As the Chinese saying goes “starting a business is difficult, but maintaining a (successful) business is even more difficult”. It is even more so in today’s world, where consumers have access to a variety of choices, not just locally, but globally. Even though some fundamental concepts remain the same, it is still important for SMBs to adapt and to sustain, within this dynamic business climate. Follow these eight rules to ensure your SMB is on the right path to success.
1) Have a plan? Write it out
The first one rule to starting or running a business is always to write out a business plan. Putting the plan in writing is a conviction to make the business work; as it requires the writer to logically and thoroughly consider each and every business function; therefore giving clarity and depth to the business idea. The business plan is often required when meeting with potential investors, partners or even government agencies. With the set direction, drawn up action plans and financial strategies, it also serves as a framework to keep all parties in check. However, this plan should not be cast in stone, bringing us to the next point.
2) The Lean mean planning machine
Simply put, lean planning is the continuous process of Plan-Do-Check-Adjust. Building from the core business plan, lean planning leaves out all the unnecessary information and works with a set of clearly defined goals and expectations. Progress is tracked and reviewed on a regular basis. With metrics set in place, it also instils a sense of accountability and urgency. Where change is the only constant, lean planning is an efficient and fluid method that allows SMBs to adapt quickly to market conditions.
3) Don’t work hard, Work Smart
With time, energy and money being limited resources, it is crucial to spend them on tasks that bring value. As Chief of the tribe, learning to prioritize and delegate is crucial. Create a checklist, delegate to the next person who can complete the task 80% as well as you can and outsource specialized functions to the experts. With accessibility to the Internet, make full use of solutions like Office 365 with its host of products that helps to improve efficiency. From file sharing to online meetings and work planning, it is easy to work anytime, anywhere. Working smart is not hard.
4) Grow your dream team – recruit and retain
In order to grow the business, grow your people. Recruit specific roles when necessary and hire people who share your passion and vision. Retain talents with employee perks, offer training and provide opportunities for advancement. Silicon Valley is known for providing quirky perks like game rooms and nap pods; Twitter gives its employees three free meals a day and on-site acupuncture.
5) Know your numbers – Data-based culture
Setting and tracking key performance indicators (KPI’s) keeps everyone focused and accountable for their goals and sends alerts when situations are moving out of track. It also forces people to spend limited resources wisely, in order to get more returns on the investment. Having useful and accurate data helps in making sound business decisions, so the more data you can track and use, the better your decisions will be.
6) Know yourself, know your competitors
It pays to keep an eye on your competitors to better position your business or to prepare for retaliation. Be it your direct or indirect competitors, understand their business and know what they are doing, so you can position and differentiate your business from them. You may have little direct competitors but watch out for the indirect competitors, who vie with you for the same resources from the same set of customers, in a similar category.
7) Manage your cash flow
Even in today’s digital world, Cash is still King. Cash flow is one of the most critical components as, without cold hard cash, profit on paper is meaningless. It is necessary to spend time to monitor the movement of funds on a regular basis. For fear of upsetting the customer, some SMBs do not chase up on outstanding receivables or offer too much credit terms. Always assess the risk of extending credit to your customers and adjust accordingly, and chase up on outstanding receivables appropriately.
8) Know your margins
Sales Revenue and Profit Margins are key financial terms for any SMB to understand. Sales Revenue reports the value of sales, while Profit Margins show how much the business actually earned. Monitoring and tracking these margins allows you to understand the efficiency of your business operations, highlight areas where costs can be reduced or flag out a pricing discrepancy. So whilst the targets are based on sales revenue, remember to look at the margins too.