By Kimberly Loftis   

Over 50% of small businesses fail within the first 5 years. What makes  successful businesses different? Both successful and failed business owners had  passion, expertise and drive to make their business grow. The difference – -  successful business owners made sure that they focused on the five things that  are critical to their business success.

Critical Item 1: Make Sure Your Money is Right Both Professionally  and Personally

As a part-time CFO, I have had many clients that did not have in place a formal accounting system. This is critical because if you do not have a handle on how you earn and spend money, you will never know where you can safely cut costs, raise prices or focus advertising. However you decide to track your finances, they must include the following:

• Separate accounts and tracking of business and personal expenses
• Ability to track financial information at a detailed enough level to  perform analysis such as revenue earned by department. For example, a spa with  departments broken out by service area (e.g. nails, spa, salon).
• Continuously look for ways to cut costs without cutting performance or  customer service (e.g. periodically look for less expensive providers for  supplies).
• Manage cash flow by projecting future needs in a 6-12 month cycle so that  you ensure that you are able to pay the bills that keep your doors open (e.g.  rent and payroll) and spend money on important customer building expenses (e.g.  marketing).

Critical Item 2: Continuously Improve Customer Service

Customer service is vital to retaining current clients and wooing prospective  clients. In today’s “always on” world, you must have the ability to service  customers across multiple platforms in person and online. Your customer service  toolbox must include the following:

• Professional website not a do-it-yourself one if it ends of looking like a  DIY site
• Regular customer communication which can be through emails and  newsletters
• Easy way for customers to find you and connect with you
• Beyond average customer service

Critical Item 3: Know Your Competition

In order to maintain competitive, you must keep an eye out for what your  competition is doing right and wrong. You can learn from what they are doing  right and incorporate it into your business. You can learn from what they are  doing wrong and capitalize on it. You can also capitalize on what makes you  different from the competition. By knowing your competition you can do the  following:

• Determine the share of the market your business should have and set goals  to achieve it
• What makes your business different from competitors – both positive and  negative attributes
• Ways you can lessen the competition by capitalizing on what makes your  business different

Critical Item 4: Be Able to Delegate Non-Essential Tasks

Because their business is their “baby”, many business owners do not feel  anyone can do anything right unless they oversee it or do it themselves. This  can be death to a business. As a business grows, you must be able to delegate  everyday mundane tasks to others. Tasks that can have a major impact should not  be delegated unless you have the appropriate person in place (e.g. trusted  manager or hired consultant) such as hiring of key staff.

Once you have begun to delegate, you can spend more time on strategically  growing the business and analyzing your business results.

Critical Item 5: Maintain Multiple Revenue Streams

Your business should not rely on just a few customers or one mode of revenue  generation. If there is a change in the industry or a customer goes out of  business, you could irreparably hurt your business. For example, if you own a  service business such as a hair salon, you should also sell retail product as  another revenue source.

If you do have a business with only a few major customers, then find new  target customer segments that would be interested in your product or service.  For example, Cisco, the technology company, has traditionally had only corporate  clients but recently it introduced a product for the consumer market, its home  networking router product.

Incorporate these tips into your business and you will be well on your way to  business success.

Kimberly Loftis, President of Loftis Consulting, provides interim and  part-time CFO services and business plan services for a variety of businesses.  Formerly, Ms. Loftis was Vice President of Corporate Development for HSBC, an  international banking conglomerate. She has previously held managerial positions  with AT&T, Pepsi and Exelon.

Kimberly Loftis earned her MBA from Kellogg and her BS in Accounting from  Indiana University. She is also a CPA.

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