For most small businesses money is always tight. So it’s a good idea to actively manage your finances. Here are some quick tips to ensure you have your money matters covered:
1. Values & purpose are key drivers
You went into business because you were passionate about what you do. Let your values and purpose (rather than profit) drive your business.
2. Set financial targets then take action to achieve them
Be realistic and write down your sales and profit goals. Work out how you’re going to achieve those goals and monitor progress regularly.
3. Fund start-up & growth period wisely
How are you going to pay the bills when there is little or no revenue coming through the door during the early stages? Savings? Loan? Consider continuing to work during start up and running your business part-time. Avoid running up large credit card bills unless you can repay them in full each month.
4. Cash is king
Ensure you have enough cash reserves to fund at least two months expenditure. Actively manage your cash flow to make sure you can pay the bills each month. Collecting customer payments in a timely manner is crucial. Can you charge up-front, at point of sale or take a deposit? Make it as easy as possible for customers to pay you.
5. Nurture relationships with employees, customers, referrers & suppliers
When you look after your employees they will look after your customers in turn. Ensure your customers feel valued and they will keep coming back. Focus on the 20% of customers that generate 80% of sales. Set up a genuine referral network. Pay your suppliers on time, every time.
6. Value yourself & your product. Avoid discounting.
Know what you and your products are worth and don’t be afraid to charge it. Add value, be generous and provide outstanding service/ products.
7. It’s all about the margins
Do you know which products return the highest margins? Concentrate on the higher earners and ditch the low earners (unless there is a strategic reason for offering them).
8. Streamline service delivery
Can you do things more efficiently without compromising quality and timeliness? Can you automate some of your processes?
9. Focus on core business. Outsource non-core activities.
Hate book-keeping? Does IT confound you? Then outsource it and concentrate on generating sales and improving the bottom line.
10. Don’t cut corners. Invest in yourself, staff, systems & products.
Improving skills, expertise, customer service, marketing, systems and processes will add value to your products and services. Ultimately this will add to the bottom line.
Yours in happiness.
Dianne Krome (founder of Equilibrium Business Consulting)
Equilibrium was born out of a desire to share my experience in business with other small business owners and help them along their business journey. Equilibrium works with small businesses in Brisbane and surrounds. Sign up to Dianne’s newsletter to get free business tips to help manage the balance in your professional and personal life to achieve your ultimate goals.