Guest post by Rohit Mittal, cofounder and CEO of Stilt
Small businesses are the lifeblood of a growing economy, and they are popping up faster than ever. Whether it is a stay-at-home mom running her own business out of the family basement or a local grocer opening up a shop–small businesses are a big part of the economy.
More often than not, though, small business owners do not see the overlap with their businesses and tech startups. Your hand-made clothing business feels worlds away from Silicon Valley. You operate in different markets and face vastly different challenges, so what can you possibly learn from them?
Quite a lot, actually.
Basic business principles can be applied to any business, no matter where you are or what services you offer. Just because you greet your customers by hand and know them by name, it doesn’t mean your business can’t be built on the same business practices as tech startups.
Let’s take a look at some of the lessons you as a small business owner can learn from tech startups.
1. Learn from Other’s Mistakes
Learning from other people’s mistakes is one of the ways startups ensure they stay ahead of the game and are always moving forward. Your business, market, and niche may be unique, but the mistakes you’re likely to make are more common than you’d think.
If someone else has already learned a lesson the hard way, there is no need for you to do the same.
In the modern world, business resources are all around us–from blogs to video tutorials to books. Business owners share their advice on how to go about building a successful business, what they’ve learned, and things you should avoid–and a lot of it is out there for free.
The basic lessons available in these resources aren’t only applicable to startups, but all businesses, big and small. So dive in and make learning your new sport.
2. Don’t Worry About Perfect
All business owners want the same thing: for their business to be the best it can be. For it to be perfect. Unfortunately, the desire to launch the perfect business is what stops most would-be business owners from ever getting started.
Seeking perfection will lead to you over analyzing every situation and outcome, ever business decision. In the end, rather than building a successful business, you’ll find yourself crippled by perfectionism.
This is called “analysis paralysis.”
To prevent analysis paralysis, startups use the “lean” approach to building business and make use of “minimum viable products”. Rather than waiting for a product to be perfect, a startup will build the best possible version of the product with the means it has, and launch with that.
If your product isn’t perfect, but it’s great, you can always continue to improve. Stilt (a Y Combinator backed fintech company) launched their product the same day their company was registered.
This is a great method to apply in your business whether you are launching, or planning new expansions or avenues. Don’t get stuck in the details. Rather, make it happen and continue to improve as you go.
3. Develop and Know Your Business Model
Most founders of successful startups suggest that you should not look for investors, do market research, or even design your website before you have a basic business model in place. You need to know what problem your business will be solving and how you’ll be solving it before you go any further.
Your business model is the blueprint of your business. In it, you identify your sources of income, your revenue model, your market, your customer base, the details of financing, and so forth.
So, how do you develop a business model?
There are great resources out there, like Business Model Canvas, that will help you step by step in creating your blueprint for your business.
And #2 applies here as well–your business model doesn’t need to be perfect before you launch. A simple, working business model is enough to start.
4. Stay on Top of Your Finances
Finances are the oil that keeps the machinery of your business running smoothly. If you’ve set up systems to do your financial recording and to keep your books in order, you’ll have more time to focus on other important aspects of growing your business.
Luckily, if numbers aren’t your strong suit and you can’t afford a top-notch accountant, you don’t have to worry. Most startups utilize simple-to-use, inexpensive accounting software to do their books and you can, too.
We’ll take a closer look at some software solutions available below, but, the point is, having your finances in order is really important. Nothing kills a business quicker than mismanaged books. It’ll cost you a lot of time and money to get the books in order, so make it a point to keep them in order straight from the start.
5. Adopt Software to Become More Efficient
Any worthwhile tech startup is using software to streamline its processes and tasks. Software is a tool that helps to automate the tasks associated with your business, freeing you up to work on other, less menial aspects of the business.
As we explained above, accounting is one area where software is a great business solution. Zoho Books is a prime example of this.
Zoho Books is a simple, subscription-based accounting software that has all the features you need to keep your small business books in order without having to pay a hefty fee. Zoho Books links with your bank accounts to keep track of your transactions and can also help you create and send invoices. Which means you’ll keep track of them more efficiently.
Using software to streamline basic tasks and processes in your business will save time and allow you to focus on what is most important–growing the business. If you have an online presence, think about using online-chat tools like Zopim to interact with your customers. E.g. When a new user comes to Stilt, they are greeted by a live customer support agent and are available to answer questions.
6. Seek Out and Welcome Feedback
Feedback is one of, if not the most crucial tool needed for your small business to grow. And it’s not just a one-time thing–we mean consistent feedback from different groups of people at different stages of business growth.
No one starting a tech startup knows everything about building a business. That’s why startup employees–whether they’re the CEO or the marketing guy–rely on feedback from more knowledgeable people.
If a small tech startup needs to improve its website’s store, the CEO might sit down with an expert website designer, eCommerce expert, or even another startup CEO who’s had the same problem in the past. The benefit here is that, rather than a constant process or trial and error, you can walk away from a conversation with the distilled information and feedback you need to improve your website.
This ties back to #1–learn from others’ mistakes. You might be considering a way to grow your business that someone else has already tried. Someone who’s been down that road already can give you insight on what may actually work, instead, and you can save time and money.
But this kind of valuable insight only comes from seeking feedback.
An obvious place to get feedback from is other people operating in your field and niche, especially those who have also started their own businesses. You can also ask people you respect for honest feedback. You’d be surprised how open people are to give their input if they see you only want a little time.
7. Become Data Driven
Better decision making makes for a better business. And in the 21st Century, it’s easier than ever to make good business decisions by becoming data-driven.
Data-driven decision making, in short, is using data to make better business decisions. This method of decision making has changed the way businesses, both big and small, operate around the world, saving them time, money, and improving how efficiently they operate.
But how do you get started?
The first step to becoming a data-driven decision maker is figuring out what aspects of your business you want to improve.
Once you’ve figured out where you can improve, you need to decide what data is important to look at to understand how to make improvements.
For example, say you want to improve in the way you order feed for the chickens you sell. You order six bags of feed every three months for your chickens, and some of it always ends up spoiling before it’s used.
Now that you’d identified the problem that needs solving, you can gather the necessary data to make a better decision.
At the end of three months, you would weigh the spoiled feed and purchase that much less next time and save money by not throwing it away on feed that will go bad before it can be used.
With this data, you can also understand how much feed a single chicken requires and scale your ordering up to account for more chickens if you want to grow your business.
Now, this is a simple example, but it illustrates clearly how making data-driven decisions can improve and help grow a small business. All you have to do identify a problem, ask the right questions and collect the data.
8. Test Your Market
Even with all your planning and preparation, there are some insights you’ll never know with experimenting. But it can be risky (and expensive) to launch a new product or expand your business.
One technique startups use to negate some of that risk is to do what’s called a “soft launch.” With a soft launch, you expose your business to a small group of customers or clients who you can easily engage with and get feedback from.
Then, you can use the data collected from the soft launch to readjust your business plan and projections.
This principle can apply to any industry, too–even a neighborhood grocery store. Say you want to offer a new brand of bread, but you aren’t sure how your customers will take to it. Rather than making a bulk order, you can order a few loaves, see how well it sells and how the customers are reacting to it, and then adjust your orders accordingly in the future. If they love it, order more. If they hate it, move on to the next offering.
The biggest questions you’re looking to answer when testing your market are:
- Is the customer experience positive?
- Is there room to improve the product?
- Are the customers willing to pay for the product?
The benefits of a soft launch are that you get feedback and insights into how a product will perform without a time-consuming and expensive full-scale launch and you can use that data to adjust your plans if need be.
Whether you are the owner of the groundbreaking startup or you run a small business from your home, the principles discussed above will help improve and grow your business. And these are all things you can start doing for your business today! So what are you waiting for?
Have you tried some of these tips and have some feedback? Or do you have a few extra tips you want to share? Drop us a comment below and share your thoughts!
Bio: Rohit Mittal is the co-founder and CEO of Stilt. Stilt is a fintech company focused on improving access to credit for immigrants and the underserved. The core mission of Stilt is to improve financial inclusion and help people live financially healthy lives who are shut out by the current financial system.