What It Takes to Operate a Local Business
Large corporations may get the spotlight by media, but according to Small Business Administration, small businesses make up 99.9% of all businesses in America. It’s hard to understate local businesses’ value to any community. However, many new local businesses fail in their first year. The good news is that one can successfully start and manage a local business with the right knowledge and skills. Discover ten tips to help you operate a local business like a pro.
1. Conduct Market Research
If you want to operate a local business successfully, start by researching marketing. The process involves gathering information about your target market, customer preferences, and competitors. For example, before starting an air conditioning company, you can walk around your neighborhood to evaluate how many such businesses serve the community.
Market research helps you understand customers’ needs and preferences. Even if you have started the business already, you could benefit from learning what your customers would want. Therefore, you can make informed decisions about the business and thus reduce risks. For example, if a product is not in high demand, you don’t have to pay high storage fees for little return.
You don’t have to be expensive in market research. If you want to do surveys, you can run one on survey monkey or Google Forms. Social media platforms such as Facebook also offer a chance to do polls. You can learn about your market by analyzing feedback: what do previous customers say about what they loved most in your business?
2. Develop a Solid Business Plan
Are business plans outdated? Not if you want to operate a local business that thrives even with a lean budget. The business plan is much alive and helpful if you do it right. That’s why working with a consultant or a successful business owner in your circle is essential. It highlights your financial goals, strategies, and financial objections of your small business. Without a business plan, you may lose focus, leading to inefficiencies.
The business plan is not a static document in your cabinetry; rather, it’s a dynamic one evolving with the business. It provides a roadmap to success that guides you toward growth. A business plan is also essential for financing because investors want to see how you will allocate it and gain growth. However, a business plan is not a guarantee of success; it works when you execute and adapt it to your business.
Let’s say you want to start a staffing agency for utility companies. Your first step would be defining your business components. What’s your mission and aim in starting the business? Next, think about operations—how will you run the daily aspects of the business? A solid business plan should include financial projections such as sales, expenses, and profits.
3. Utilize Local Marketing Techniques
One of the most easily ignored aspects of running a business is marketing. Many large corporations invest copious amounts of budget in marketing, but small business owners often don’t plan for marketing because of budget restrictions. However, think of it like this: investing in marketing gives you more leads who pay for the marketing and a profit. From asphalt paving services to local restaurants, every small business needs marketing.
Even with a small budget, you can reach more people using local marketing techniques. A good place to start is discoverability on search engines. In the digital world, most consumers check online for services before purchasing. Yet according to Forbes, 1 in 3 small businesses don’t invest in a website. A website can support other local marketing campaigns, such as social media and paid influencers.
A good tip would be to hire one employee dedicated to marketing and increase that as you go up. Ensure your marketing specialist has worked with similar local businesses and helped them bring results. Also, allocate a budget before beginning your business, so you don’t get stuck before your business starts bringing in results. Operating a local business and getting worthwhile leads takes a multi-targeted approach.
4. Focus on Customer Satisfaction
In an increasingly competitive world, customers seek businesses that truly understand and alleviate their pain points. If a homeowner is looking for a countertop installer, they want a neat job that doesn’t need redoing. Besides, when you do a good job that satisfies your customer, they’ll be back again and probably with another lead. What that means for you is fewer customer acquisition fees because you keep on building your current client list.
Customer satisfaction takes multiple strategies, but the main one is alleviating pain points. A consumer engages in a business to alleviate pain or enjoy a privilege. If someone goes to a fancy restaurant, they are looking to have great food and an experience. Think about how your business as a plumber, electrician, or dog groomer helps them solve a problem.
A good way to evaluate if you are satisfying customers is to check their feedback. If customers keep complaining about a certain aspect of your business, take note and make adjustments. If they leave positive reviews on your socials, use it too to increase their satisfaction. Do quarterly reviews with your staff to see where you can make your clients smile better. It takes satisfied customers to operate a local business, even when you are starting.
5. Price Your Services Competitively
For as long as businesses have been around, pricing has always been a vital aspect of marketing. There’s a whole psychology of pricing strategies. For example, what may appear as a discount is a marketing strategy to get people to spend more. So, if you want to operate a local business, analyze and develop a pricing strategy that will get more customers without hurting the bottom line.
Some new business owners make the mistake of underpricing to attract more customers. While these work in some product markets, underpricing – especially in the service market – can make prospective clients think your services are of poor quality. Similarly, overpricing in a local community can turn away worthy leads who could become regular clients. Aim for a sweet spot: competitive pricing. It means clients get value for money.
Depending on your business, you may have a unique pricing strategy that works. For example, if you provide drain cleaning services, consider the operating costs vis-à-vis your profit estimations. You can also get some free quotes from similar companies to understand what everyone charges. Take advantage of certain seasons in the market to introduce other pricing strategies. Timely price reduction can help you have a higher sales volume, bringing in higher profits.
6. Stay on a Budget
So, you recently started your hardscaping company and almost hit your financing target. Should you go ahead and purchase that equipment that would make business easier? While that could seem like a good idea, it’s best to stick to your budget and advance as you go. Staying on a budget in your first year of business will help me stay afloat before you stabilize and start injecting your profits back.
Staying on a budget requires following keenly on your expenditure. If your business grows substantially, you can employ an accountant to keep tabs on your spreadsheet. Alternatively, work with a virtual assistant specializing in accounting because you can hire freelance. Even with such help, you must resolve to be cautious with budget allocations because a simple bad move can leave you in debt and business failure.
While staying on a budget seems easy for a small business owner, it may not come naturally, so investing in financial education is smart. Many courses and videos online can teach you how to allocate money within your budget. Consider more affordable options if you notice an aspect of your business demands a higher cash flow than you have. For example, you don’t have to hire full-time.
7. Seek Legal Guidance
Do you need a lawyer for your small business? A common myth is that only people who have committed crimes need legal assistance. However, even local businesses need legal guidance on some matters, including contract signing and compliance with employment law. You don’t have to work with multiple lawyers to get legal guidance for your auto repair shop because a business lawyer can do.
If you’ve friends who do business in the local community, ask for recommendations about good lawyers in the area. You can also do a simple online search for legal services for businesses and read customer reviews. Once you narrow down on a few business attorneys, please take advantage of their free consultations to discuss your needs and their expertise. Don’t forget to talk about costs and fees to stay within budget.
Many small businesses don’t seek legal guidance from the onset, thus poising themselves for legal trouble. While budget and lack of awareness are contributing factors, you don’t have to go the same route. A legal professional will help you get the best out of a deal and protect your intellectual property.
8. Build a Local Client Base
The whole point of having a local business is to meet the needs of the locals. However, some businesses, such as tourist-centered businesses, serve an influx of clients into the community. Even when you are targeting people moving into the town, have a local client base. For example, market yourself within the community if you offer local moving services.
A local client base allows you to build long-term connections that are good for the sustainability of the business. Besides, local clients are great referral agents, so even when the influx of foreigners is low, you’ll always have clients. Targeting the local market will also reduce your marketing budget.
It takes a community to operate a local business, so don’t miss out on community events. They are a great avenue for marketing your business and meeting their needs. You can also take advantage of local advertising methods such as ‘Google My Business.’ Partner with other businesses, too, because you can have a mutually beneficial relationship.
9. Consider Loan Options Wisely
As you start, you may need financing to operate a local business. Loans are a good option for financing. However, many small business owners make mistakes such as borrowing more than their business can pay and taking multiple loans. Taking loans wisely can provide much-needed financing for your business without hurting your financial health.
A wise way to choose loan options is assessing your needs: how much do your need for your business to run sustainably? Next, analyze your projections and evaluate if you have repayment capability. You can also look for niche loan givers; for example, some lenders offer financing for mowers.
The loan market is huge and diverse, so that you can use this to your advantage. Ask for multiple quotes to compare interest costs when looking for a financier. Also, compare other hidden costs such as processing fees. Consider how the loan will impact your credit score because that could have long-term consequences.
10. Anticipate Challenges
Going to business with bliss and unicorns in your mind can leave you disappointed and discouraged. You’ll face challenges even if you are passionate and knowledgeable in your business. Thus, it takes sheer resilience and determination to operate a local business. Some of the challenges local business faces is competition, narrow customer base, and asset deterioration.
You should know where to get help when you need it the most. For example, know where to get furnace repairs, financing, and legal help. Prepare your mind that it won’t be a smooth ride; if you need motivation for entrepreneurial roller coasters, listen to Tony Robbins or your favorite speaker. Also, anticipate challenges by having insurance to cover you, your employees, and your business.
To bring it all together, it takes some strategies and skills to operate a local business from its infancy to growth. The most successful local business owners don’t have special secrets—they only apply fundamental business principles that keep them growing. Even if you are a novice in entrepreneurship, you can learn your way to growth with the right principles.
