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.
Visit out site to learn more about Loftis Consulting part time CFO services http://www.loftisconsulting.com/cfo_svcs.php
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