Key Ways to Build a Stronger Small Business in 2021
Today's post is brought to you by guest poster Julie Morris, a life and career coach who thrives on helping others live their best lives. After years in a successful (but unfulfilling) career in finance, Julie busted out of the corner office that had become her prison and now is fulfilled by helping busy professionals like her past self get the clarity they need in order to live inspired lives that fill more than just their bank accounts.
Small businesses spent 2020 just trying to survive. They pivoted, adapted, and hunkered down as COVID-19 wreaked havoc on local economies, waiting for the day things would finally return to normal. At this point, it’s time to regroup.
How can companies develop a winning strategy for this new economy? Here are some key strategies for strengthening your small business in 2021.
Protect your assets
Small business owners have a tendency to play fast and loose with finances — especially if they are inexperienced — and in 2020, Reuters notes many paid the toll. Even if you got through 2020 unscathed, it's a good time to review your asset protection strategy to prevent incurring unnecessary risk. That includes:
Reviewing your corporate structure. Does your business entity leave you personally liable for debts? Incorporating may not seem worth the trouble for very small businesses, but don't underestimate the importance of limited liability.
Establishing business bank accounts. Mixing personal and business finances is another common, yet risky move. With the widespread availability of free business bank accounts, there's no excuse not to maintain separate accounts.
Avoiding personal guarantees. You can take the right steps to protect your business, but it all goes out the window if you back business debts with personal guarantees. Building business credit by applying for business credit cards and lines of credit and always paying on time is the best way to avoid personal guarantees.
Review how you pay yourself
Your business structure affects more than your liabilities — it also determines how you pay yourself. Owners of corporations are required to put themselves on payroll with “reasonable compensation.” While this simplifies administration, it also leads to less wiggle room during lean times, as many business owners discovered during the pandemic. LLCs, on the other hand, distribute owner draws that can be taken at your discretion. Consider whether your business is better served by restructuring as an LLC and find out how to start an LLC.
Next, start thinking about payroll. In short, payroll is the process by which you pay yourself and your employees (if you have any). Many business owners opt to outsource this task to payroll services that will handle things like time tracking, direct deposit, and tax payments. Some services even provide tax penalty protection up to a certain amount in the event that any problems arise. You can even set up your payroll to run automatically.
Enhance your hiring strategy
As businesses reopen after the pandemic, many are hitting the same wall: They can't fill jobs. Franchising notes the verdict's out on the cause of 2021's hiring challenges, it's a major burden for business owners who want to reopen but lack the staff. To get qualified candidates in the door, employers need to rethink the value they offer employees — not just pay, but also flexibility, training, and growth.
Build strong relationships
Those benefits don't just get qualified candidates in the door. They're also what makes your best workers stick around. While employee loyalty may seem like a rarity these days, the truth is, effective loyalty programs start at the top. That includes establishing rapport, building trust, and investing in employees' personal and professional well-being.
The importance of relationship-building isn't limited to staff. Customer loyalty is critical if small businesses are going to compete with bigger brands and lower prices. Not only does loyalty retain customers through downturns, but it also drives growth through repeat sales, customer referrals, and reduced marketing costs. To make a loyalty program work, identify and market to your business's ideal customer.
The COVID-19 pandemic exposed small business’s weak points, from risky financial strategies to lacking loyalty programs. As businesses move forward into 2021 and beyond, they'll need to adapt to the new normal, starting with the most fundamental aspects of their business. While these tasks aren’t easy, they’re the key to creating businesses that are built to last.
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