1. Write a business plan! Even if your business is 10 years old, you will benefit from a business plan. A business plan gives you direction and lays out on paper everything that is in your mind about your business. Including the market you are going after, your unique selling proposition, your S.W.O.T. (strengths, weakness, opportunity and threats) Analysis along with projected cash flow to name a few items. See my Blog on What is a Business Plan for more details. Your business plan will change over time and it should as you look for new opportunities. The challenge with running a business without a plan is like cooking without a recipe, it might me clear in your own mind, but add another cook to the kitchen and the outcome will start to change. Your business plan will keep you and your team from wondering too far from your core business focus. By writing out your plan it will automatically be in your brain and top of mind. Write a business plan, your business will benefit. Need help writing a business plan?
2. Cash-flow. Make sure you have a solid handle on your cash-flow. This means having a cash-flow projection and knowing how each revenue stream will impact your bottom line. Often times you have to spend money to make money. This simply means if you sell embroidered shirts, you probably should have a machine to do the work and machines cost money. You will need to invest in the machine and people to run it in order to best satisfy your clients. Of course, you could outsource the entire operation and many people can do that in the beginning. Sooner or later, most businesses will look for the most efficient way to get products to their clients at the best price. Use your CPA/bookkeeper to analyze your cash flow and plan both income and expenses.
Positive cash-flow is critical to the success of a business. The more positive cash-flow, the more you can expand or decide to increase wages. These wages should be to yourself first and employees later. The value of most businesses is directly linked to positive cash-flow. Some businesses are seasonal and as an owner, you need to plan for the fluctuations in cash, either by creating additional revenue streams in the off season or stock piling cash to get you through the quiet months.
3. Marketing Strategy. Trust me on this, even if all your sales are from one client-you need a marketing strategy! The world looks a lot different when you have 2000 clients all adding to the bottom line rather than 4 clients accounting for 50% of your revenue. I am not going to pretend to know what your ideal client/revenue mix should look like. Experience has taught me more clients equals more stability. You will need to get people to know your brand, reputation, offerings and the value you bring to them. Even when you cannot take on more clients, keeping a strong brand image is important. Basic supply and demand will tell you that when you have more clients than you can supply, it is time for an upward price adjustment. Take Uber for example, during peak times, the cost of rides goes up. Uber makes more revenue with the same number of drivers. Your business can do the same thing. Too many clients, weed out the high maintenance ones with higher prices. Giving better service to fewer clients with more revenue, this is a recipe for success.
In my previous business, we tried not to fire a client, we simply raised their prices and paid the staff more to service those clients. The client paid more, the staff enjoyed working with them because they got paid more. If the juice was still not worth the squeeze, we raised their prices again.
Your business will need a web presence: Website, Social Media, reviews and links. When someone googles your business, they should come across a ton of positive and relevant information about your business. You need to leave a foot print on the web. I was recently tasked to recommend and hire a contractor for a condo project in a community where I did not live. The project was about $45K. My reputation was on the line. I asked for a couple warm introductions to contractors from my network in the area where the work was to be done. Of the three bids I received, one had no Website and no social media. When I googled the business, the only relevant listing was a BBB link with outdated information. I could not hire them at any price because my reputation is priceless. I was ‘responsible’ for making the recommendation and cannot recommend someone who seems invisible to the internet. They may have been a great company, we will never know.
4. Know your clients. Clients do business with the people they know like and trust. The more you know about your clients, the more successful you will become. The Ritz Carlton Hotels are famous for their legendary service to their clients, including knowing them by name and giving each client an over the top experience. I had the pleasure of staying at a Ritz Carlton and they live up to their reputation. They call their guests by name all the time, they anticipated my needs and made me feel like royalty. I When price is not a factor, we all want the best. Let your clients know you value them. Reach out to them more often than in December with a token holiday card.
Talk to your clients, follow them on social media, connect with them when you have something in common. Forward them an interesting Blog or article that they would find relevant. Be where your clients are. Really, if your ideal clients (past, present and future) are at the exclusive golf club in your area, become a member. If your clients are active in the Chamber of Commerce or at a trade show, be there. You want to be able to connect with your clients and build trust and make a personal connection.
5. Systems. You need to put the systems in place now so eventually your business can run without you. When I started in business, I wanted to be the “go to guy”. Well, I got my wish, everyone wanted to talk to me because I had the answers they wanted. What started as an ego booster and great for my business eventually became my weakest link. Although I felt I could do everything better and faster than the rest of the staff, I could not grow my business, I simply had exceeded my bandwidth. A revelation occurred though my business coaching and gave all the glory to the staff and within a couple years, I was no longer the hero my staff was. I had empowered them through systems to be the lynch pins of our organization. I methodically reduced my hours in the business to 20 hours per week, travelled more and lived the life which I dreamed about having after I retired. I often joked to my friends that if I did not return from vacation, it would be 6 months before anyone would know. My staff would continue to run the business, doing payroll, paying the bills and serving our clients. They love what they do and would not want something as small as the owner disappearing from the face of the earth to impact their jobs.
This Blog really should have been titled the 32 things to know when you start a business. Running a profitable business is fairly easy, running a cash making machine is much more difficult. Putting the systems in place and clearly identifying your niche will put you in the class of a cash making machine. Feel free to reach out to me if you have any questions.
Stev Stegner, MBA