Every small business is different, but all million-dollar small businesses have at least 1 thing in common: They sell something people will buy.
That might seem obvious, but the rate at which small businesses fail says otherwise. Only half survive at least 5 years, according to the Small Business Administration.
“The one thing that’s consistent is that we have to work and refine the visions that we create,” says Carla Walker-Miller, president and CEO of Walker-Miller Energy Services in Detroit, which she founded in 2000. “And sometimes they’re not in line with the real world. Entrepreneurs are optimistic, but they have to make sure there’s a market and someone who will pay you for whatever you are selling.”
Finding a market and refining a vision has led to success for Mabel’s Labels and Ample Hills Creamery, too. All 3 of these million-dollar small businesses are different in fundamental ways, yet they share traits that new entrepreneurs can learn from, with founders who were willing to take risks, create visibility for the business, invest in employees, and evolve as the business grew.
Walker-Miller Energy Services
Before starting her own business, Walker-Miller worked for a global engineering company based in Europe.
“They basically chewed me up and spat me out,” Walker-Miller says. “The people in that company didn’t see me as an engineer or accomplished manager. They saw me as a black woman, and many of the decisions were made in that context.”
So she started Walker-Miller Energy Services, which finds innovative solutions for energy waste reduction.
The first piece of advice she offers to anyone considering starting a business is: “Be rich. Things are just easier. It’s the greatest predictor of future success.” For those unlucky enough not to be rich, she says, you have to be “determined, gritty and just persevere.”
But for all the grit an entrepreneur might have, Walker-Miller has realized that hard work alone is not enough. She says she learned this after losing out on a contract a few years ago that would have been life-changing.
“It went to another company that had a much better relationship with the customer,” she says. “After I was able to figure it all out, it just boiled down to relationships. I knew it intellectually but hadn’t accepted it. Working hard helps with success, but it’s a really complicated algorithm. You have to work hard, and the timing has to be right and the stars have to align.”
After that, she developed a new 4-word business plan: “Y’all gonna know me.”
Julie Cole describes herself as a “recovered lawyer turned entrepreneur.” The mother of 6 teamed with 3 other moms in 2003 to start Mabel’s Labels, which makes durable labels for “stuff kids lose.”
They started the company for 2 reasons. They wanted to leave the traditional workforce, and they had a great idea for a product. At the time, there just weren’t very many good labels that helped moms prevent their kids’ things from disappearing.
But starting a company to make labels wasn’t the kind of light-bulb moment that impressed other people.
“We tried to ignore the people who thought we were crazy,” Cole says. “We knew we were onto something. Shut out the naysayers. If you get any real criticism, try to take feedback and use good judgment when listening to other people’s opinions. Common sense will get you far.”
Another trait in their corner—Cole and her partners knew their market well.
“You have to know everything you can about the people who are going to buy your product or service,” she says. “Ours was moms. Knowing their ages, incomes, and buying habits is so important. Social media has been huge for us. Moms own social media.”
Initially, Cole and her partners kept their day jobs and made the labels in the basement of her sister’s house until 4 a.m.
“We thought small, but the way we acted was not small,” Cole says. “We made some pretty risky decisions. You really do have to have an appetite for risk, right? It’s pretty scary to be so passionate about something—you can invest a couple years of your life in it, and it might not go anywhere. It’s a pretty dreadful thought.”
The other big risk they took was having 4 partners.
“That’s a lot of opinions at the table,” says Cole, who is senior director of public relations at the Hamilton, Ontario-based company. “But we did divide and conquer, and that was great. We put a shareholders’ agreement in place early while everyone was still friends. It’s a good idea. If you think marital divorce is tricky, you should see a business partner divorce.”
Another factor in their success, Cole says, was that they were willing to spend money to hire people to do the things they couldn’t do well. It made them more efficient, ultimately saved money, and let them to focus on their core roles.
“A lot of small business owners don’t want to spend money on a bookkeeper,” she says, “but if they hired an accountant to do it, it would take 45 minutes. If you do it yourself, you’re not thinking about all the things you should be thinking about.”
Ample Hills Creamery
Brian Smith and his wife, Jackie Cuscuna, didn’t start their business because they thought there wasn’t enough ice cream in the world. But they did see something that nobody else in their Brooklyn, N.Y., neighborhood had.
They started Ample Hills Creamery because they were “more interested in creating a space where people could pass the time than eat the ice cream.” So Smith took his son, who was 1 then, to every ice cream shop in the tri-state area to do research before they opened in 2011.
“We went to one every day,” he says. “How could we feel comforting and familiar and still have our own voice? It’s all about storytelling, all branding, and how you define yourself and what the story of Ample Hills is—how it’s different than all the other places out there.”
Before starting the business, which now has 6 stores, Smith was a sci-fi screenwriter and produced audiobooks and radio plays. As a hobby, he fed his obsession for ice cream by making it at home.
“I think out of writing, which is anxiety producing and lonely, I was interested in creating a place where everybody knows your name,” Smith says. “We tell stories with our ice cream. It’s a different kind of canvas. We’re always looking for ways to tell stories with ice cream, and I looked around and saw an opportunity.”
Despite all his research, Smith says they were prepared for failure when the business was born. Instead, they sold out of ice cream the first day and had to close for several days to make more. They’ve been profitable ever since.
Now he advises young entrepreneurs to prepare for both failure and success. That means not having to close your shop because you run out of inventory and, eventually, implementing systems that let the business function without you as your role evolves. They recently hired a CFO, too.
“It doesn’t pay for Ample Hills if I’m scooping ice cream,” Smith says, “but it did when we started.”
And while Smith’s day-to-day work has evolved from scooping ice cream, the primary focus from the start was to find a creative outlet that drew an audience that was willing to pay for it.
“People were more inclined to like my ice cream than my latest script about a giant monster,” he says.
The post What Million-Dollar Small Businesses All Have in Common appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/million-dollar-small-businesses