What Makes a Small Businesses Successful and Profitable

What Makes a Small Businesses Successful and Profitable - Digital Marketing, Web Development, Business Consulting

Launching and growing a small business is a difficult endeavor. 20% of small businesses fail in their first year, 50% fail within 5 years, 70% fail within 10 years. So what stands the profitable small businesses apart? How do they continue to outlast their competitors and increase their market share year-over-year?

This article will take a look at the strategies and systems behind successful small companies, and outline why they excel where others fail.


Know your Market

Research is critical to the success of many startups and small businesses. Without sufficient prior knowledge of their market niche, a business can be doomed to fail from the beginning.

The most successful entrepreneurs have often spent years in their specific industry before they decide to launch their business. Even with relatively small budgets, startups can put together thorough consumer research using methods such as questionnaires or focus groups.

The best way to start with testing a product or service is to identify the ideal customer. Once they have been identified, companies can begin to test their theories on how they’ll use and benefit from their product or service.

It is at this stage that many companies uncover critical errors that other small businesses missed by skipping their market research. Having a “build it and they will come” approach rarely works in today’s business climate.


Have Clear Goals

No business can ever succeed if there aren’t clear and attainable targets set in place. Also, it is not sufficient for just the owners or managers of the business to keep these goals to themselves.

The most successful small businesses make the company’s overall mission and the underlying goals attached to that mission clear for all employees. This allows colleagues at all levels to both buy in to the company principles and provides direction on all employee tasks.

The company’s objectives should be time-bound to give a sense of urgency, and milestones should be celebrated to recognize their achievement. However, once the celebrations are over, the company’s employees should quickly refocus on the next target and use that for motivation.


Measure Your Results

Good work is measured work. Without objective data, it is impossible to tell how well a product or service is performing.

It is important for small businesses to be scientific in their approach, establishing a baseline and then adding variables one at a time while measuring their impact. The variables that perform above expectations and have a positive impact can then be drafted into the overall product or service offering, and those that perform poorly can be discarded before any significant investment into their development has been made.

It is often the case that leaders within a business have an idea that they think will transform their performance or sales. They launch this idea with great fanfare, and it quickly becomes a flop because there was no testing or measurement of data beforehand. The greatest asset of measurement is that it is objective, as the famous phrase goes “the numbers never lie”.


Focus Your Actions

A small business is unlikely to have unlimited resources, and therefore, as much of the finite budget as possible should be spent on profit-generating activities.

The Pareto Principle tends to hold true for most businesses. The principle states that 80% of the effects come from 20% of the causes. What does that mean in a business context? It means 20% of a company’s work will generate 80% of its revenues and therefore profits.

The key is to work out which 20% is generating the 80% as quickly as possible, and then invest heavily into increasing resources in this area. This is a continual process and a review every year should indicate if that 20% has shifted somewhat from where it was at the beginning of the year.


Provide Your Clients Consistent Quality

Of those 70% of businesses that fail within 10 years, inconsistency will have accounted for a large portion of those failures. Customers or clients cannot rely on a company that does not have a reliable output.

Whether that’s ensuring your product consistently meets of all the necessary quality requirements to be a success, or making sure the service a company provides is always at the same or increasingly improving levels; if an end-user is continually let down, they will fail to return. Putting robust systems and processes in place ensures that every time a product or service is delivered, it is consistently of the same quality as its predecessor.

No business has ever succeeded without returning customers in one form or another and word of mouth marketing can make or break a business. 54% of customers share their bad experiences with more than five people compared to just 33% of customers sharing a good experience with more than 5 people. That statistic alone emphasizes the importance of delivery quality on a consistent basis.


Continuously Innovate

No company has ever become successful by standing still. Selling the same product or service over and over again without ever improving, developing, or pivoting the offering is akin to signing an early death certificate for a small business.

Despite being a large company, the recent transformation of Apple demonstrates this point perfectly. After the break out success of the iPod in the early to mid-2000s, Steve Jobs decided to launch the iPhone, despite the fact it performed many of the same functions as the iPod (in actual fact, a lot more).

Just over a decade later, the iPod is defunct, the iPhone accounts for over 50% of total sales and it has transformed Apple into a trillion-dollar company.

This example is even more stark when you take into account the inventor of the mobile phone Motorola now doesn’t exist and the first mass-market mobile phone manufacturer Nokia is all but extinct. Why? Because they didn’t innovate fast enough and quickly got left behind, thinking their success would last much longer than it ever did.



Launching and subsequently running a small business is tough. Many market segments are cut-throat environments that reward innovation and punish inconsistency and ignorance. Many companies enlist outside professional help to achieve their goals and help maintain their competitive advantage.

Small business consulting is one such way to achieve these results. DigiTellus offers a wide range of services and are experts at helping companies develop technology systems and business processes to ensure a quality product or service is delivered consistently.

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