A recent report from the Guardian Life Small Business Research Institute examined the practices of small business owners (SBOs) who saw revenue increases in 2011 and identified several steps for entrepreneurs eager to make 2012 a success.
Small business owners who were able to grow their companies despite the adverse economic climate were found to have six approaches in common – planning for contingencies, seeking counsel from professionals, using borrowed funds strategically, developing managerial skills, not obsessing about their business and having a clear vision of the company.
With regard to using borrowed funds – such as those obtained through commercial loans from a local community bank – 58 percent of SBOs reported that investing in research and development yielded the best return. Although putting funds toward expanding the company by opening new offices, taking on more staff or adding new capabilities are all common courses of action for entrepreneurs, the study found that using borrowed money for these efforts often led to a decrease in sales.
At a time when revenues are down and the unstable economy is making it even more difficult than usual for SBOs to predict the future, it can be hard not to obsess over how your business is doing.
However, maintaining a healthy work-life balance is important. As you strive to make your company a success, keep an interesting fact from the study in your head – three-quarters of higher-growth small business owners said their companies made it possible for them to enjoy more satisfying experiences with their families, compared to less than two-thirds (64 percent) of revenue-declining company owners.
Another hallmark of successful SBOs studied by the institute is that they tended to incorporate contingency planning into their company's financial plan. Nearly half (47 percent) of higher-growth companies that took part in the research had cash reserves set aside for a rainy day.
Of course, every small enterprise is different. My Bank understands that, and we offer a variety of flexible, scalable business checking solutions for entrepreneurs who open an account with us. Professional financial services advisers are also on hand to provide all the guidance you need to help your company become a high-growth enterprise, recession or not.