Running a successful business can be challenging, we all know that but we also understand the massive rewards that come along with a successful business. The day to day running of a small business is critical to helping it consistently grow. The details matter. Small business fundamentals executed well is often what is needed to get to a good spot as a small business. Therefore, I am going to talk about 3 things every small business owner needs to run a successful company.
Its important to create a comprehensive strategy and financial plan that you can refer too and track on a regular basis. This would be better then doing a long document that you use once and then forget about because it’s so big.
Planning is an ongoing approach that should be used to understand your assumptions you will have about your business. And to understand if your assumptions are correct, or whether you might need to re-examine and make adjustments to better suit the reality of your business.
60 percent of the small businesses that fail in America fail due to a lack of usable cash. Not a lack of profits, using lean planning help you quickly understand what you might of missed in your initial assessment about your financial situation as a business that has had an adverse effect on your current business context.
By keeping a track of ongoing planning and measuring the actual results of your business compared to what you have planned you can quickly understand if in reality you are getting paid every 45 days (instead of every 30), and if so, you can quickly and intelligently increase your credit line, and keep your business cash flow in a healthy state – to avoid further issues.
Understanding the margins on all your products and services
I have worked for a wide range of small businesses that only understand their bottom line, and not how individual products and or services and their profit margin adds up (or takes away) from the bottom line.
I recently spoke to a small business commercial banker who was trying to help a client get their business ready for the open market. It was a business doing $10 million in revenue per year that had only been around for 10 years. The owners were shocked and confused to realize how little the business was worth in reality – because their profit margins were pitiful.
In a $10 million business they were only making $55,000 in profits. It turns out when they dug into the issue, they discovered that multiple product lines were dragging down profit down. If they had gotten rid of those product lines, they would have made $7 million in revenue, but over $800,000 in actual profits.
You need to have a Strategy for Recruiting and Retaining Talent
Talent is a massive part of any organization. Finding the best talent for your business is the difference between business success and failure. If your talent is lacklustre you will not be able to grow as a company. Creating an enticing company culture will help promote the experience up-and-coming talent can expect if they join your organization. Take time to understand the potential hires and how they will fit into your company’s culture though. Every business is different, just because someone on paper might not be qualified for the job, it does not mean that they do not have the qualities to step up to the role.
Ultimately, there are many variables to keep track of when you are trying to make your small business a success. Lean planning can help you be directional but also flexible in a constantly changing market. Being able to adapt is something small business’s often pride themselves in doing. Margins are the corner stone of any business. Do not ignore them and if you are making great margins with your current product and service line, look to push those further or use them as a benchmark for what you expect from future additions to your business. And finally, the right talent will make this all possible so do everything you can to attract the best and brightest.