You can’t always get what you want in life — but often you get what you need. It’s easy to listen to that lyric and gloss over the advice within, yet successful entrepreneurs get it. Things may not work out exactly as planned, but to turn a short burst of relevance into a long, healthy business life, sometimes trade-offs are necessary.
Thankfully, the pandemic hasn’t scared away resilient folks who want to start businesses. In fact, Americans are becoming small business owners at an accelerated clip: New filings for employer identification numbers are higher than they’ve been since 2007, according to the U.S. Census Bureau. Many entrepreneurs rightly see opportunity amid a crisis.
To be successful as a small business leader, during a pandemic or otherwise, requires a realistic vision for what’s possible. Making trade-offs doesn’t signify failure — quite the opposite. Trade-offs show resilience, a willingness to compromise, and a leader who’s willing to change things up to get the job done.
How to execute tough trade-offs
Those compromises, of course, will be different for every entrepreneur and every industry, but leaders can consider them with the same angles and strategies. Here are a few tips for startup leaders to effectively approach these tough decisions.
1. Consider narrowing your focus
The life of an SMB owner is constantly changing. Be aware of what your business needs — and what it is capable of achieving — so that you recognize your main focus. If you’re just starting out, you’ll need to strengthen your marketing muscle and bring awareness to your company before you worry about follow-up or account management.
So, the first tradeoff or decision is whether to narrow down your idea to a specific mission or purpose. What is the service or product you’re bringing to market? Being laser-focused on what you’re trying to do (and not trying to do too much) is key to initial success. Start with socks and then go to scarves, for example.
You should focus on solving one problem, at least to start. Tempting as it may be, you should never start with a grandiose idea. Get your reputation together for that core service/product, and then branch out once you have loyal customers that have become advocates and spread your message throughout their personal networks.
Joanna Gaines started out with a small home goods store in Waco, Texas. She never really thought about going beyond that. But she stayed focused on perfecting her craft, and new opportunities started to open up once her loyal customers started talking to friends and posting on social media.
2. Learn where you can add accountability
When you’re starting or growing a business, a major trade-off you’ll ultimately have to consider is the efficiency of your operations versus finding, winning, and keeping customers (revenue versus expenses). As a small business owner, you always need to think about cash flow, too.
Some leaders don’t appreciate answering to others, but it’s always wise to set up regular checkpoints for your business. Implement systems to let the customers (and the data about customers) tell you what they like and what they don’t via purchasing trends. That way, if one item is selling better than others, you can double down and focus on growing that line of business.
Technology tools such as a CRM system can also help you get a strong understanding of your sales cycle and pipeline. You can see where leads aren’t converting or which clients are making repeat purchases. This can help you determine where to best allocate resources and focus. Think about your weak points and where you are today.
You might not need a CRM tool on day one, but eventually, you’ll want something more powerful than spreadsheets. Technology helps you stay accountable for some of the difficult decisions you’ll need to make, so it’s worth it to prioritize that expense early.
3. Weigh hiring an employee versus implementing software
Small businesses always have to get more of that proverbial bang for the buck. Price out the cost of tools (and estimated impacts) to compare against hiring someone new. What can you make do with right now to get to the next phase of success? Decide whether technology can do the job for you or whether you need to hire. Many SMBs make the mistake of thinking that expanding headcount is the only indicator of a growing business, but your focus should be on maximizing your employees’ impact to see a measurable impact on your bottom line.
A common trade-off that entrepreneurs should anticipate is building out product and infrastructure (via technology) versus aggressively selling (by hiring a sales team). You need to get to market ASAP with a minimum viable product so you can test and adapt.
You need to move fast, but chances are you won’t get it right the first time. It’s important to iterate in order to ensure that you aren’t dedicating time to building or developing something that your customers don’t want. Build up a solid product team with short sprints and release cycles to make the most efficient use of limited time and resources.
This will be the quickest way to filter out the areas to focus on for potential growth and get much-needed revenue in the door. A solid approach is to hire a top-notch sales team and adapt your offerings as needed to make the best product possible.
Tough decisions are persistent
The decision to invest in efficiency boosters versus building out a team in the early stages is another potential tradeoff to consider. Tools and technology can do a lot to boost the efficiency of a small, scrappy team. Do the most you can with the tools and resources you have before expanding the team. Automation tools, CRMs, and cloud-based software can help make every minute spent on your business more impactful. Managing a team can be quite time-consuming. Can your existing team be more efficient if they have the right tools?
The scale is always in flux, so SMB owners need to be prepared to make tough decisions constantly. Again, you can’t always get what you want. But if you think logically about the path to success and take the right steps to get there, you might find that you get what you need. Catchy, eh?