As we continue to navigate the current pandemic and its impact on our economy, some people are finding themselves with more time on their hands than usual, and are using that time to focus on business endeavours they had been putting off previously. Small business owners and entrepreneurs are vital to creating growth in the economy, so if you have had plans to start your own business, now might be the time to begin putting those plans into action.
If you are considering opening your own business once pandemic restrictions are reduced, or you are in the process of putting a plan into place, the following ten factors can be extremely important to any new small business. If you keep these in mind when starting out, they will help ensure that you take care of the fundamentals and set your organization up for success.
Manage your cash flow – it’s your number one priority.
You can be earning decent profits but if you run out of cash, you may have trouble sustaining the business and run the risk of going into bankruptcy. How does a business owner ensure they’re managing cash well? Think about the assets and liabilities that you will deal with in day-to-day operations – money owed to you by your customers, how much inventory you actually need to have on hand and how much cash you owe to your suppliers. These are activities that you need to monitor daily, weekly and monthly and you will need access to reports from your accounting system to do this properly.
Establish a data-based culture.
You need an accounting system that can quickly process data and provide accurate real-time readings so that you have up to date information on an ongoing basis. This will allow you to make decisions based on the financial realities of your situation and ensure you are able to make changes in your process or priorities as circumstances evolve.
Engage in Lean Planning.
What is lean planning? It’s simple, efficient business planning that starts with developing a simplified business plan that is then regularly reviewed and revised as needed. The system is based on the acronym PDCA: plan-do-check-adjust. It’s not enough to plan and implement strategies. A successful business owner must constantly evaluate how their strategies are panning out and make changes as needed. Lean planning is an ongoing tool that should be used to understand assumptions you have about your business, and whether those assumptions are correct, or whether you might have to make adjustments.
Understand your margins on all your products and services.
Remember the 80/20 rule – 80% of your product and/or service margin probably comes from 20% of your products/services. You need to put a lot of focus behind the activities, services and products that earn your highest margins. When a certain product or service is not performing well, consider whether you can improve the margin or move on to something more profitable in its place.
Establish a strategy for recruiting and retaining talent.
If you need to hire a staff to help run your business, it’s important to recruit top talent and keep them working for you into the future. Think about the culture that you want in your business and look for people who fit in this culture. Making use of social media platforms such as LinkedIn, Twitter and Instagram are great ways to find people who share common interests with your business and may complement the culture and bring new ideas to help your enterprise grow.
Monitor online activity every day.
Every business should set up alerts online to gauge what your market is saying about you, your competitors and your market in general. Google Alerts is a free online tool that can be used to monitor what is being said about your business and your competitors. It is also important to monitor review sites such as Google reviews, Glassdoor (for employee reviews) and other industry-specific review sites for negative feedback you can address and resolve quickly. As the old adage goes “find trouble before trouble finds you”.
Engage in marketing that maximizes ROI.
Small business owners need to start small, and often rely on networking and word of mouth to build their brand. Start by networking with local business owners. Find out what they do that works. Use your website and Google Analytics (a free tool) to find out how people find your website, and where they’re coming from. Use various social media platforms to get your name out there and update those platforms regularly and consistently. These days, a new business without an engaging online presence will face a steep hill in terms of gaining traction in the marketplace. Once you’re in a position to, you can begin paid marketing efforts with measurable results.
Talk to your customers.
Customers are a great source of free information. Building a good working relationship with your customers will generate many benefits. They will feel comfortable telling you how to improve your services and what needs fixing. They will also provide referrals, helping you to grow with little output with respect to cost.
Know your competitors.
Keep a close eye on your competitors, as they will likely be doing the same. If they think that you are about to launch a new product, they will try to launch their version of it before you do. Follow them on social media, set up online alerts with their names and keep an eye out for new innovations they may be implementing.
Have a higher purpose: create a mission statement that incorporates giving back.
Corporate social responsibility is more than a fad. Lots of companies engender customer loyalty and positive branding through charitable works. Think of the companies that have built their brands by pledging to donate goods for every item sold, or make it a point to get involved in local community works projects. Coupling this with a company culture focused on giving back will inspire your employees and impress your clientele.
If after reading this, you would like to discuss the financial and tax implications of starting a new small business or growing your current small business, please contact the Chartered Professional Accountants at Edelkoort Smethurst Schein online or by calling 905-517-2297. Their corporate accounting expertise will help you make the best decision for you and your business.