How To Build A Small Business

How To Build A Small Business

Do you want to start something of your own? Are you wondering how to build a small business?

If your answers are yes, then we recommend that you carefully follow this discussion as we share essential information on how to build a small business.

To begin this wonderful journey, let us look at the basics…

What are Small Businesses? – How to Build a Small Business

Small businesses are identified based on their small level of operation.

In other words, these businesses operate with less labor, capital investment, and less equipment.

Small businesses are the kind of businesses that do not provide and produce services and goods on a large scale.

Hence, they do not need complex infrastructure to function properly.

These businesses play a vital role in countries’ economic growth.

Their owners make a one-time investment in plants, industries, and machinery, or they sometimes hire purchase, or lease.

A small business owner can decide to grow their business bigger or continue to operate at the level they are.

Traits of Small Businesses – How to Build a Small Business

To better understand what small businesses are, we are going to look at the traits that identify a business as a small business.

So, below are the traits of small businesses:


Small businesses are often characterized by either a sole owner or partners.

That is, they often operate under a sole proprietorship or partnership business structure.

Most times, the partnership is among friends or family members.

Hence, small businesses can be seen managed by some family members or friends who have shares in the businesses.

Other times these friends and family members have no share in the business but work together with the owner.

Limited Investment – How to Build a Small Business

With small businesses, the investment made is usually limited.

That is, the owners do not put a lot of money into the business.

The capital is mostly raised from the owner’s pocket and some individuals.


Small business owners rarely employ people to manage their business.

Hence, the duties of a manager are usually performed by the owner/owners.

As a result, the motivation to put effort and work into their business management is usually high.

Labor Intensive – How to Build a Small Business

Small businesses are typically labor-intensive.

That is, they operate with manpower than make use of equipment and machinery.

The equipment and machinery they use most times are usually the ones operated manually.

Limited Reach

Small businesses typically work and operate with a limited reach.

That is, they operate within a restricted area.

They do not go out of the location where they are found.

The reason for this is because of their limited marketing facilities and capital.

Unorganized Labor – How to Build a Small Business

Unlike big companies and businesses, small businesses do not have a large number of employees.

Hence, the employees rarely form or work under any union.

So, they are unorganized and often stay unprotected.


Small businesses make use of available and local resources.

They work better with limited wastage and natural resources.

Flexibility – How to Build a Small Business

These businesses are characterized by their ability to be flexible.

As a result of their size, they find it easier to accept and adapt to unexpected changes, unlike big companies and businesses.

Reasons Why Small Businesses Fail – How to Build a Small Business

Before you can build a small business, you need to know the things that can cause failure to better handle issues as you build your business.

Hence, below are some common reasons why small businesses fail:

Poor Management

Several small businesses have failed due to bad or poor managerial skills and knowledge.

Yes, anybody can start a business, regardless of their experience or background.

However, going into a small business with no managerial skills or knowledge can be problematic for a person.

This is because a business will not function properly if it does not have good management.

Poor management affects everything in a business from sales to product production, and so on.

So, anybody who wants to start a small business should either acquire managerial skills or knowledge or hire help to ensure that their business grows and survives situations.

Low Working Capital – How to Build a Small Business

Not every business demands the same amount of capital.

However, every business demands working capital to grow and survive.

Yes, small businesses operate on a small scale with less capital and resources.

Regardless, it needs to have working capital.

So, once a small business’s working capital is low it usually leads to failure.

This is because the business will not be capable of operating anymore without money to make production and ultimately close down.


When small business owners cannot properly balance the interrelated affairs of their business it can lead to failure.

Several affairs need to be crossed and checked with other affairs to ensure that everything goes smoothly.

For instance, marketing/sales and production need to be balanced before production is made to avoid producing too much and losing.

A small business owner who pays no attention to balancing the different aspects of their business is out to fail.

Inexperience – How to Build a Small Business

As we earlier stated, anybody can start a business whether experienced or not.

However, when an inexperienced person starts a business such a person is in danger of failure.

Inexperience can cause a person to make disastrous and faulty decisions when running a business.

Therefore, to avoid failure, an inexperienced person needs to acquire knowledge to ensure that their small business runs smoothly, survives challenges, and grows.

Disaster or Fraud

Small businesses are in danger of failure because of their inability to handle or survive damages in several situations.

When a small business experiences situations such as burglary, fraud, flood, fire, or the owner’s death, it will affect its production and market continuity.

Sometimes, it leads to the end of such a business.

Wrong Location – How to Build a Small Business

One factor that determines the success or failure of a business is its location.

So, a business that is located wrongly is in danger of failure.

This is especially true for small business that operates mainly in their place of location.

In such cases, the business location should be found where its customer base is.

However, if that is not the case, the business will suffer from a lack of customers and some factors related to location.

Ultimately, if there is no location adjustment, the business can close down.


No matter how experienced, skillful, or knowledgeable a small business owner is, if they do not pay attention to their business affairs, it will fail.

Small businesses demand absolute attention, care, and maximum supervision since it is hard for them to recover well from disasters.

Therefore, neglect is one reason small businesses do not succeed.

Poor Planning – How to Build a Small Business

Planning is essential for the growth and success of businesses.

Hence, poor planning can cause a small business to fail.

Small businesses owner needs to plan their actions to avoid failure.

They need to take cautious and necessary measures when doing anything that concerns the business.

When they do not, anything can go wrong, consequently,causing failure.

Skills/Qualities You Need To Possess When Building a Small Business – How to Build a Small Business

For you to achieve success as you build your small business you need to possess some skills and qualities.

So, below are the skills/qualities you need to possess when building a small business:


Confidence is a quality that allows one to believe and trust in themselves and their abilities.

It helps a person to acknowledge and accept both their weaknesses and strengths and still see themselves capable of succeeding.

You need this quality as it will make you understand your best abilities/skills and make effective use of them.

No matter how small a business is, risk-tasking is part of the process.

Hence, confidence will help you to believe in your abilities and take those necessary risks when building and growing your business.

It will also help you to readily pursue your business goals.

When you possess confidence, fear will not hold you back from doing what you need to do.

Furthermore, you will see your limitation and reduce making silly mistakes as you build and run your business.

Goal-Oriented – How to Build a Small Business

A goal-oriented person is someone whose mind and focus are fixated on the objectives and steps that will enable them to achieve their goals.

As someone who wants to build a small business, you need to not only set attainable goals but also be able to follow through with them and ensure that they are actualized.

Hence, you need to be goal-oriented.

When you are, you will find it easier to accomplish the goals that you set for yourself and your business.


Persistence is being able to go on when you encounter setbacks, challenges, and difficulties.

Businesses encounter hindrances as they operate.

So, as someone who wants to build a small business, you have to be ready to face those hindrances head-on and keep moving.

The way to do this is by being persistent.

It will ensure that you seek solutions to problems and issues instead of giving up.

Check here to discover 5 ways to master the persistence that makes a great entrepreneur.

Personable – How to Build a Small Business

You should not take likeability for granted when building a small business.

This is because you are the ambassador of your business.

Your character and attitude have a significant impact on your business.

It can either help to attract people to your business or push them away

You need people to build your small business, so you need to possess an approachable and positive attitude that will make people be attracted to you and your business.

Engage in building good relationships with people as you build your business.

Finance Management Skills

Poor finance management skills have led to the fall of several small businesses.

Therefore, you need to possess good financial management skills to avoid failure as you build your business.

One way to manage your finance well is by setting budgets and following them.

When you do, you will know how to spend your funds without negatively affecting your business.

Passion – How to Build a Small Business

As a business owner/founder, you need to possess a strong feeling of affection for your business.

This will enable you to put effort, money, work, and make sacrifices for the growth of your business.

You will not find it difficult or complain about all these things when you are passionate about your business.

Steps on How to Build a Small Business – How to Build a Small Business

For you to successfully build a small business, you will have to start from scratch.

Starting from scratch requires you to follow certain steps.

These steps ensure that everything is put into place for the business start-up and growth.

To build a small business, here are the steps to follow:

1. Generate Your Business Idea

To successfully build a small business, you need to have an idea that you can base and build that business on.

Therefore, the first step to take is to generate a business idea.

A business idea suggests what you should do in your business.

It does not have set plans and objectives.

That is why you have to work on it by setting plans and redefining them.

If you already have a business idea, then you can move on to the next step.

However, if you do not, you can generate your business idea through the following way:

  • Surfing the internet for ideas
  • Finding out people’s problems and capitalizing on them
  • Asking other people
  • Tapping into your skills/talents/hobby

2. Perform Market Research – How to Build a Small Business

The next step to take is to perform thorough market research.

Your market research will help you to find out if your business idea will work.

With market research, you will get to know those who will purchase your service or product.

Also, you will discover who your competitor will be.

All of which is important information when starting a business.

The beginning phase of a business has great significance in other phases.

So, you should not take this step lightly if you want to build a small business that will last and grow well.

3. Make Your Business Plan

After you have performed your market research and found out if your business idea is workable, the next thing to do is to build on it.

However, if after your market research you discover that your business idea cannot work, it is best to go back to step one and generate a new idea.

You should not go on with an idea that would not work if you want to successfully build a small business.

To build on your business idea is to write and structure the business plan that will enable you to effectively make use of that idea to gain profit.

Your business plan is a guide that outlines the process and factors that will help you to achieve your goal.

With a good business plan, you will find it easier to build your business because every objective will be outlined for you to know.

You should not find it tasking to draft out the plan for your business.

Instead, you should see it as an essential tool for your business’ growth and success.

Do not feel that you do not need a business plan because it is a small business you are building.

No matter how small-scale a business is, it needs plans to make it work and grow.

When writing a good business plan, here are the essential parts to be included:

  • Executive Summary
  • Services and Product
  • Target Market
  • Sales Plan and Marketing
  • Company Overview
  • Financial Plan
  • Metrics and Milestones
  • Management Team
  • Appendix

The more detailed your business plan is, the easier it will be for you to determine your business strategies and activities to execute.

4.  Choose a Location for Your Business – How to Build a Small Business

With your business plan ready, the next thing to do is to choose where your business will be located.

If you will be running an online business, you might not need to have a storefront.

However, you will need a website where your business can be reached.

In a case where you will need a store and location, you will have to consider factors of a particular location that will help your business grow before settling.

As we earlier mentioned, your location has a great significance on your business success or failure.

So, you have to think well before choosing a location.

5.  Legalize Your Business

Every business has to be legalized by registration.

So, the next action to take when building a small business is to get your business registered.

However, before doing this, you have to know and understand the different business structures.

For instance, if your business is a sole proprietorship, you have to know things about this business structure.

It is because, as you are registering your business, the structure you register it as will determine your taxes, liabilities, and other factors.

Therefore, you have to know what you are doing before going for your business registration.

If it is possible you can get a legal representative who can help you understand the details better.

You should not get it wrong here because this step is very crucial to your business.

You will be required to get a business permit and license, so be ready for that.

Other requirements will be made depending on the location of your business.

Ensure that you find out what all the requirements are before going for your registration.

6. Take Action towards Growth – How to Build a Small Business

After you have performed all the necessary tasks for your business startup, it is time to grow it.

To do so you have to readily take daily action.

For instance, you have to give the business attention and manage it well.

You have to make sacrifices such as giving up your time.

Furthermore, you have to make decisions and take calculated risks to build it to how and where you want it to be.

With a small business, the growth is mostly dependent on the owner.

So, you need to be ready to do those little and big daily tasks and actions that will help you build your business.

Conclusion on How to Build a Small Business

To build a small business, you have to be ready to do the work.

You also have to ensure that you follow the necessary steps when starting up to ensure that you successfully build it to what you want.

The information we provided will help you build your small business.