If you are aspiring to start a small business, there are some essential principles you need to follow if you’re to succeed. Here are nine steps to building a thriving small business:
- Manage Your Cash
The top reason American businesses file for bankruptcy is not lack of profits but lack of cash. To plan your cash effectively, you should understand the components of your business that impact your cash flow. For instance, you should consider the following:
- How much inventory do you need?
- How long do you wait before your customers pay?
- Are you making loan payments?
- Do your suppliers’ prices shift based on market conditions?
- Develop a Data-Based Culture
Great business decisions are often based on facts and data. Therefore, you should track data and base your decisions on that data. By tracking the KPIs (Key Performance Indicators) for your enterprise and knowing why they shift upwards or downwards, you’ll be able to manage and grow your business.
- Rely on Lean Planning
You should craft a financial and strategic plan and track it over time instead of just developing a written document that you won’t be referring to regularly. Planning should be an ongoing endeavor that you use to understand your assumptions about business and whether they are correct. For instance, say your plan hinges on you being paid punctually every 30 days. By tracking the results of your business, you may realize that you actually get paid every 40 days. You can then make the necessary adjustments, like ensuring your business cash is healthy and increasing your credit line before you run out of cash.
- Understand the Margins of all Your Products and Services
You’ll need to clearly understand how each of your products and services can impact your bottom line. Consequently, you’ll be able to eliminate products with terrible margins that eat into your profits.
- Have a Feasible Strategy for Recruiting and Retaining Talent
As a business owner, you’ve got to be always watchful for great talent that can help your business grow. To this end, you should track talent in your region as well as develop effective programs and benefits to help you retain talent.
- Listen Online Daily
You should set up alerts to keep track of what your customers are saying about your business, your competitors, and your industry in general. Google Alerts is a free and effective tool for tracking online chatter.
- Engage in Marketing Activities that Drive Your ROI
You should start your marketing in places that are easy and free. Start by connecting with local business owners and businesses. Find out the marketing strategies that work for them. Besides, use Google Analytics and your site to figure out how customers find your site and where they emerge from. You should also ask your customers how they found your business. And, when advertising, you should track your adverts and learn what does or doesn’t work.
- Talk to Your Customers
Talking to your customers frequently will help you learn about the aspects of your business they like, as well as the aspects they don’t like. Consequently, you’ll be able to address their pain points more effectively.
- Understand Your Competitors
You should track what your direct and indirect competitors are doing in terms of offerings, marketing, pricing, etc. This will enable you to position your business against the competition effectively.