Have you just opened your first business and wondering how to steer it to success?
In a country where about 600,000 new businesses start every year but most collapse within a decade, it’s understandable why you want as much help as you can get. The cold truth is running a successful small business in the U.S. is easier said than done.
But, there’s no reason you shouldn’t do it. Some of today’s most renowned corporations like Apple and Microsoft were once tiny startups. Oftentimes, it’s the owners’ small business management ability that makes all the difference.
In this article, we’re sharing practical tips to help you manage your small business soundly and profitably.
1. Stay Faithful to Your Business Plan
A business plan has important information about your business’s current and future plans. This is why every small business consultant will advise you to never start out without a plan.
However, that’s not the problem. Many entrepreneurs have a well-drawn business plan. Unfortunately, not all of them stay true to their plans.
Deviating from your business plan is akin to starting a whole new business from scratch. You’ll no longer have a reference point and will be forced to make up new strategies as you go. This increases your chances of making costly mistakes that can result in business failure.
Unless it’s clear that your current business plan isn’t working, there’s no pressing need to abandon it. It can take longer than forecasted for the business to align with the plan. All you need is patience and faith in your plan.
2. Don’t Mix Personal and Business Finances
About 20 percent of small business owners use their personal accounts to manage business finances. If your business is a sole proprietorship, there’s no legal requirement to open a separate bank account for the business, but that doesn’t mean you’re free to mix personal and business finances.
There are a number of consequences for mixing up those finances.
First, you’ll spend a lot of time sorting through personal and business transactions. Second, there’s no guarantee you’ll accurately sort out the transactions, which means you risk having an inaccurate picture of your business’s financial position.
Third, small businesses are entitled to some tax deductions, but you’ll not make the most of them if you don’t have clear documentation.
Opening a separate business bank account is not only financially prudent but also gives your business a professional image. Imagine what your clients will think if they make payments into your personal account.
3. Manage Your Cash Flow Properly
Did you know 82 percent of the small businesses that fail attribute their failure to poor cash flow?
In a nutshell, if your business is spending more than it’s pulling in, you have poor cash flow. It’s only a matter of time until the business can no longer afford to fund its operations. This is why proper cash flow management is one of the keys to running a small business that can succeed.
Strive to keep your business expenses as low as possible. Resist the urge to move into a large commercial space or hire more workers because your revenues are growing. The revenue growth could be short-term, yet expenses like rent and salaries are long-term in nature.
If possible, bring in an in-house bookkeeper or accountant as one of your first hires. This professional will keep both eyes on your business finances, ensuring you’re making smart expenditure decisions.
4. Hire the Right People
Speaking of hiring, at some point, your new business will grow from a one-man band into an orchestra. Every member of the team will have an important role to play, but they have to be a good fit.
Recruiting for your small business isn’t just about creating job advertisements, reviewing resumes, conducting interviews, and making a pick. You need to look beyond a potential employee’s professional qualifications. Are they a good culture fit, for example?
If you’re anything like the average small business owner, you certainly lack the skills to recruit and build a strong team of employees. The cost of making a bad hire runs well into the tens of thousands of dollars, so recruitment is not a risk worth taking. It’s advisable to outsource the function to a small business staffing firm.
5. Manage Your Inventory Prudently
If your business sells physical products, inventory management is at the heart of your responsibilities. You need to ensure there’s enough stock at all times so that your customers get their orders on demand.
But it’s not uncommon to find small businesses struggling with inventory management. They’ll often run out of stock and sometimes end up with too much stock.
Running an efficient business requires you to strike a delicate balance between demand and supply. The good news is you can use inventory management programs to automate most of your inventory functions. The best inventory apps will crunch the data and tell you what you need to stock and in what quantities.
6. Put the Customer First
Small businesses are notorious for offering less than satisfactory customer service. They assume the customer will understand that a small business doesn’t have the resource to provide excellent customer service.
The research says otherwise. 86 percent of customers will leave a business after just two instances of poor customer service.
If you want your small business to succeed, put the customer first. Invest in a great customer services team and train your staff regularly to improve their skills.
Great customer service leads to customer satisfaction and loyalty. It can even turn customers into brand advocates.
Small Business Management Tips That Work
Effective small business management makes the difference between success and failure.
Be a prudent manager of your business and you’ll increase its chances of growing into a large company. Manage it poorly and you’ll burn it down to ashes. With this guide, managing a small business is now easier.
Keep tabs on our blog for more practical advice for small business owners.