Every small part is the total of the whole. Thus, a critical component of small entrepreneurship is sustaining constant growth. According to the US Small Business Administration (SBA), start-up businesses comprise 99% of total trade. Small businesses employ 47.5% of the workforce – the vast majority using 20 or fewer, and 40% with annual revenues of $100,000 or less. The above statistics indicate that majority of businesses begin small. Besides, most enterprises start by providing certain services and products in the immediate community while generating profit. Therefore, as the society grows in population, the surrounding small enterprises grow into multinationals – all bearing the mark of humble beginnings. Moreover, small and big businesses develop a synergy; the big business uses small business for market penetration, access customers, and sell products at lower prices, generating profits for the smaller companies. Indeed, the small business of today is tomorrow’s manufacturing brand.
In addition, the primary concern of any business is to satisfy an immediate demand in the community. Meaning, the prospective entrepreneur discovers the niche in the market to fill – in most cases, popular customer demands. The prospect of the entrepreneur is to provide daily services required in the community, such as; grocery, beauty parlor, clothes shop, petrol pump, cyber café to mention a few. The psychologist Alexander Maslow identified the basic needs of man; food, shelter, clothing. These needs in the community form the basis of the nature of the business to establish.
Following various reviews, I approached the local barber parlor to establish the business’s journey, as mentioned earlier. In addition, the business idea developed following the establishment of a technical community college in the community. Thus, attracting an influx of students from the immediate community and far beyond. Immediately the entrepreneur noticed constant inquiries on a barbershop; the continual demand aroused the idea to start a barbershop. Moreover, the primary concern included the start-up capital to commence the business. The entrepreneur acquired capital to start the business through bootstrap financing – by obtaining a loan. Studies show that 60% of start-up businesses rely on bootstrap sources for capital financing. The absence of necessary initial capital threatens the success viability of the company. Thus, high levels of debt and insufficient capital impede the firm’s capability to attract market opportunities. Therefore, the barbershop started with minimal equipment, two employees on commission, and rental space.
To avoid unnecessary competition or establish a start-up without a customer base, a marketing plan is critical to assess and identify existing marketing opportunities. The target market focused on the nearby college students and the adjacent basketball court in the community. The only competition existing is the beauty parlor that mostly sold women products. Therefore, the youthful community shall attend the barbershop for their respective trendy haircuts. Further, the cultural market segment allows entrepreneurship to determining the underlying theme of the SME. The SME constructed the simple message of stylish haircuts and stood out to attract the youthful African American segment. The entrepreneur used social media to market the barber throughout the community. Technology enables instant communication, criticism of products, and increased market awareness of products or services. Establishing blog sites allowed customers to offer feedback on the experience at the barbershop, with plans dedicated to creating a website with tracking software to identify frequent visitors to the website and thus capture new market opportunities. From the onset, the SME began by offering discounts to adults accompanied by their children, with free haircuts for children below eight years.
Furthermore, retaining the customer base allows for revenue growth. More importantly, the relationship the customer establishes with the SME creates and maintains loyalty. Statistics show that it is 40% probable to retain customers than to acquire new ones – with a percentage of 5-20% (Turner, 2017). The entrepreneur began with calculating the existing customer base and setting piece-meal targets, mapping the customer experience at the barbershop – interaction with the employees and reassuringly accepting criticism. The customer’s experience allows the SME to improve its service delivery – the understanding customer is king. However, employees found customer mapping as stressful and time-consuming. Hence, the learning curve involved retaining customers through perceived value to influence the customer experience by providing free magazines and refreshments at the barbershop.
The retention of employees creates a substantive challenge in SMEs. The frequent obstacle is salary dissatisfaction. The business must operate within a budget. However, employees attach a high salary perspective based on their experience, notwithstanding the limitation of management. The entrepreneur challenges to convince the employee that salaries are negotiable as the business expands. A common misconception is situations where the prospective employee over markets the qualifications or experience, only to discover the quality of work is unfavorable.
Further, unrealistic future expectations of the SME by employees attract high turnover rates. Indeed, starting a business requires consideration of many factors; market opportunity, capital available, competition, and expertise. Moreover, implementing the business strategy offers the greatest threat to success or failure. Furthermore, SME’s suffer from the copycat syndrome that floods the market segment with similar services or products. Lastly, the success or failure of the business is determined by the ability to retain and increase the customer base, with constant adaptation to the market trends.
Turner, S., & Endres, A. (2017). Strategies for enhancing small business owners’ success rates. International Journal of Applied Management and Technology, 1https://scholarworks.waldenu.edu/ijamt/vol16/iss1/3/ 6(1), 3.