The Seven Stages of Small Business Success

The Seven Stages of Small Business Success
5 Surprising Mobile Search Statistics and Facts
What You Need to Know About the S Corp Deadline of March 15
Now You Can Buy Cloud Services Through Comcast

Posted: 28 Feb 2013 12:00 PM PST

small business success With 28 million small businesses in the U.S., it's hard to be a member of planet earth and not have a personal connection to small business. Small businesses play a critical role in the economy, making them a hot topic of discussion.

What's the problem if everyone is talking about small business?

The problem is this: Small business means different things to different people.

Small businesses come in many shapes and sizes. If you're a solopreneur, you have different needs and challenges than a business with 10 employees. And you have widely different needs and challenges from a 100 person company.

What I've discovered in working with thousands of small businesses for the last decade is that there are seven stages of small business success. It's important to remember you can have success at any of the seven stages. The goal of the seven stages is to help you articulate which stage your small business is in and the success factor you need to focus on. Having this focus helps you make intentional decisions about where you want to be in the future.

7 Stages of Small Business Success

Solopreneur

Of the 28 million small businesses in the U.S., 22 million of them are solopreneurs. In this stage, businesses have one employee and bring in $100,000 or less in annual sales. The success factor for the solopreneur is time. Ask any small business owner and you'll hear that there isn't enough time in the day.

Handling every part of the business, from finances to sales and marketing to everything in between, is a dizzying cycle that can ensnare even the best multitaskers. A shortage of time butting up against the ever growing to-do list can detonate the solopreneur's chance of success.

The key to thriving in this stage is to establish a meticulous time management system. Devote the largest pieces of your time to what actually makes the business grow. Don't forget to carve out time to take care of yourself, to be with your family and to remember why you actually became an entrepreneur in the first place.

You'll stretch yourself thin, but you'll at least stay sane while in this stage.

Partnership

Partnerships comprise 1.7 million businesses across America and make somewhere between $100,000 and $300,000 annually in sales. The solopreneur grows beyond him or herself to two or three employees in this stage, which usually means bringing on a partner. There's great value in strategic partnerships and they can really ramp up your business' growth.

But, there's a flip side to everything. The wrong partner can stunt your company's growth and cripple its path to success. Start by evaluating your own weaknesses. If you lack financial know-how, find a partner who is passionate about projections and balance sheets. If your instincts are to act as a manager, a visionary entrepreneur that dreams big might be what you need. There’s not always a perfect yin to your yang, but look at each potential partner as an entire package.

Having partners in place allows you time to harness the main success factor at this stage– sales. It's a bit uncomfortable for many entrepreneurial types to sell, but you have to get new customers to survive. You have to figure out how to talk about your product in a way that speaks to the benefits your customers need.

There's no one in the world who's more passionate than you about your product or service. So get over your fears and start selling.

Steady Operation

As your business steadies, you will reach this stage in which 1.9 million businesses also reside. A steady operation has four to 10 employees and annual sales of $300,000 to $1 million. Once your business has the sales operation running, you'll need to get focused on marketing and service. It's essential to get a plan in place to make marketing systematic and profitable for the business.

As a small business, you can't afford to have marketing efforts not generating revenue. Learn to make smart marketing decisions that help you grow sales and keep customers.

Customer service is also something to focus heavily on at this stage. Invest in the people and systems that make your customers feel like VIPs and you'll end up with a boost in repeat sales, referrals and a higher customer retention rate.

Local Success Story

There are 900,000 businesses nationwide that are local success stories and have between 11 to 25 employees. As your business grows from $1 million in annual sales up to the $5 million mark, the big picture must be at the forefront of your mind.

The success factor at this stage is setting the vision. You face the reality that you won't always have a hand in hiring and you have to trust the people in charge of these decisions. It's intimidating for an entrepreneur to relinquish the control he/she had over every detail of the business. But setting your vision and making it known to your team will go a long way. A clear vision will attract the right people to your business.

As your business expands into this phase, you will begin to be viewed as a success story in your local community. The growth of your company will be an inspiration to other small businesses in your area.

Your example of setting the vision and letting go will be an important model that others will follow.

Managed Organization

In this stage, your business has expanded to between 26 and 100 employees and annual sales from $5 million to $20 million. There are 200,000 businesses like this across America and the success factor of hiring in line with your vision will set companies in this stage apart.

Most CEOs feel that when they get to this level, all the focus needs to be on shareholders. If this is true, then you must turn your attention to employees and the company culture. Happy employees make happy customers who make happy shareholders.

Culture is what holds managed organizations together. Culture attracts the right people, ejects the wrong ones and ultimately guides a company's path to success. Actively including every employee, regardless of rank and title, in the direction of your company will make your entire workforce feel invested in the business.

This can be a difficult stage as you add more layers of management. The wrong leaders will dilute and weaken your culture. Be sure to establish core values and a mission that can be shared among staff and valued from top to bottom. Employees will feel mutual respect and a culture they can't resist.

This, combined with the processes you've already put in place will move your company forward like a machine.

Mature Company

You've reached a place of substantial success to the tune of annual sales between $20 million and $40 million. You now have 100 to 200 employees and you're in the same stage as 60,000 other businesses. You've become a stronghold in your industry. It's time to unleash the success factor of strategic planning and mix in concrete performance measuring tactics. Without solid planning, your company will become stagnant and that's when it becomes vulnerable.

Revisit your strategic direction and gauge its effectiveness often. If you notice a dip in progress, it may be time to reevaluate your strategy. The pulse of a mature company should be checked regularly.

A healthy culture combined with a strong strategic planning process will allow you to move into the rare space of corporate player.

Corporate Player

As the business escalates to annual sales between $40 million and $100 million and anywhere from 201 to 500 employees, entrepreneurs must make the terrifying decision to surrender even more control. There are 30,000 companies in the nation at this stage and the leaders of these companies have to make some tough choices. The vision is still yours (mostly), and the company is still yours (maybe), but the time comes to handpick a leadership team you can trust.

The success factor for this stage is leadership development and you must choose and develop leaders who share your vision and are every bit as determined to preserve your culture as you are. These leaders should be ethical beyond reproach, treat every member of your team with respect and exude their commitment to the business and its core values in their daily actions.

You want to trust the business is in good hands.

Every one of these seven stages is incredibly distinct and it is possible to achieve success in each one. Stop where you're comfortable. Keep in mind that people are what make or break your business. Small businesses have needs of their own that cannot be sated in the same ways those of large corporations can. Small business owners must take the time to recognize which stage of success their business is situated in and act accordingly.

Success is in the eye of the beholder, but success factors can take you there.

7 Stage Photo via Shutterstock

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5 Surprising Mobile Search Statistics and Facts

Posted: 28 Feb 2013 09:00 AM PST

mobile search statistics There’s a revolution taking place – a mobile one.

Today, everyone knows and understands that people continue to be more reliant on mobile devices for their immediate needs now more than ever. Mobile search is even expected to overtake desktop search in volume within the next year.

It’s immediately clear that mobile search is fast growing in popularity and value.

But how much?

You’re about to find out.

5 Mobile Search Statistics and Facts

Google Conducts 30 Million Click-to-Calls Per Month

Click-to-call is among one of Google's new or improved ad extensions, letting advertisers attach clickable "click to call" links that automatically generate the business's phone number on a user's mobile device. Click-to-calls make it super easy for searchers to get in contact with a business in the least amount of time possible.

According to Google, click-to-call is such a popular ad format that Google generates 30 million calls every month as of right now. If your small business relies on getting the phone to ring for orders and inquiries, consider looking into click-to-call extensions in AdWords now.

One in Three Mobile Searches Have Local Intent (Versus 1 in 5 on Desktop)

Searches on mobile devices are 66% more likely to have local intent than a desktop search. Meaning people searching on mobile phones are usually looking for something around them. For example, directions to a business or a phone number to call.

Capitalize on strong local search intent by creating ads and landing pages that make it easier for searchers to call or find your business (see #4 below).

Commercial Intent is Significantly Stronger on Mobile

In a recent interview with Surojit Chatterjee, the head of global mobile search ads at Google, Chatterjee said:

"The time between intent and action is shorter on mobile actions."

Since mobile searchers are often trying to find a quick answer to a present problem, they have stronger intent and are much closer to making a purchase than a desktop searcher. If a mobile user is searching for emergency road side car service, then the user is probably in need of service right away. A user executing the same search at home, in the evening, is probably in no rush.

So, depending on your business, mobile clicks may actually be more valuable than desktop clicks. Even though, historically, they've been cheaper.

Advertisers See a 6-8% Lift in CTR with Click-to-Call Extension

Click-to-call extensions are a tremendous benefit for both users and advertisers. Mobile users can get in contact with businesses quickly and easily, without writing down numbers or navigating cumbersome mobile sites.

Advertisers get better performing ads. Ads featuring the click-to-call extensions along with location extensions can see a 6-8% increase for click-through rates (which can subsequently raise your quality score, lower your costs and improve ad exposure).

Call Reporting Costs 100% Less Than it Used to

Okay, so I forced the "statistic" a little on this last one. But this is great news: Google recently began offering extensive call reporting free of charge. This granular call data was previously available for a fee of $1 per call. But Google has since decided to start providing this data for free.

Ultimately, the only mobile search statistic that matters is the ROI (return on investment) for your small business. New detailed call reports show advertisers the phone numbers of various calls to the business, how long the phone calls lasted and what time the calls occurred. It's as simple as looking at a phone bill.

This data can help businesses decide what time of day is most valuable for enabling click-to-call extensions, when to have more staff available to answer phones, etc. Measuring the ROI from mobile search is easier than ever.

The Mobile Revolution

Everyone knows there's a mobile revolution happening. Mobile search is expected to overtake desktop search in volume within the next year and mobile advertising is getting both easier and better.

The great news is that with Google's recently released Enhanced Campaigns, developing a mobile search strategy for your small business is easier than ever.

Mobile Device Photo via Shutterstock

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What You Need to Know About the S Corp Deadline of March 15

Posted: 28 Feb 2013 07:00 AM PST

s corporation deadline Choosing the right business structure for your small business can seem like a daunting task. After all, the decision can have pretty significant implications, from how much you pay in taxes to how much paperwork you need to contend with.

March 15th is the deadline for existing businesses to elect S Corporation status, making it a good time to examine this business entity.

Double taxation

You may have heard that the traditional C Corporation is overkill for most small businesses and results in higher overall tax payments through something known as double taxation. That's because when it comes to taxes, a C Corp is a separate taxpayer that files its own federal and state (where applicable) tax returns.

This means that profits are first taxed with the corporation. Then if the corporation decides to take that profit and distribute dividends to shareholders, the dividends are taxed again (this time, on each shareholder's personal tax statement).

The LLC (Limited Liability Company) and S Corporation are popular structures for small businesses since they avoid this double taxation burden. With these business structures, the company is taxed like a sole proprietor or partnership, meaning the company itself doesn't file its own taxes: all company profits are 'passed through' and reported on the personal income tax return of the shareholders (S Corporation) or members (LLC).

If you're interested in setting up an LLC or S Corporation for your business, you're probably wondering which business structure is right for your business. While circumstances vary among individuals and individual businesses, here are some general guidelines to help you understand the differences and their impact on your business.

As always, you should consult with a tax advisor or CPA to discuss the specifics of your own situation:

Liability

Both the LLC and S Corp will separate your personal assets from any liabilities of the company (whether from an unhappy customer, unpaid supplier or anyone else who might pursue legal action).

Business Formality

An S Corporation actually begins as a C Corporation. After the corporation has been formed, it can elect 'S Corporation Status' by filing Form 2553 with the IRS in a timely manner in order to get pass-through tax treatment (more on the deadline later). This means that the S Corporation involves the formalities and compliance obligations of the C Corporations.

If you incorporate as an S Corporation, keep in mind that you'll need to set up a board of directors, file annual reports and other business filings, hold shareholder's meetings, keep records of your meeting minutes and generally operate at a higher level of regulatory compliance than your business might need or want to deal with.

With the LLC, this isn't the case. LLCs just use an informal operating agreement. Think about how much formality you want to deal with. In some cases, the S Corporation can seem too burdensome for the small business or solo entrepreneur.

Shareholder Eligibility

The IRS places restrictions on who can be a shareholder of the S Corporation. An S Corp cannot have more than 100 shareholders (of course, this may not be too significant for the small business). In addition, all individual shareholders of an S Corp must be either U.S. citizens or permanent residents.

How Income is Allocated

The two structures differ in terms of how profits can be divided among the owners. An LLC gives you flexibility to decide how profits should be divvied up. But in an S Corp, income and loss are assigned to each shareholder strictly based on their pro-rata share of ownership.

Here's an example: Let's say you open a business with a colleague, each owning 50 percent. As the year goes on, your colleague gets busy elsewhere and you start taking on the bulk of the work. At the end of the year, the two of you decide that because you have done more work, you should keep 75 percent of the profits and your colleague gets 25 percent.

With an LLC, this type of agreement is fine. Owners simply need to agree to the arrangement and they will be taxed accordingly to their 'operating agreement.' By contrast, this type of flexible arrangement won't work with an S Corporation. Because you and your colleague are each 50 percent owners, you each will be allocated 50 percent of the corporation's income (at least when it comes to computing income tax).

Class of Stock

If you are concerned about the type of stock you can offer, take note that the two business structures are different. An S Corporation can have voting and non-voting shares, but cannot have distinctions like common stock and preferred stock. In an LLC, however, these priorities and preferences are allowed and you can have different membership classes.

When is the S Corporation Deadline?

If you're interested in the S Corporation for your business, keep in mind that there's an upcoming deadline to apply for S Corporation treatment. If you have an existing Corporation (C Corp) or LLC, March 15th is your deadline for filing IRS Form 2553 with the IRS and electing S Corporation status for this tax year and forward.

In other words, if your corporation/LLC existed on January 1 of this year, then you need to get your Form 2553 in by March 15, 2013 in order to have your S Corp in effect for the 2013 tax year. If you're forming a new corporation this year, then your S Corporation deadline is 75 days from the date of incorporation.

The right business structure for you will ultimately depend on all the unique aspects of your business. But regardless of which business type you choose, taking a serious look at your legal structure is creating a strong foundation for your business.

S Corp Business Photo via Shutterstock

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Now You Can Buy Cloud Services Through Comcast

Posted: 28 Feb 2013 05:00 AM PST

Comcast is getting into the cloud service reselling business, giving small businesses one more place to shop – the Comcast Upware Marketplace.

The company’s new Upware app store, launched last week, is targeting small to medium-sized businesses by offering cloud storage, security, and collaboration products from Box, YouSendIt, and Microsoft.

The photo below shows a search page within the Upware store. Results include the name of the product and company along with a brief description and price. Users can choose to narrow their searches by category, price, industry, and whether discounts or free trials are available.

comcast upware marketplace

Stores like this one are nothing new in the industry, reports Giga Om. However, the new reselling portal does represent an additional revenue stream for the Internet service provider and one more choice for small businesses seeking cloud services like storage and security.

The company is marketing cloud services offered through its store as specially selected for business customers. It is positioning Upware as a simpler way of buying and managing cloud services through a single portal.

If your business already buys Internet services from Comcast, you might find it easier to shop for cloud services there. In any case, business owners will need to compare prices with other cloud providers including direct pricing with companies whose services Comcast resells. Also, small businesses already buying cloud storage, security, and collaboration tools from some other provider will need to evaluate the new Comcast Upware Marketplace services to determine how they compare for quality.

Comcast's Upware marketplace contains software products organized into three categories, or "aisles" as they're called on the site: data backup, data security, and Web and document collaboration.

Other companies teaming up to provide services, according to Comcast, include Carbonite, Norton, and DigitalSafe.

Upware will also offer Comcast tools like website hosting and Business VoiceEdge phone service.

Only nine third-party applications are available through the Upware store so far, but Comcast has promised it will add more to the portal in the future.

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