According to statistics published in 2017, about one-fifth of business startups fail in the first year and about half of all employer establishments fail within five years. Only about one third survive ten years or more.
If you are thinking of starting a small business, get the right processes and steps in place to make sure you are one of the third:
1. Manage your cash.
The main reason small businesses go bankrupt is lack of cash, not lack of profits. It is vital for you to really understand how your cash flow is being effected.
2. Track your Data.
Tracking your data properly will help you make strategic business decisions. Set and track your key performance indicators (KPI’s) for your business. Understanding why things go up or down, will help you to make key decisions to help you grow your business.
3. Financial Planning.
You should develop a financial plan based on your company strategy and make sure you monitor your performance against your plan regularly to ensure you stay on track.
4. Understand your margins.
Many small businesses only understand their bottom line, and not how individual products and or services contribute (or take away) from the bottom line. It is vital that you know how profitable each of your products or services are to ensure your business is as profitable as possible.
5. Have a strategy for recruiting and retaining talent.
Having the right talent is vital for building a successful business. Take some time to think about your companies culture, and what you want the culture to be. Clearly define the job role and specifically target potential candidates, when you have the right people make sure you have a strategy in place for keeping them. It takes work and investment to get the right talent, make sure they want to stay.
6. See what in going on online.
In todays word, your business is always visible to your potential clients and customers. People are more reliant on reviews from their peers than ever before and leaving reviews has never been easier. Be the first to know when a customer gives you a bad review, or someone raves about your business online. Make sure you are in a position to use whats happening online to your benefit.
7. Engage in marketing that gives you ROI.
Many small businesses don’t understand marketing and why would they, unless their business is Marketing? Marketing can be done for free or it can cost you money, it is important to monitor results from your Marketing efforts to measure performance and ROI (Return on Investment). You can start by networking with local businesses and local business owners, find out what works for them, it might be something that works for you? When you talk to new customers always ask them how they heard about you. Learn what works, and what doesn’t, and repeat your successful marketing promotions. Don’t spend money if you aren’t going to be able to measure the results.
8. Talk to your customers.
Every business should talk to its customers, it is valuable information knowing what they like or don’t like. You could talk to them in person or send a customer satisfaction survey. People like to talk, and people like to be asked for their opinion. Sometimes negative feedback may not be the nicest to hear, but it’s important to hear and listen so you can understanding how you can make your business better for your customers.
9. Know your competitors.
It really doesn’t matter what your business is, you will not be alone, there is always a competitor. Find out about both your direct and indirect competitors. You always need to keep an eye on your competition, understand what they are doing, how they market, what their pricing is, etc.
10. It’s not just about the money.
Your are in business to make money which is absolutely fine but it is worth considering that customers also like to buy from businesses they feel have ethics and passion. For example people are often willing to pay more for items made from fair-trade materials. Think about giving free advice or helping charities to give back to your local community.