4 Things Successful Main Street Businesses Have inCommon

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There’s no magic formula to running a successful business. While an equation would be helpful, the most businessowners can do is learn from fellow entrepreneurs. By looking at the common threads between successful smallbusiness owners, hopeful (and experienced) entrepreneurs can learn about what they should and shouldn’t do.

First, let’s look at what causes many small businesses to fail:

Incompetence: Despite their intentions, many business owners aren’t educated enough on the intricacies ofbusiness ownership. About 46% of businesses fail because of it.

Lack of managerial experience: 30% of businesses fail due to a lack of managerial experience. When one lacksexperience with leading employees, good credit practices, reviewing important data (such as financial ratios byindustry) and the logistics surrounding borrowing money, businesses can very quickly run into trouble.

Lack of product knowledge:11% of businesses fail because of a lack of experience in the goods or services theyoffer. This can lead to incorrect pricing and wasting money. Educating yourself on important logistics like financialratios by industry, financial statement trend analysis, benchmarking analysis, business valuation software, andbudgeting and planning software will lay the groundwork for your business’s success.

Fortunately, it’s easy to learn what makes a business successful. While it may not be as simple to implement,knowledge is the first step:

1. Know What You Want: If your answer to that is simply “money,” you’re already setting yourself up for failure.While money is a necessity, it shouldn’t be the driving factor behind running a business. The most successfulentrepreneurs started out hoping to solve a problem, do what they love, give back to their community, and/or provideawesome service for their fellow community members.

2. Know What You Know: Don’t deviate from your knowledge base. If you know plenty about sporting goods fromyears working on a golf course, utilize that. If you’ve never baked a cake in your life but want to open a bakery, you

will be creating extra challenges for yourself. When you know the ins and outs of the product/service, it will be easierfor you to find financial ratios by industry.

3. Make the Most of Everything: Don’t let any resources go to waste! A large part of business ownership islearning what corners to cut. Entrepreneurs are the masters of efficiency and apply their skills to a variety of thingsother than money. For example, a small business owner who is going through a dry spell may skip buying brandnew office equipment and pull together used equipment to suffice.

4. Don’t Put All Your Eggs in One Basket: The same advice you’ll get from an adviser for your personal financesapplies to business ownership. By diversifying your assets, you can avoid a sudden financial crisis if anything goesawry. Once business owners have established the foundation for their company and are able to bring in a steadyprofit, they should be looking to expand their investments.