Author: Daniel B. Kline | January 24, 2018
It's not a job -- it's a lifestyle
In my 20-plus-year career, I've run a giant toy store, managed a retail and rental operation owned by my family, and partnered in a company that developed websites. At each stop, I've learned some lessons about running a small business, but I learned the most during my days running a well-loved toy and model train store in Connecticut.
In that job, I worked for a highly involved but generally off-site owner, and I had full responsibility for our profit or loss. I was charged not only with making money, but also with serving a devoted clientele and staff. Through this experience, as well as my other small-business management positions, I learned countless lessons that helped me grow as a manager and a person.
1. The customer comes first
The only way an independent toy store -- or any small business that competes against major chains -- can survive is through relationships. That's why, as a manager, I made time every day to work the floor and interact with customers, no matter how busy I was.
On Saturdays and holidays (heavy traffic days in the toy industry because kids are not in school), I did everything from working a register to stocking shelves. I mostly talked with customers, learning what they liked and connecting with them on a personal level.
I made an effort to get to know the regulars and to make first-time visitors feel comfortable in a potentially daunting store. Connecting with consumers gave them more of a reason to buy from of us -- even if the chain stores down the street (all the major ones were less than two miles away) were cheaper.
2. The customer is not always right
While the old saying goes that the customer is, in fact, always right, running a small business will quickly teach you that this is not true. The key is to deal with difficult customers in a way that prevents a scene and leads them to keep coming to your store.
At the toy store I ran, we mostly had amazing, devoted customers. After Christmas, however, we were set upon by people who wanted us to fix the cheap train sets that they had purchased at chain stores, drug stores, or even mall kiosks. My task was to politely explain that we could only service hobby-grade train sets and to convince them to buy one from us.
Low-end sets bought on the cheap aren't fixable: They can't be opened, and parts aren't available. Telling this to a customer and then trying to sell them what they should have bought in the first place was a delicate dance. It might look as if we were trying to take advantage of them when, in reality, we were trying to help a non-customer by selling them a higher-end train set at a price low enough that we lost money.
Sometimes, people left upset because we could not give them the answer they wanted. Often customers came in angry but eventually understood that we were trying to help -- and many of those people became new and loyal regulars.
3. Go above and beyond
Larger businesses have a lot of advantages, but the ability to cater to every customer is not one of them. Running a small business showed me that the best way to build customer loyalty is to go above and beyond.
At my family's ladder and scaffolding business, that sometimes meant throwing some crucial equipment in the back of my car and delivering it to a customer's job site by 6 a.m. so work could start on time. At the toy store, going above and beyond meant everything from extending our hours to accommodate out-of-town customers to delivering a new release to a sick customer while he was laid up.
To win as the little guy, you need to do things a bigger rival would never be able to do. The manager at a chain store may want to offer some sort of personal service, but for a big corporate machine, it often proves logistically impossible.
4. Pricing isn’t everything
There are some customers who prioritize price over all else. Many people, however, are willing to pay more (within reason) for better service. In some cases, a customer will pay just about anything for convenience alone.
At the toy store, we sold all sorts of amazing board games for all ages, but due to a quirk in how games are bought, we could not get Candyland or Chutes and Ladders. We had better games for that age group, but sometimes people want the classics.
To satisfy our customers, we waited until those games were on sale at one of the nearby chain stores and bought a bunch. We would then sell them at a modest markup, not hiding at all where we got them (the name of the store was in our price code).
Customers were happy that they didn't have to shop elsewhere, and if asked, we explained why we couldn't get the games directly. Customers were also happy to pay for "want it now" items, such as batteries, that can be purchased cheaper online.
You should never gouge your customers just because you can, but people will pay more when it makes sense. If you need to price certain items a little high, just be up front, and most customers will appreciate the honesty.
5. Not everyone will believe
Some people won't trust a small business. They'll assume that you charge high prices without compensating by providing value in other ways. Sometimes these people will, for reasons only they know, come into your store just to tell you they can get a better deal elsewhere.
You don't have to convert everyone. It's OK if there are customers you can't win over. But when you come across patrons who are partial to your business, serve them well enough that they'll not only support you, but even tell their friends about you.
6. Some people can’t be pleased
Not every person who comes through your door is nice. At the toy store, we had an older gentleman customer who built miniature wooden radios. That's a unique hobby, but we sold all sorts of wood and related supplies, so we tried to help him.
This did not stop him from regularly calling my staff "stupid" because we didn't understand the intricacies of his obscure hobby. At one point, I had to take him aside and tell him he could either stop berating the staff or leave the store.
He went on a tirade about how he could shop at plenty of other stores whose selections dwarfed ours. This did not reflect the market reality. He stormed out, cursing us the whole way -- and then he came back a week later and shopped quietly.
7. No job is beneath the boss
When the boss has done a job, it's hard for an employee to refuse to do it. That's why, at both the toy store and the ladder company, no job was ever beneath me. If a phone rang, I answered it. If shelves needed stocking and I was available, I stocked shelves.
At the toy store, customer traffic often exceeded the capacity of our parking lot on weekends, which led me to assign workers to manage traffic flow. It was a job I rarely did, but when it was raining, snowing, or otherwise miserable, I made sure I took the first shift and worked more hours in misery than anyone else.
Seeing the boss take the lead inspires employees and makes them more willing to do unpleasant jobs.
8. Don't disappear
As the boss, you may often have lots of legitimate work to do in your office. But people who work for you in more manual jobs tend to think you're goofing off when you disappear for long periods of time.
Make sure you're a visual presence, even when it's not easy. Walk the floor, visit your employees, and lend a hand where possible. Sometimes it's as simple as covering for a bathroom break or making sure someone gets a cup of coffee. No matter what your business does, get some face time with your employees, show respect for their work, and be sure not to isolate yourself on management island.
9. Give people a reason to come out
Whether you run a store, a small service business, or anything else that needs customers, you need to give people a reason to come see you. Coupons and sales might work, but so do alternative methods.
At the toy store we tried a variety of things to get shoppers in the door, like hiring balloon animal artists, hosting events like barbecues and model build days, and -- perhaps my most poorly conceived idea -- renting a cotton candy machine (which led to days of cleaning sticky toys).
Have fun. Be unique. Give people a reason to check you out, and even though many (maybe most) will just take the free stuff and run, capturing a few new customers can pay off in the long term.
10. Knowing the value of your average customer is key
The value of an average customer tells you how much you can spend to obtain a single new patron. At the toy store, once a customer had shopped there, they either never returned or became at least a semi-regular. Our average customer shopped for birthdays, Christmas, and other occasions, easily producing $250 in profit that would not only recur, but often lead to referrals.
Because of that, we dabbled in all sorts of advertising -- everything from TV and radio to direct mail. During the holidays we would see casual shoppers, but they often spent enough money in one visit to justify the higher marketing spend during that period.
For most of the year, we were comfortable spending $200-$250 for each customer we added. It might take a year or longer to make that money back, but we would make it back and then some.
11. Give back
An easy way for a small business to gain attention is to be charitable. That can mean everything from making donations to offering services for free or hosting events.
At the toy store, we offered to give various nonprofits a cut of our sales on a given day (and, in theory, they sent customers our way). We also collected for toy drives, sold items at cost to various groups that provided toys to at-need children, and made space available to nonprofit groups.
Sometimes we got media attention for these efforts, but more often than not, the effect was simply greater goodwill in the community. Be a good citizen, and your neighbors will hopefully remember that your small business exists.
12. Employees are people
It sounds silly, but managers of businesses of all sizes can forget that employees are people, not tools. Get to know the people who work for you and figure out how to make their lives easier, especially if you can't afford to pay as well as a bigger company.
People value intangible benefits like flexible schedules and the ability to leave for a doctor's appointment. Parents especially tend to appreciate a boss who's willing to work with them so they can do their job and be there for their children.
13. Be flexible with jobs
In a small business, employees need to wear a lot of hats. Managers, however, also have more flexibility than they do at bigger companies.
It's OK to customize employees' roles based on their talents. It's also never a bad idea to help employees swap responsibilities when the right match appears. Be flexible, listen, and don't reject an idea just because it's unconventional.
14. Some employees won’t respond
No matter how good you are at dealing with your employees, some simply won't get it. Once, while working for my family's business, I sat down with a senior manager and told him that to continue working in a senior position, he would need to develop some new skills to meet our changing business needs.
I offered training, laid out a timeline, and checked in repeatedly, but he made no effort to improve his skill set. When I laid him off six months later, he was upset, but I felt no guilt.
Some employees will resist change. As a manager, you can make an honest effort to help them, but at a certain point your only option is to let them go.
15. You can’t make money when you’re not open
Many small businesses have limited hours -- say, 9 to 5 on weekdays and a few hours on Saturday. However, because small businesses often can't compete with big corporations on price and selection, they should do their best to compete on convenience by staying open when customers want to shop.
That could mean staying open while rivals are closed, making appointments outside traditional hours, or being somehow available (perhaps by cellphone) at all times. For example, the ladder company opened at 6 a.m. as needed, because contractors sometimes needed to pick their items up early in order to reach their job sites before rush hour.
At the toy store, I opened by myself one Easter, guessing that some of our older customers with no place to go for the holiday would appreciate it. I made coffee, put out cookies, and welcomed a steady stream of customers -- both the expected ones and some bored families killing time between meals. It wasn't a blockbuster sales day, but people did buy things, and we earned a lot of goodwill just for doing it.
16. Not everyone can be your "friend"
At the toy store, we had a group of regular customers who got 10% off. We also extended a 20% discount to some friends of the owner and people who helped us at events.
The first discount was pretty easy to get, but the second was guarded carefully. The reason is that many collectible miniatures and high-end board games only had a margin of about 40%, so if we sold them for 20% off, the sale would not cover our costs once overhead was factored in.
That was OK for a small fraction of sales (or for prepaid special orders), but if it had become the norm, we would have been in trouble quickly, even if we moved more goods through the cash register.
17. Separate work and home
Running a small business can be all-consuming. On days off from the toy store, I used to watch our security cameras just to get a sense of how busy we were.
That didn't help us make any more sales, and it wasn't healthy. After a while, I learned not to work at home except when I needed to. If someone from my staff called with a problem, I would talk to them, but I did my best to focus on my family and personal life during my limited hours away from work.
That's a healthier attitude that will be better for your business in the long run.
18. Don't work just to work
Working long hours is inevitable and OK now and then. For example, an accountant will work more during tax season than he or she does during the rest of the year.
When you're running a small business, though, it's easy to get swept up in the idea that you should always be working -- that you could always be doing something else to help the business.
While there usually is something useful to do, you'll get diminishing returns for your efforts. Finish everything that has a clear payoff and then maybe do a
little more. After that, stop, take a break, and consider whether saving a buck or two is worth sacrificing more of your time.
Make sure you apply the same rule to your employees. It’s important for all your staff to take breaks. If it's a quiet day, or if a big project has just ended, then go home and send your staff home with pay. It won't happen very often, but you want to create a culture where people work not just hard, but smart. You don't want your employees to feel like they need to look busy long after their work is done.
19. Don’t fight battles you can’t win
Large companies have certain edges over small businesses. It could be price, selection, or any number of factors, but in any case, there are times when they are clearly the best choice for a given purchase. In those instances, you should simply make the customer your best offer and tell them they may be better off going to your big-box competitor.
It hurts. It's not fun. But your business won't last if you try to win every battle by undercutting rivals on price. On the bright side, customers will appreciate and remember your honesty.
20. Watch your money
I don't mean you should just be cautious with your money. I mean you should literally watch it, checking your accounts every day to make sure each dollar going out is for something you authorized.
At the toy store we had two small, unnoticed charges coming out of our bank account a couple of times a week for months. It added up to a few thousand dollars, and it turned out to be a case of clever cyber theft.
We also learned that consumers are much more protected from fraud than businesses are (at least at the bank we used). We did not recover the money, and our bank had no legal option to return it. From then on, we balanced our books each week and investigated any debits involving names we didn't recognize.
21. Cash flow is everything
Toy stores, as you might imagine, make a huge portion of their income between Thanksgiving and the end of the year. Our problem was that our expenses were not seasonal in the same way. In fact, we had to pay for some of our holiday merchandise before the season started.
Not every business goes through such pronounced ups and downs, but it's important to know what your company's rhythm is so you can plan for more fallow times.
It's a delicate game that's played differently across industries. No matter what you do, however, it's important to stay focused on your cash flow, because bills can't be paid with "but next month is our busy season."
22. Theft is an ugly reality
If you run a business that sells physical merchandise, people will steal from you. At the ladder company, we came in early one day to find that our neighbor had detained a man on a bicycle trying to leave with two 40-foot ladders under his arms. He told him he had bought them, which seemed unlikely, as we had not opened yet.
Once, at they toy store, I was taping an interview for a local TV station when a "customer" walked by with a very expensive radio-controlled helicopter. After the interview, I went to the register to see how big the sale was, only to find there had been no sale. The person had stolen our merchandise, brazenly walking past a TV camera on the way out.
Sometimes thieves were caught, but in most cases they were not. At both companies we took every reasonable precaution, including security cameras, but a certain percentage of merchandise disappeared no matter what we did.
23. Be honest and up front
Any small business will benefit from honesty and transparency. That can mean walking customers through every step of how you set the price or even walking away from a job when you know you can't do right by the customer.
Building a reputation for honesty can only help you grow your customer base. Consumers assume big business is out to get them, so establishing trust is sometimes enough to convince customers to give you a chance.
24. Be gracious to competitors
Most industries are smaller than you think, so it's always smart to maintain good relationships with your competitors. That could mean offering friendly advice, sending the occasional customer to a competitor, becoming a customer yourself, and more.
One winter, the ladder and scaffolding business landed a huge rush job for a retail distribution center that had a roof caving in due to heavy snow and needed to rent some special scaffolding. The amount of equipment needed was about triple what we owned, so we reached out to some competitors, told them what we were charging, and rented truckloads from them at a price that made us a small profit.
It was good for us and good for our rivals. We all got a payday, and the client, an important business in that region, got to keep its roof.
25. Plan ahead but act in the moment
The owner of the toy store was (and is) a dreamer. He's a very smart man who served as senior vice president of a major corporation. The store was his playground, and he loved to discuss big plans for things we might do.
We talked about building an indoor RC racing track, adding an area with classic pinball games, setting up a section for fly fishing gear, and installing a permanent Pinewood Derby track, just to name a few. Those were all viable ideas, but it was easy to fixate on them and forget about the day ahead.
I learned early on that while it was great to make big plans over dinner or during a long commute, it was more important for us to execute in the moment so we could make it to tomorrow.
26. You'll probably be lonely
In all my various small-business management positions, I had friends and was generally well-liked, but I learned that you have to keep a certain distance from your staff. If an employee invited me to a party, I knew the offer was genuine, but I also realized I should show up early, say hello, drop off a nice gift, and then leave. Even though the host wanted me there, if I stayed too long, it made things uncomfortable for everyone else. It's hard to relax in front of the boss -- even a boss you like.
You must also be aware of how others view your relationships with employees and avoid the perception that you're playing favorites. If I had lunch with someone too often, then that person was seen as a "teacher's pet."
You can like your staff and even be friends with them -- to a point -- but as the boss, you need to maintain firm professional boundaries.
27. Keep your head when disaster strikes
About an hour before two buses full of model train enthusiasts were about to descend on our toy store (which had an entire floor dedicated to train sets), a car hit a power pole near the store, knocking out our electricity. It was a crushing blow that we could not have anticipated, so we made the best of it.
I dispatched a staff member to buy flashlights, and we gave our visitors flashlight-guided tours of our model train layouts and merchandise. We also used an old-school credit card copying device to process sales, and we generally put on a brave face.
It wasn't the sales day we had hoped for, but it was not the total disaster it could have been. Small businesses don't have the resources of larger ones, so when something unexpected happens, you need to be resourceful.
28. You can only do so much
One of the challenges of running a small business is that because you know it intimately, you're often the best person to accomplish whatever task needs to be done. However, if you try to do everything yourself, you'll burn out.
Sometimes it's enough for a job simply to be done, even if it's not done perfectly. You may even find that someone else performs a task better than you do. Give your employees a little trust and breathing room, and you may be surprised to learn that things can run smoothly without your direct involvement.
29. Running a small business can harm your health
When you run a large company, you often have lieutenants who can take over when you're not there. At a small business, that may not be the case.
Over the years, in various jobs, I sometimes found myself surrounded by junior staff. They may have been able to run the show when I was gone, but I was generally worried that they couldn't.
That put me in a position where I was always either working or on call. My phone never left my hand when I wasn't at work -- and that wasn't very often.
Don't let this happen to you. Find a person or even a group of people who can take the reins now and then so you can relax. Yes, your business will probably never be far from your thoughts, but it's important that you have the opportunity to get away, because if you don't, your health will suffer.
30. Success and work are closely related
The small business that succeeds is generally the one whose owner or manager works hard and inspires employees to do the same. Competing with bigger rivals means you have to find ways to stand out. That often means simply outworking the competition.
Customers and sales won't just come to you. You have to make things happen. There's no replacement for putting the work in, and while it's important to work smart, you'll also going to need to push yourself beyond your current limits to do the seemingly impossible.
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