7 Essential Principles of Small Business Success

Why does one small business owner flourish while another one fails? In all my years of being in business, reading all I can about business, and surrounding myself with successful entrepreneurs (large and small), I have come to believe there are 7 essential principles that all successful small business owners have in common.

  1. An entrepreneurial mindset
  2. Strict fiscal discipline
  3. A kitchen cabinet of advisors
  4. A defined brand
  5. A niche market
  6. Excellent customer service
  7. Cash position and a good banking relationship

1. An Entrepreneurial Mindset

To develop a mindset for success, you must realize that how you perceive your business and your life determines your reality. Business owners with an entrepreneurial mindset do not think like worker bees. They have several characteristics that cause them to stand out in the crowd. Entrepreneurs are not born. They are built through constant study and determination. Entrepreneurs are willing to fail to eventually win. They understand that not every idea is a good one. There will be times when you will be doing your best, but feel frustrated by a lack of progress in your business. Every entrepreneur goes through these difficult periods. I certainly have been there on more than one occasion. It is at times like this that you need to focus on the positive and keep your optimism working. The key is to avoid negative thinking.

2. Strict Fiscal Discipline

Successful businesspeople use budgets and realistic sales projections to run their businesses. They know by the 15th of the month how well their business did financially the month prior.  They do not spend money on travel, events or trade shows that are not budgeted. They do not hire staff without have the money or contracts in place in advance.  They also understand how to use a line of credit. They use it carefully for short-term cash needs, and not long-term funding needs such as marketing expenses.

3. A Kitchen Cabinet of Advisors

You will need to develop relationships with people who are already entrepreneurs or other businesspeople in a position to give great insight into what you need to be a business success.  It is very helpful to also include a potential client in your back-channel conversations. Clients can provide valuable insight into budget cycles and current pain points, and most importantly introduce you to other potential customers. Keep the company of smart people. Sometimes a phone call to an advisor can save a lot of heartburn and money.

4. A Defined Brand

Your brand is the personality of your product, company or service, but what makes the brand great?  You must protect your brand with the necessary trademarks, patents and/or copyrights for everything from your logo, colors and design of your packaging to the invention of a new product or process. Your brand enhances the performance, innovation, transparency of your company and it has the power to project a sense of social responsibility outside the company.

Successful entrepreneurs treat their brand as an investment, not a cost. A strong brand must be relevant to customers, contemporary and appealing.  Brands are among the most important assets that a business can own, and strong brands can ensure business continuity in times 0f difficulty.

5. A Niche Market

Successful small businesses owners understand that only a limited number of people will buy their product or service. They only pursue marketing efforts toward the exact people they are targeting as customers. Having a narrowly defined group of customers is how they’ve built their business.

6. Excellent Customer Service

Successful entrepreneurs know excellent customer service will keep customers coming back. In today’s customer-oriented business environment, “people skills” are critical for small business success. How you handle your customers can directly affect your company’s performance.  Strong businesses provide manuals and staff training on the skills needed to communicate professionalism, gain respect and enhance customer relationships.  They also use customer relationship management (CRM) software to track the value of customers to the business and to manage customer contacts.  

7. Cash Position and Good Banking Relationship

On a day-to-day basis, successful entrepreneurs understand what their cash position is in terms of accounts receivable and accounts payable.  They do not just make deposits and withdrawals. They have a relationship with the manager and head teller at their bank.  They also use two banks to make sure that their personal and business assets are not located in the same bank.

Do you have any other principles to add to my 7 small business success principles?

17 Comments ▼

Melinda Emerson


Melinda Emerson Melinda Emerson, known to many as "SmallBizLady," is a Veteran Entrepreneur, Small Business Coach and Social Media Strategist who hosts #Smallbizchat for emerging entrepreneurs on Twitter. She is also the author of, Become Your Own Boss in 12 Months.

17 Reactions

  1. Amen Melinda! These principals are spot on!!

  2. Persistence would be one to add. If your proposition is soundly researched and viable persevere and it will come good. As you say, ntrepreneurs dont give in they keep bouncing back until they win.

  3. Fiscal responsibility is more easy in principle than in practice, but you’re right, without it a small business will tank even if they’ve got their other ducks in a row.

  4. Hi Melinda
    My wife and I have been running an importing and retail business for 12 years, and we have done very well, when other people in our area started a business the same as ours only to fail within 3 years. Your 7 Essential Principles of Small Business Success are very sound.

  5. Yes, you missed a giant step to success. You must NEVER do work that someone else could be doing. Outsource everything to contractors such as accounting, payroll, web sites etc. And if you hate making sales calls, outsource lead generation. We hire work at home salespeople who simply follow up and ask if the prospect wants to talk to me, then they patch the call through. I pay $100 to $300 per ‘patch through’ depending on the product and the result. It is cheaper then advertising but of course we only do B2B. I also used a service at http://www.delegationmagic.com to go paperless and that really helped us get little tasks out of our life so we could focus on getting customers, hiring people to do the work for that new customer, and then writing systems to keep that customer happy.

  6. The two most important are the mindset & having a good board of advisors. If you have those, the rest fall into place.

  7. Someone did say: Behind every great man there’s a great woman. For being success, shall we have a great woman? If so, what shall we include this type of concept into this article…;-)

  8. Thanks Melinda. I’m definitely having a day where I feel I’m doing my best and seeing no forward motion. Your article really helps me relax. I appreciate it so much.

  9. Hi Melinda, I like this phrase: “Business owners with an entrepreneurial mindset do not think like worker bees”. I agree with you. This is one of the most useful articles I’ve read since it doesn’t only teach about businesses but it doesn’t discriminate in anything. In other words the content of the article is all positive and it is a great start of people would get a chance to read this.

    Great work!

    Juan

  10. Do not be afraid to take calculated risks. Too many small business owners worry more about what can go wrong instead of what can go right. All great leaders have failed, but learned what went wrong and corrected their mistakes.

  11. Thanks Melinda for a fantastic set of essential principles!I particularly liked the first one. It is imperative to work at building a success mindset, especially when running a small business because you don’t always have ‘others’ to rely on!

  12. I would add to “defined brand” the fact that you must have a web presence to engage more people. But having a website is not enough: it MUST work. For example: If you build your website or part of it using Flash you are losing exposure and potential customers (not to mention that it won’t work on i-devices: iphone, ipad, etc). Something we have used and are really happy with is soloago.com because you can create photo gallery widgets using no flash. You can market your products using this app.

    Believe, all these principles are true!

  13. Great post Melinda.

    The entrepreneurial mindset is the first step, yet very challenging. Whatever one BELIEVES can be done, can be done. Everything else is an off-spring to that. Thanks for sharing

  14. thanks Melinda

    that helps, like u a saying we need 2 make gud relationships with successful pple and learn from the

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