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The SBA defines which companies are officially designated as small businesses.
Your industry determines whether your business’s designation depends on its number of employees or its annual revenue.
You can find your industry code in the U.S. Census Bureau’s NAICS publication.
This article is for business owners who are trying to determine whether their organization is technically considered a small business.
You can call your company a small business, but if you don’t meet the SBA’s definition you could lose out on some opportunities. The SBA’s standards for small businesses are based on three factors: your company type, your average annual revenues and your number of employees. Is your business truly small? Read on to find out.
How to tell if you own a small businessTo qualify as a small business, a company must fall within the size standard, or the largest size a business may be to remain classified as small, within its industry.
The U.S. Census Bureau provides a list of industry codes to help businesses determine their size designation, and the SBA maintains an extensive list of small business size standards with the maximum requirements to remain classified as a small business in each sector and subsector.
“The definition of ‘small business’ is dependent on which industry code a company is in,” said Molly Gimmel, CEO of Design to Delivery. “My company’s primary code is 541611. In that industry, a small business is defined as one with average revenues, based on the past three completed fiscal years, that are less than $16.5 million.”
Though size standards vary by industry, they are usually measured by the number of employees or average annual receipts. The current SBA business size standards include the following.
Agriculture, forestry, fishing and hunting: Between $2 million and $30 million in average annual receipts, depending on your subsector.
Mining, quarrying, and oil and gas extraction: No more than 250 to 1,500 employees, depending on your subsector. There are four sectors with annual revenue rather than employee limits, ranging from $18 million to $41.5 million.
Utilities: No more than 250 to 1,000 employees, depending on your sector. There are three sectors with annual revenue limits instead, ranging from $26.5 million to $36 million.
Construction: Between $16.5 and $39.5 million in average annual receipts.
Manufacturing: No more than 500 to 1,500 employees, depending on your subsector.
Wholesale trade: No more than 100 to 250 employees, depending on your subsector.
Retail trade: No more than $8 to $41.5 million in average annual receipts, depending on your subsector. Other subsectors have defined employee maximums from 100 to 200.
Transportation and warehousing: No more than 500 to 1,500 employees, depending on your subsector. Some subsectors have maximum average annual receipt limits ranging from $8 million to $41.5 million.
Information: No more than 250 to 1,500 employees, depending on your subsector. The maximum average annual receipts ranges from $9.5 million to $41.5 million.
Finance and insurance: No more than 1,500 employees for direct property and casualty insurance carriers, and a maximum of $13 million to $41.5 million in average annual receipts. Certain financial institutions instead qualify as small businesses if they have no more than $750 million in assets.
Real estate, rental and leasing: No more than $8 million to $41.5 million in average annual receipts.
Professional, scientific and technical services: No more than $8 million to $41.5 million in average annual receipts, or no more than 150 to 1,500 employees, depending on your subsector.
Management of companies and enterprises: No more than $34 million in average annual receipts for offices of bank holding companies. Offices of other holding companies must earn no more than $40 million in average annual receipts.
Administrative and support, waste management, and remediation services: No more than $7.5 million to $41.5 million in average annual receipts, depending on your subsector.
Educational services: No more than $8 million to $41.5 million in average annual receipts, depending on your subsector.
Healthcare and social assistance: No more than $7.5 million to $38.5 million in average annual receipts, depending on your subsector.
Arts, entertainment and recreation: No more than $8 million to $41.5 million in average annual receipts, depending on your subsector.
Accommodation and food services: No more than $8 million to $41.5 million in average annual receipts, depending on your subsector.
Other services: No more than $7 million to $41.5 million in average annual receipts depending on your subsector.
Benefits of being classified as a small businessBusiness size classification isn’t frivolous. Being classified as a small business comes with certain benefits, so it’s important to know if your business qualifies. Here are some of the benefits small businesses can enjoy.
Loans: Rather than lending money directly to businesses, the SBA works with lenders and essentially acts as a co-signer for small businesses seeking loans. This provides lenders a stronger guarantee that they’ll be paid back, which gives small businesses access to better rates than they might receive on their own.
Tip
If you need to obtain funding for your small business, visit our page on the best business loans.
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How To Choose A Small Business Loan
Small business loans are an essential tool for buying and growing a business or for staying afloat when times are tough, but it can be challenging to navigate the many small business funding options and to decide what type of financing is right for you. Before settling on a lender for your business, you should understand all of your choices, as well as your business’s needs.
Editor’s note: Need a loan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
Types of small business loansThere are many top loan options for small businesses, such as traditional loans, equipment loans and working capital loans. Lenders include the U.S. Small Business Administration (SBA), conventional banks and alternative lenders. Each has its own set of positives and negatives.
“While there are numerous options from which to choose, not all deliver the same benefits,” said Tom Coletta, senior vice president of corporate banking at City National Bank of Florida.
First, let’s look at some common forms of small business funding.
Traditional bank business loansTraditional bank loans typically feature low interest rates, a detailed payment schedule and the ability to retain total ownership of the business.
The types of loans offered by banks include term loans, which are geared more toward expanding a business than starting a new one. They can be paid back over one to five years at lower monthly rates. However, they are better suited for more established businesses than for startups. Other funding options from banks include lines of credit, real estate financing, working capital loans and equipment loans.
According to Jay DesMarteau, head of commercial banking at LendingClub, one of the chief concerns for borrowers is how long they need the loan.
“A line of credit would most often be used for short-term funding needs, while a term loan or commercial real estate mortgage offers multi-year financing for expansions or to purchase property,” DesMarteau said.
SBA loansLoans backed by the SBA are prized by business owners for their low interest rates and extended repayment terms. You will need to go through an extensive application process, so this isn’t the best choice for businesses that need emergency funding. That said, SBA loans are safe and attainable for businesses that might have been turned away by other lenders
“SBA loans allow approvals in some cases, such as when the down payment or a business’s cash flow is too low, because of the government guarantee,” DesMarteau said. “There is a misconception that SBA loans are a startup loan and that the government gives them away, but it is true that they have different credit underwriting standards, terms and other factors than a traditional small business loan.”
Did You Know?
Many SBA loans can be repaid over 10 years or more, which is a significantly longer term than other funding sources offer.
Alternative loansAlthough traditional banks offer some of the best terms for financing, they usually maintain stricter requirements for applicants. You will need a solid credit score and proof of at least several years of profitability. Business owners with lower credit or little time in operation will likely have to pursue other sources of funding, such as financing from an alternative lender.
Alternative lenders offer many of the same types of funding as traditional banks, including term loans, lines of credit and working capital loans. The upside of alternative lenders is that you can often get approved quickly and easily, and some lenders even offer same-day funding into your business bank account. But while alternative funding features a short application process, downfalls of using alternative lenders include much higher interest rates, a shorter payback time and less control over the business.
FYI
Applying for an alternative loan differs from applying for an SBA loan. It is important to know what is required for each application.
Secured/unsecured loansThe difference between an unsecured loan and a secured loan is that a secured loan is backed by collateral. This means that if the borrower cannot repay the loan, the lender can take possession of the collateral to recoup their losses. Secured loans typically have lower interest rates because the lender has less risk.
An unsecured loan is not backed by collateral. This means that there is no property or asset the lender can take possession of if the borrower cannot repay the loan.
Secured loans are easier to acquire than unsecured loans because of the collateral required. This type of loan is often suited for new businesses with startup costs and funding needs of over $50,000. If you have good credit, you can expect to obtain an unsecured loan of up to $50,000. However, startups with business owners who have poor credit are often turned away. [Learn more about loan options for those with poor credit.]
How to choose a small business loanBefore you decide on a small business loan, it is essential to take several preliminary steps. First, make sure you assess your business’s funding needs, as well as cash flow and expenses. Thoroughly researching lenders and carefully weighing funding offers will ensure you don’t overpay for financing.
Outline your business’s funding needs.Before choosing a loan, business owners should write a business plan and outline their objectives for the company, Coletta said. This will give you and your lender a better idea of the best funding solution for your situation.
“Prior to meeting with a banker or lender, it is important to have a business plan in place, preferably one that has been reviewed by your certified public accountant,” Coletta said. “The plan should include articulated short- and long-term financial goals.”
Ask yourself what you need to reach your goals. From there, find a banker who can help you project the growth of your business and craft a lending solution, Coletta added.
Tip
Knowing how to use SMART planning can help you set goals for your business.
Small Business Taxes In 2023
Tax obligations can be confusing and change frequently, so take time to review the latest tax changes for this year.
Most of the tax rules put into place during the COVID-19 pandemic are expiring this year or have already expired.
Working with a certified public accountant (CPA) can help you ensure you are complying with current regulations and paying the right amount.
This article is for small business owners who want to know what to expect for their tax obligations for the 2023 tax year.
As a small business owner, it’s important to stay up to date on tax laws. Several changes to the federal tax code will affect small businesses this tax year. Read this guide to find out the most important things to know about filing taxes next year.
Tax changes for 2023The following changes are in effect for the 2023 tax year, which you prepare and file in 2024.
Tip
Doing your taxes on your own? See our reviews of the best tax software for small businesses.
Modified credit for pension plan startup costsThe SECURE Act increases the Section 45E credit for all or a portion of employer contributions to small employer pensions for the first five employer tax years, starting in 2023. The credit for employer contributions is capped at $1,000 per employee. The full credit is available to employers with 50 or fewer employees and is phased out completely for employers with more than 100 employees.
Net operating rulesThe rules around how to claim a net operating loss are changing this year. A net operating loss occurs when your deductions exceed your gross income. As a general rule, you can carry the loss forward to offset income in later years. You cannot offset more than 80% of your taxable income.
However, a net operating loss generated in 2023, 2023 or 2023 that you are carrying forward is not subject to the 80-percent-of-taxable-income limit. For net operating losses generated after 2023, the 80-percent-of-taxable-income limitations again apply.
Excess business-loss limitation rulesThrough a temporary suspension of Tax Cuts and Jobs Act rules in 2023 and 2023, businesses could carry net operating losses back five years or carry them forward indefinitely. However, the suspension has ended. Taxpayers cannot deduct losses of more than $540,000 per year if married filing jointly or $270,000 if single. This applies to all business income and losses, including Schedule C and pass-through-entity income and losses. You can carry forward losses in excess of these amounts to lower your taxable income in future years.
In addition, W-2 wages can no longer be used to offset the business losses. Spousal income is taxed separately and may result in a tax bill even if the business losses are greater than the spousal income.
Interest expense limitation ruleThe interest expense limitation rule generally limits the amount of deductible interest expense for the year to the total of the following:
Business interest income for the year
30 percent of adjusted taxable income
Your floor plan financing interest expense
This tax rule was temporarily suspended during the pandemic, but it is back in force in 2023 and beyond.
Charitable contributions increased limits expiredThe charitable contribution rule that allowed C corporations and individuals to deduct a greater percentage of their income for charitable contributions is no longer in force for the 2023 tax year.
New 1099-K form deferredAccording to the American Rescue Plan Act of 2023, beginning in tax year 2023, small business owners and freelancers who receive more than $600 from third-party digital platforms were scheduled to receive Form 1099-K reporting that income. Platforms such as Amazon, Etsy and eBay also were to report this income to the Internal Revenue Service.
After pushback from taxpayers and businesses, this requirement has been postponed for one year. If it’s applicable to your business, expect to receive a Form 1099-K in 2024 for the 2023 tax year.
Tip
A tax professional can help make sure your business taxes are correctly prepared and filed in accordance with the latest federal, state and local laws.
State and local tax (SALT) capSince 2023, filers can deduct only up to $10,000 in state and local property and income taxes. The deduction is the same for single filers and couples filing a joint return.
Many business owners who operate a pass-through entity in a high-tax state find their deductions limited by SALT rules. Wayne Winegarden, senior fellow and director of the Center for Medical Economics and Innovation at the Pacific Research Institute, said all business owners should be aware of this cap. “I really think in the high-tax states, the SALT cap is going to be meaningful, more for small businesses, just because they’re going to be filing through their personal taxes,” he said.
Tax benefits for pass-throughs and corporationsThe tax reform law created a significant deduction for both pass-through and corporate entities. Pass-through businesses are small businesses structured as S corporations, limited liability companies (LLCs), sole proprietorships and partnerships. Pass-throughs make up approximately 95 percent of U.S. businesses. The law now provides a 20 percent deduction for those businesses. The 2023 deduction phases out at taxable income levels between $170,050 and $220,050 (between $340,100 and $440,100 for joint filers), and the 2023 phase-out levels will be adjusted for inflation. This deduction is set to expire at the start of 2027.
C corporations also got a big tax benefit: The Tax Cuts and Jobs Act lowered the corporate tax rate from 35 percent to 21 percent in a bid to bring major corporations back to the U.S. to employ workers and create wealth.
First-year bonus depreciationThe first-year bonus depreciation deduction was changed to 100 percent through the end of 2023. In other words, businesses that made eligible equipment and property purchases could deduct the full purchase price instead of writing off a portion of it each year. This provided businesses with more money upfront, which lawmakers hoped would be invested back into the business or be used to hire workers.
Starting with the 2023 tax year, the 100 percent bonus depreciation amount is scheduled to be reduced every year. Josh Zimmelman, founder of Westwood Tax & Consulting, said this enables businesses to write off the cost of assets in one shot.
“A company can invest in vehicles, computers and equipment, and claim the entire expense on their … tax return,” Zimmelman said.
Winegarden said the break is an incentive for businesses to spend more. “Anything that gets you closer to complete expensing is going to increase the value of the depreciation, lower the tax burden and reward those capital-intensive firms,” he said.
Did You Know?
Some provisions from the 2023 tax reform law may still affect your business today.
Important 2023 deadlinesTake note of the following tax deadlines for 2023:
2023 tax returns and payments are due by midnight on April 18, 2023, for sole proprietorships, household employers and C corporations. For S corporations and partnerships, taxes are due March 15, 2023.
Quarterly tax deadlines for 2023 for estimated income tax are April 18 for Q1, June 15 for Q2, Sept. 15 for Q3 and Jan. 15, 2024, for Q4.
2023 tax returns and payments are due April 18, 2024. S corporations and partnerships must file by March 15, 2024.
Top small business tax deductionsThis isn’t a comprehensive list of tax deductions available to small businesses (and you need to ensure your business is eligible for these deductions), but it’s a great starting point:
Rent: If you rent your office space or retail location, the cost of your rent is fully deductible.
Home office: If you have a dedicated workspace in your home (it must be regularly and solely used for business), then you are eligible to deduct expenses related to that portion of your home.
Advertising: Promoting your company not only helps to grow your business; it also may shrink your taxes, as these expenses are fully deductible as well. Advertising expenses include things such as business cards, flyers and digital marketing.
Vehicle: As long as you can document and verify that the vehicle is used for business purposes, you can deduct the operation costs. As with the home office deduction, you can choose to use the simple deduction, which is 65.5 cents per mile for 2023, or you can itemize the specific costs.
Travel: Business travel costs are fully deductible. These include flights, hotels and other transportation costs you incur while on a business trip.
Employee salaries: Salaries — along with many benefits, like retirement and education offerings — are tax deductible. [Learn how to build a great employee benefits plan.]
Types of small business taxesSmall business taxes vary based on the structure of the business, but here are the five primary small business taxes:
Income tax: Except for partnerships and other pass-through entities, all businesses file annual income tax returns. Pass-through entities file information returns.
Self-employment tax: The self-employment tax is on your net earnings from self-employment and consists of Social Security and Medicare taxes.
Employment taxes: If you have employees, you have taxes (and forms) related to their Social Security and Medicare taxes, federal income tax withholdings, federal unemployment tax, and other taxes, such as local transit taxes. These are referred to as payroll taxes.
Sales and excise tax: Most states require you to collect and remit sales tax on qualifying sales. You also pay excise tax on sales in specific categories. You may even have to register and collect sales tax in other states in which you do business.
Estimated taxes: Many businesses (sole proprietors, partnerships and S corporation shareholders) must pay quarterly estimated tax payments. This requirement applies if you don’t have taxes withheld from each paycheck or don’t have a sufficient amount withheld from each paycheck.
Key Takeaway
Small businesses must account for several types of taxes, including income tax, self-employment tax, employment taxes and excise tax. These vary based on your company’s structure, but there are ways to reduce your business’s tax liability.
Things to rememberIf you started your business in 2023, remember these key takeaways:
To file your tax return, you will need a tax ID number. This is typically either the employer identification number issued when the articles of incorporation were approved (for corporations and LLCs) or a Social Security number, although, in rare cases, other numbers can be used. If you need an employer identification number, you can apply for and receive one online.
In addition to income taxes, you pay 15.3 percent in self-employment tax on net self-employment income. This equals what an employer would normally deduct from an employee’s paycheck for Medicare and Social Security taxes, plus the employer-paid share.
All income, including cash and noncash payments, must be reported on your tax return.
If you pay your own health insurance premiums, you may be able to deduct them as a business expense.
If you’re not ready to submit your taxes by April 15, you can file for an extension. However, you should pay your estimated taxes to avoid penalties and interest. The deadlines for requesting extensions are March 15 for S corporations and April 15 for C corporations.
Employee bonuses are taxed differently than regular wages are, with a special bonus tax of 22 percent, as well as a distinct rate for Social Security and Medicare taxes.
If you have a side hustle that supplements the income from your regular job, the IRS considers what you make on the side to be self-employment income and you are taxed accordingly.
Tip
Business travel is 100 percent deductible, but personal travel isn’t deductible at all. So, if you have airline or hotel points, use them for your personal travel and pay cash for your business travel expenses.
Tax planning should be a year-round strategyIt’s important to be proactive about tax planning for your business. Waiting until the last minute makes tax preparation more complicated and limits your money-saving options. Keeping up with current and future tax changes helps keep you in charge so you can maximize all tax benefits and run a profitable business.
Jennifer Dublino contributed to this article. Source interviews were conducted for a previous version of this article.
Should You Move Your Small Business To The Cloud?
Cloud computing. For some, the term is wildly nebulous. Not long ago, even Oracle’s Larry Ellison publicly asked what the heck people meant by “the cloud.”
Before you dismiss the cloud as a lot of vapor, though, listen to what three small-business people told us about their experiences with it:
• “We saved over $4000 in up-front costs by moving to an entirely cloud-based solution [for e-mail, Web hosting, virus protection, and more]. We were also able to substantially reduce our power bill and the costs needed to maintain and upgrade hardware.” –Bob Everett, president, Bottom-Line Consulting, a three-person firm offering various small-business services.
• “As a non-IT person, I find cloud-based applications easier to set up and use than many [computer] applications, and I don’t need to rely on internal IT support as much for assistance.” –Cristina Martin Greysman, executive vice president, business development, Vuzit, a six-employee software company.
• “A power surge nearly destroyed our in-house e-mail server. Had we not recovered it, a great deal of historical knowledge and valuable information would have been lost forever, not to mention the lost productivity for days or weeks. Now we have a secure, redundant, cloud e-mail system we can access anywhere, anytime, with a consistent interface, and it’s made our business stronger.” –Kevin Hart, partner and founder, Hart-Boillot, a ten-employee marketing and communications agency.
Here’s what you need to know about cloud computing: what it is, pros and cons, suggested services, and tips for applying it to your business.
What Does Cloud Computing Mean?Cloud computing can refer to software as a service, such as chúng tôi for customer relationship management (CRM); to file storage, synchronization, backup, and other utility computing, such as Dropbox; and to infrastructure as a service, including Amazon’s Elastic Compute Cloud, which delivers customizable computing capacity over the Internet.
Examples of Cloud Computing Services for Small BusinessWe queried dozens of small businesses about the cloud services they use, and why they use them. Among the most popular services were these:
• Google Apps ($50 per user per year) and Google Docs
With either Google Apps or Google Docs, your data remains in one place no matter where you access it from, according to Brian Armstrong, founder of BuyersVote, a product review site that relies on Google’s premium services. Despite Gmail’s periodic outages, Armstrong says, Google’s cloud tools are “actually more secure on the whole because, although you’re trusting your data to an external provider, Google works hard to secure a ton of data; and it’s the sort of attention to detail that you probably don’t have time or money for in your local IT department.”
• Box.net
• QuickBooks Online
• Skype is popular for its free video chats as well as for the low-cost calls to landline and cell phones that it makes possible. Brand Thunder, a browser customization firm with 11 members, uses Skype for all-team meetings, says Patrick Murphy, the company’s founder and CEO. Though Skype call quality varies, the service “allows easy and open communication between team members, despite their being geographically dispersed,” he says.
• Highrise for CRM and Basecamp for project management ($24 to $149 per month each, depending on the level of service you choose) both come from 37signals. A number of small businesses we contacted recommended these services for their feature sets and ease of use.
The Benefits of Cloud ComputingFor example, Microsoft Office 2010 Home and Business will cost $199 for a downloadable version and $279 for a boxed version. By comparison, Google Docs, which offers office productivity tools via the cloud, is free. (Microsoft is currently working on Web-based versions of Office 2010 apps.)
Storing files on a secure, reliable, cloud-based service helps eliminate backup worries and gives you anytime access to your files. Usually, cloud-based services are simple to use—the only things you need are a computer (or in some cases, a mobile handset), a browser, and an Internet connection. And such services require no maintenance from the user.
Easier collaboration with colleagues in distant locations is another oft-cited cloud benefit.
These benefits enable small businesses to “stay focused, be more collaborative, and bring products to market more quickly, because they’ve got access to the kind of infrastructure that only large companies used to have,” says Judith Hurwitz, president and CEO of Hurwitz & Associates and a coauthor of Cloud Computing for Dummies .
Comment: Apple’s Small Business Program Is A Huge (And Extremely Clever) U
Apple’s new Small Business Program represents a massive U-turn by the company, disguised as something far smaller.
The company has been coming under antitrust fire around the world, with most of the attention focused on the 30% commission it charges to developers. Apple has previously dismissed any suggestion that it should reduce this rate …
Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so.
But the company has now literally halved it.
Of course, Apple’s angle is that it has now halved it for ‘small businesses.’
Apple today announced an industry-leading new developer program to accelerate innovation and help small businesses and independent developers propel their businesses forward with the next generation of groundbreaking apps on the App Store. The new App Store Small Business Program will benefit the vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases. Developers can qualify for the program and a reduced, 15 percent commission if they earned up to $1 million in proceeds during the previous calendar year.
The reality is that the cap of a million dollars a year means that the commission has been halved for, at a conservative estimate, 99% of iOS developers. It would be more accurate to say that the App Store now has a standard commission rate of 15%, doubled to 30% for a small number of very large developers.
But doing it this way is a clever approach, for three reasons.
First, because it means that most developers are now very happy – while Apple still protects its take from the most popular apps which generate most of its commissions. It’s like a very extreme version of the 80/20 rule, where 80% of Apple’s revenue comes from 20% of its developers – but I bet the reality is more like 99/1. Update: It’s 98/2.
Second, Apple has removed a potent weapon used by big players like Epic Games and Spotify. These companies love to pretend they are speaking up for small developers, rather than protecting their own interests. When Apple charges the same commission to a one-person business as it does to a tech giant, that’s a persuasive angle to take. Apple has now robbed them of this PR weapon.
Third, Apple leaves its 15% commission on recurring subscriptions untouched. With an ever-growing number of developers heading down the subscription route in an attempt to generate recurring revenue from their apps, Apple is ensuring that it protects its take here.
With one stroke of Tim Cook’s pen, he has defused one of the biggest antitrust threats to the company, and done so in a way that has a dramatically smaller impact on the company’s bottom-line than reducing the commission rate for everyone.
Some claim Apple can’t innovate any more, but that is a truly innovative solution to a large and growing threat to the company’s business model.
A low-key press release with a 3 am embargo time, released at a time when all the focus is on the company’s new Macs, is actually one of the most important decisions the company has made for years. Well played, Apple.
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How To Make Your Small Business Stand Out From The Competition
Starting a small business is the easiest thing to do but executing strategies and making it profitable is where the entire challenge lies. Businesses need to find ways to stand out from the crowd of competitors in order to enjoy effortless flow of clients.
Startups no doubt are witness to larger companies investing tons of money into their marketing strategy and branding and don’t have the means to compete at that level. But that shouldn’t be deter you from competing for your slice of the pie.
Here are five ways to distinguish your small business from the rest of the crowd.
Have a Superb Customer Service
Your customer care is the engine of your small business. Aim to create a superb service for each client. And don’t stop there, find out how your top competitors are treating customers and how well they invest in making their customer care work effortlessly. Ask your team, what are they doing that you aren’t doing, how can your services be made friendlier and more balanced for prospective clients.
If possible, sign up for their product testing and run a thorough research on how their customer care will handle your self-imposed problems you throw at them.
Solve Problems Your Competitors Aren’t Solving
Businesses basically exist to solve problems of potential clients. Your small business should be checkmated around that line to know how well you’re solving the problems.
The best yardstick to use is to know how well your competitors are pushing or investing to solve your ideal customers problems.
When you’ve checked and gotten rich data back from your extensive research, you can decide how best to take over the market. From your research, you should be able to develop a strategy for solving the problems your competitors aren’t solving. The research you’ll do in your niche will enable you see gaps in the market and to see where your competitors are having lapses.
Fill up those lapses by producing a better product or a product that specifically answers the questions that no competitors were formerly answering. The more you present a product as a solution were your competitors haven’t entered yet, the more revenue and market share you cut out.
Niche Down Your Target Market
It’s naturally not a good thing for a small business to start out in a crowded market. In some markets, they’re top dogs there who have literally taken over the market.
But taking on the whole market may not be the best strategy. Instead of focusing on the market as a whole, find a subset of your market to focus your energies there and let your brand be the top dog there.
You may end up eating a smaller pie, but it’s better to than fighting the big competitors for a share of the big round pie. Locate that big market, and don’t just stop there; go further and try to take over other little sub-niche around it.
Brand Yourself Differently
The best way to stay memorable is to go against the crowd. Your small business is probably not the first business offering what you’re trying to present to your market.
There are literally thousands, if not millions who want to also partake of the overall market share in your niche. What will differentiate you from others is branding yourself differently.
This takes time. Branding takes time to build into a potential customer mind. So there is a need to go the extra mile. Do stuff your competitors don’t want to do.
Design your business so uniquely that it steps your brand out. Your brand mustn’t be known to blend into the crowd of other businesses. Strive to find everything possible that will make your business unique and different in everywhere.
From your logo and the font texts of your website, to the alignment of your company do it all differently. When you go against the crowd it’s always harder. But that is basically how success happens.
It takes hardness to succeed in business. For your small business to stand the test of time, it will undergo series of tough times. I implore you, let that period be a time of branding yourself and making your business unique.
When you invest in branding, your customers will value you and keep coming back for repeat business.
Focus More on Deliberate Innovation
Brands die when they stop innovating. Some create epic products that go viral and then go to rest on the success of just that product. Business has no resting place. Innovating in business is simply striving to outwork and outperform your previous products.
You should develop a company culture of always trying to get better than where your company is at every moment. Innovating can’t really happen until you start asking the right questions. I have found out that questions – especially thoughtful questions – are one of the core ways to force your business to stay innovative.
Check your services and compare them with that of your competitors. If they’re literally on same page, what you need do is heighten the services and surpass them at something.
Don’t stop there, compare your products to that of your competitors and check if you’re on same page with them. Your goal is to increase and be above them in something.
The more you strive to go above them in innovation, the higher market share you’ll naturally get in your niche.
Read more about marketing strategies from experts on TechCo
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