The #1 Reason Small Businesses Prosper

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Growing businessOne of the big advantages a CPA has working with small business owners is that we get to learn what makes them profitable and what makes them fail. 

In a past blog I gave you a number of reasons small business fail. But while avoiding these reasons for failure is important, it is just as important to understand how to succeed.

Moya K. Mason released a paper years ago, What Causes Small Businesses to Prosper? ( In it, she writes, “What does matter, it turns out, is having a strong grasp of the business basics. Without exception, companies that outperformed their industry peers excelled at what we call the four primary management practices – strategy, execution, culture and structure.” My observation of small business owners who prosper agrees with her findings. To this I would add the following reasons that small business owners prosper: 

  • They have or acquire a strong working knowledge of business basics.
  • They have a strategic profit plan.
  • They build their strategic profit plan around a clear value propositions for the customer.
  • They are committed to marketing and selling their product.
  • They concentrate their sales efforts to a niche rather than trying to sell to every possible customer.
  • They develop a way to make their product something their customer “must have” rather than something that would be “nice to have”.
  • They continuously turn out innovative products and services rather than reacting to events.
  • They deliver products and services that consistently meet and exceed customers’ expectations.
  • They hold themselves and their people to a high level of performance.
  • They empower their employees and managers to make independent decisions and to find ways to improve operations.
  • They make it easy for their employees and customers to work with their organizations.
  • They hold on to talented employees and actively work to develop more.
  • They get a mentor on board.
  • They practice the “Golden Rule” in all of their business and personal dealings.
  • They develop a good accounting system that provides them with strong management reports.