How to Manage a Small Business

Becoming the owner of a small business brings a variety of challenges, both in terms of scale and operations. Small business owners must overcome obstacles related to revenue, logistics, finances, management, and development, often with little to no staff. The most crucial aspect is maintaining engagement from stakeholders: customers, suppliers, and the workforce, to build strength in a short amount of time. Running a small business holds significant value both personally and financially.

Put the idea on paper. The most important step is to form the idea on paper. Successful businesses often offer new products or services or enhance an existing market segment. Whatever the goal, you need to write a plan.

• You can write multiple drafts and choose the best one.
• Create a detailed business plan. Thinking deeply about the details is more beneficial than overlooking them.
• You can include questions in your draft plan. Verifying what you don’t know is just as important as listing what you’re sure about. You don’t want to present a plan with unanswered questions to potential investors; including relevant questions in your draft will help you find suitable answers for the final business plan.

Contact your local Small Business Development Center (SBDC). The SBDC can assist you throughout the process of running your business. They can help you create a business plan to attract investors and offer free consulting services.

Identify your customer base. In your plan, you need to define the target audience who will purchase your product or use your service. Why do they need or want your product or service? The answer to this question will influence many aspects of your business.

• This is the time to ask questions about your product or service. For example, you may want to ask: will my product/service appeal to younger or older individuals? Is my product/service more suitable for low-income or premium customers? Does my product/service attract customers in a specific environment? You can't sell snow skis in Hawaii or towels in Alaska, so be realistic about your product's appeal.

Estimate your budget. In your plan, you need to address the crucial question of your business’s financial status.

• How will your product or service generate profit? How much money will it bring in? What are the production costs for the product or service? How do you plan to pay for costs and wages? These are important questions that you need to answer in your business’s financial plan.

Develop your project. Every successful small business needs to grow its customer base and product capacity from the start. You need to assess how well your business can handle its growth potential.

• Be realistic about your growth potential. Always keep in mind that growing a business requires growing its capital. A business that expands rapidly in a short period might quickly lose potential investors.

Select the right bank. Run your small business efficiently by exploring the various offers from banks designed for small business owners and choose the most suitable one to carry out your financial plan. Many financial institutions provide accounts with low fees, low-interest loans, or free deposit programs for small business owners. Work with the institution offering the best deals to ensure every dollar you spend counts.

• Compare offers from different banks to secure the largest amount of capital at the lowest interest rate. For example, if one bank offers a loan of 200 million VND at 4% interest, you can present this offer to another bank to see if they can provide a larger loan at a lower rate.

Secure your loan or investment. A successful business requires investment capital. You need to arrange and secure enough financial support for your business, covering production costs, marketing expenses, and until your business reaches a sustainable position that can operate on its own profits.

• It’s important to compare different interest rates for small business loans.

Ensure effective collection methods. You need to track the revenue from invoices and the company’s outstanding debts. A successful business must maintain a stable cash flow. Accepting payment methods that are unorganized or allowing debt can quickly break your business.

• You need to decide whether to accept cash, credit cards, checks, or a combination of payment methods from customers.
• Cash transactions are the easiest to process but harder to track over time. Additionally, cash payments don’t guarantee the security of your company’s income, as employees might steal money from the safe.
• Checks can prevent internal theft, but they may bounce, leaving you in a tough situation with the bank.
• Credit cards and international debt cards are the safest payment methods, but they come with processing fees depending on the business size, making them a bit wasteful.

Consider using a credit control app. Many apps help small businesses improve their cash flow by clearly managing daily income and controlling customer credit payments. These apps allow you to add new customers or track existing ones, monitor bill payments, or transfer money more securely. Many providers, such as iKMC, offer software trials to help you manage finances.

Efficiently manage your inventory. Proper inventory management can make or break a small retail business, so it’s crucial to manage carefully to ensure every penny spent is worthwhile. Start by checking your stock levels and monitor whether items are selling. Regularly organize your inventory to remove slow-moving items and replace them with new products.

• Inventory management is often determined by the 'shelf life' of the products you sell. For instance, if you sell perishable goods, you should prioritize shipping out the oldest stock first to maximize your business's profits.

Consider hiring a financial expert. This is a valuable investment when you hire staff with expertise to manage the financial aspects of your small business. Accountants can help you identify areas where the business isn't performing well financially and assist you in maximizing profits.

• You don’t need to hire full-time employees to manage your finances. For example, if you are proficient in managing inventory and cash flow, you only need a CPA (Certified Public Accountant) when it’s time to calculate taxes.

Obtain a business license. Be sure to register and apply for the appropriate business license for your small business within the regulatory framework of your industry. This step is crucial to ensure your business operates legally and complies with industry regulations. Don’t forget to apply for licenses related to the services you provide, such as home repair or tax preparation, as these also require registration and paperwork. You cannot hire qualified employees if your business is not licensed.

• Not every business needs a license. You should check with your local small business administration to see if your business requires one.

Certify your employees. Hire individuals with qualifications relevant to your business, such as certified public accountants or certified electricians. Employees with credentials are highly skilled individuals who increase customer trust and confidence in your business.

Stay organized at all times. Organizing your time, workforce, finances, and inventory is key to running a successful business. Create spreadsheets to track important details so you don't have to keep them in your head, and review everything on a weekly basis.

• Hold weekly, bi-weekly, or monthly meetings with staff to ensure everyone is working efficiently and avoid time wasted when team members overlap tasks. These meetings will also help analyze who is not completing their assigned work well.

Delegate responsibilities. You can’t do everything yourself, so it’s important to assign tasks to skilled employees. A small business requires staff to wear multiple hats beyond their expertise.

• You can divide the business activities into specific areas and assign them to different team members.
• At the same time, when delegating tasks, you need to monitor the completion of these tasks. For instance, you wouldn’t want an accountant handling legal matters on your behalf, nor a lawyer managing financial records. Think about each function carefully to understand the needs when hiring new staff.

Stay involved. After you’ve assigned responsibilities, you need to stay involved to ensure the employee can handle the tasks effectively. You also need to take responsibility for customer needs. Be aware of customer demands and feedback, and don’t neglect customer care just because you’ve delegated it to someone else.

• Over time, you will need to hire and fire employees. Make sure you understand the legalities surrounding hiring or firing staff.
• Letting employees handle negative customer feedback on their own is a risky strategy. Staff may prefer only to share positive feedback, leading to a relaxed approach to company management. For instance, employees should provide evidence when reporting on business performance. This is your company, and you need to take responsibility, so be proactive in overseeing the business outcomes.

Create marketing and promotional campaigns. This is a crucial step in promoting your business. Ensure that the money allocated for marketing is used wisely based on demographic research. This will help you plan more effectively for promotional and marketing efforts.

• Consider marketing campaigns that are within your business’s budget. For example, national TV ads may not be the best choice if your business operates locally.
• Think about who will be interested in your product and why. For instance, if you’re selling dentures, marketing to a younger demographic might not be the best fit.

Network building. Seek support from local small businesses by connecting with other business owners. Join small business associations and community events to enhance your company’s reputation. Attend various community events to connect with potential customers and build relationships within the local business ecosystem.

Understand your business. Stay up-to-date with news and trends to improve your business’s competitive edge in the industry. Regularly follow newsletters or online sources to keep yourself informed about the latest events in your field. Keeping up with the newest and most exciting developments in your business area will help you attract customers from competing companies.

Provide references. Create a list of satisfied customers to serve as references for potential clients. This will help new customers assess your work and the level of service you provide.

Stay connected. Ensure that customers can reach you and your company whenever they need. The best way to build a strong reputation is by being responsive to customer needs.

• Large businesses may struggle to respond to every customer, often losing some over time. However, small businesses can’t afford this. As a small business owner, you have the opportunity to connect directly with potential customers. This may require providing your personal mobile phone number and email address to foster better communication and grow your business.

Keep your promises. Small businesses must offer a product or service to succeed. However, if you grow your business by expanding your customer base, you must not only give customers what they want but also deliver what you’ve promised. If your product or service doesn’t match the advertising, you’ll struggle to attract more customers.

• Start by aligning your sales approach with what you’ve promised. If you or your sales team over-promise, customers will be disappointed when the product or service doesn’t meet expectations. This leads to negative reviews and bad word-of-mouth for your business. Remember, an effective sales strategy should focus on identifying and understanding customer needs, helping them recognize the benefits of your product, rather than misleading them with inflated promises about the product’s potential.