Overextending Too Quickly: Rapid expansion without proper planning can strain resources and impact sustainability.

5. Failure to Adapt and Innovate: Stagnation can lead to lost relevance. Continuous innovation is key to staying competitive.

6. Not Having Proper Systems for Compliance and Streamlining: you need an expert payroll & payments company you can trust and be able to call when you need support 24/7. That is what you get when you partner with Coast 2 Coast Payroll & Payments.

Run A Better Small Business With Cutting-Edge Technology

Running a small business is challenging, but incorporating new technology is vital for streamlining operations, boosting revenue, and staying competitive. Coast 2 Coast Payroll & Payments offers a range of POS systems designed to help small businesses succeed, as well as payroll, human resources, and more. Grab our  3 FREE Bonus Bundle to get you started on the right foot.. From improving customer satisfaction to enhancing operational efficiency, the right technology can set your business up for long-term success.

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