How to start a small business: 6 tips from a successful entrepreneur

1. Pick an area with established demand and do it better

The entrepreneurial world is saturated. It’s brimming with shiny new ideas and flashy innovations (we’re looking at you, artificial intelligence). But you don’t need to reinvent the wheel to stand out. Remember, even the most legendary game-changers once started with a simple concept and a business plan.

“Most of us have a better shot at success when we tap into something with established demand.”

There’s this hustle culture buzz about “zero to one,” the idea that true innovation comes in the leap from nothing to something. Peter Thiel’s concept is groundbreaking, but let’s be honest. Not everyone can be the next Silicon Valley prodigy or fintech unicorn (backed with millions in venture capital).

The truth? Most of us have a better shot at success when we tap into something with established demand. Once you identify that sweet spot, infuse it with your unique skill set to improve it and create a competitive advantage.

For example, there are dozens of plumbers in any local market. But do those plumbers have a strong online presence? Do they weave new technology and communications practices into their service for customer convenience? If not, that’s a potential business idea worth exploring.

Looking for more ways to draw inspiration? Take a deep dive into thought-provoking sales books. The wisdom packed in those pages is a goldmine.

These books unravel strategies, stories, and secrets that have the power to ignite your spark and help you carve out a niche. Instead of getting lost trying to blaze an entirely new trail, sometimes, it’s about lighting up the existing path in a new and creative way.

“Consider registering your business as a limited liability company (LLC) to protect your assets against personal liability.”

Once you add your unique touch, that’s where the magic happens. Then, you’re on to the next step of choosing a business entity and setting up a business bank account to open the door to your first customers.

Pro tip: Consider registering your business as a limited liability company (LLC) to protect your assets against personal liability. This business structure requires business licenses, but the extra effort is worth it to protect yourself.

2. Make sure your target market can buy what you sell

At the heart of every successful business isn’t just a brilliant idea, but a market with pockets deep enough to invest in it.

Simply put: Your product (or service) is only as good as the audience is willing to pay for it.

Case in point: Say you’re drumming up a business focused on dishing out resume advice tailored for college students. On the surface, it sounds like a winner. Are bright-eyed, ambitious students gearing up for the real world? Check.

But here’s the hiccup: college students notoriously don’t have much money to their name (blame it on those sky-high tuition fees). So, while your service may meet a market need, the folks you’re targeting might not have the means to shell out what it’s truly worth.

The concept? Stellar. The audience? Not so much.

On the flip side, consider a full-service email marketing agency with its sights on businesses boasting hefty budgets.

“Your product (or service) is only as good as the audience is willing to pay for it.”

These businesses recognize the value of a robust email strategy and are more than willing to invest top dollar for prime services. The demand is there, and so is the purchasing power. It’s the perfect blend of supply and meeting the right demand. 

Remember, it’s about finding the right target customers who see the value in what you offer and have the means to invest in it.

3. Don’t compete on price alone

Price is one card in the deck of many strategic plays for starting a small business.
Slashing prices to undercut your competition feels like a quick win. But it’s a dangerous game.

Opting to “do it cheaper” can be a trap. Sure, you might attract a flock of bargain hunters. But‌ cheaper customers are often more demanding. And they churn at the drop of a hat.

When your business strategy centers around offering the lowest price in town, you inadvertently transform your valuable service or product into a commodity. The aftermath? A relentless, brutal race to the bottom. Unless you’re operating at a behemoth scale (think Amazon), it’s tough to find success with margins thinner than a piece of paper.

“Your business should offer unparalleled value. Build your brand around quality, trust, and unmatched expertise. Because when you do that, you’re not just a choice — you’re the choice.”

And here’s the kicker: if a client’s loyalty to you hinges on your price point, there’s a higher possibility for a fallout. Why? When someone swoops in with a price that’s ‌even a dollar cheaper, those “loyal” customers will jump ship without a second thought.

Your business should offer unparalleled value. Build your brand around quality, trust, and unmatched expertise. Because when you do that, you’re not just a choice — you’re the choice.

4. Talk to the market you’re interested in serving

Assumptions can be your business’s biggest downfall. Believing your product is the bee’s knees without verifying it with your target audience is like going for a hike without checking the weather — risky and unpredictable.

To avoid this pitfall, engage with your intended market before you go all-in. Dive deep into the thoughts, desires, and frustrations of those who invest in products or services similar to yours.

• What makes them tick?
• What turns them off?
• Where are the glaring gaps in ‌current market offerings?

This feedback is pure gold. The answers to “I wish it had this” or “I can’t stand that feature” are invaluable insights that can shape and refine your product.

So don’t be afraid to tap into those small business owner networking opportunities. You never know what kind of market research you’ll come away with.

“Engage with your intended market before you go all-in.”

And the best part? Access to this information offers a fantastic opportunity to carve a niche. When you attentively listen and respond to the market’s needs, you can create a product or service that’s superior to the rest.

5. Build in referrals early

The best customers often come strolling in on the arm of an existing one. So, don’t underestimate the power of referrals.

In business, trust is everything. And who better to vouch for your brand than those who’ve experienced your offering first-hand? That’s why rolling out the red carpet for referrals is important.

“Referrals are your business’s best friends.”

Light that fire as early as possible. When a customer joins your ranks, offer them a referral incentive like:

• A complimentary month of service
• A freebie from your product lineup
• A referral fee

But here’s the secret sauce. Encourage your customers to spread the good word within the first 30 days. It creates a sense of urgency and taps into the fresh enthusiasm of a new customer experience.

Bottom line: referrals are your business’s best friends. Woo them, win them, and watch as your venture flourishes, fueled by the most authentic form of marketing — word of mouth.

6. Invest in a lean but powerful tech stack

As a small business owner, you only have two hands. And there’ll come a time when you need more help. The key is to equip yourself with the right tools (and not all the tools).

Why? Every unnecessary addition to your tech arsenal is another line item on your monthly expense report. You’re also adding another layer of complexity.

Here’s your mission: Laser-focus on the essential tools that supercharge your operations and boost your value proposition.

Not sure where to start? Here are a few tools worth investing in.

Product management software helps you keep track of everything product-related, from creation to delivery. Think of it as your command center keeping projects, timelines, and teams in harmonious sync.

As you hire freelancers and full-time employees, find apps to keep track of employees’ work hours to streamline your time-tracking process. Some apps, like Connecteam, can track accurate work hours and automatically generate digital timesheets to reduce human errors.

“Laser-focus on the essential tools that supercharge your operations and boost your value proposition.”

On the marketing front, crafting a visually cohesive and appealing presence on social media can captivate potential customers and foster a loyal community. Tools like Instagram grid planners can simplify the process, helping you pre-arrange your content, maintain consistency, and effectively tell your brand’s story. 

Last but certainly not least, investing in a payment platform like Melio helps streamline your business expenses and payment processes. You can pay vendors, suppliers, and contractors via their preferred method. It’s an easy way to keep stakeholders happy and amplify your cash flow. It’s a no-brainer.

The key takeaway? Invest in a lean, mean tech stack that complements your business, empowers your team, and delights your customers. That’s smart business powered by smart tech.