About half of small businesses fail within their first five years. There are measures you can take to steer your business toward success. Be thorough with your planning, stay ahead of trends, and apply the digital methods that kept businesses going through the trying times of the pandemic.
A business plan is an important step in starting your new business. Through a business plan define what makes your business different from your competition. What makes you stand out? Define your customer base, how you will market to them, and how they will buy. Outline your finances, including your cash flow projections, startup capital, how long your cash reserves will last, taking into account business and living expenses. Remember, most businesses aren’t profitable during their first year. Addressing these issues during the planning stage will help steer your business to success.
It is critical to the success of a business to understand the customer base and its attendant likes and dislikes. In this digital age it is easier than ever to get feedback and communicate with your customers. Listen and interact with your customers through social media platforms. Yelp and Google are popular ways for people to find out about businesses and to review those businesses. Keep up with your customers’ reviews and apologize or explain to your customer for bad reviews. 85% of customers trust online reviews as much as personal recommendations. Keep them positive!
Good inventory management is essential for good cash flow. Shortages interfere with sales and overages tie up your cash. Use inventory management systems to track your inventory and identify sales patterns.
Contain your growth. Expanding too quickly often means financing which can be risky. Taking on more business than you can handle can result in draining your working capital which commonly means that your quality declines. Saying no is an important part of managing your business.
Don’t try to do it all yourself. Take advantage of your strengths and delegate to cover your weaknesses. Delegation can take the form of hiring employees or using software that cuts down on administrative work.
Success requires flexibility. Regularly assess which products and services are selling, who your customer base actually is, and what marketing is successful. Adjust your offerings and marketing accordingly. This flexibility is necessary throughout the life of your business, even when your business is doing very well.
You need to regularly review your revenue and expenses. This information is critical to making proper buying decisions, knowing what percentage of revenue to allocate to your various expenses, and setting appropriate targets for cost savings. You want your revenue to grow month over month or year over year. All of these figures, including your net income, are easier to access through accounting software. While operating a lean business, you want to eliminate waste and to improve efficiency, agility, and quality of business operations while maximizing value to your customers.
There are many components to starting and running a successful business. The steps above are essential, starting with a well thought out business plan. Along with following these steps seek out good business advice to make your business a success.
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