If you’re a complete failure on any of these points, let’s explain how to fix it.
- You have money for a rainy day.
Businesses need a financial safety net. No one is immune to force majeure: equipment may break down, and your office or store may need repairs. If your business is subject to seasonal fluctuations in demand, a reserve of money will help pay off employees and suppliers when profits are down.
Operating at zero is not a good strategy. When there’s no money to spare, any unforeseen expenses will force you into debt. It’s a risk: There’s no guarantee that you’ll have a profit so high shortly that it’s enough to cover both running expenses and paying off debt.
What to do
Create a rainy day fund. Study your annual sales trends and identify the months with high and low profits. When things are going well, set aside a portion of your income – this reserve will come in handy to get you through the tough times.
If there aren’t enough profits to put money in the piggy bank regularly, analyze your current expenses.
- You know how much money is owed and how much is owed to you
You need to pay suppliers and customers on time. Deferring payment may seem like a good idea, but it’s a risk. If you regularly allow customers to pay later, you may need getting checkstub for loans. This will make a good impression when applying for a loan, but it is better to have check stubs with your financial situation exclusively for yourself.
Keeping track of your payments helps you plan your spending. You know exactly how much money you have now, how much your customers will pay in a week or a month, and how much of it you need to give to your supplier. This allows you to plan your expenses and build that very safety cushion we’ve already talked about.
What to do
Examine any controversial points in your contract with your supplier. What happens if he fails to meet deadlines or brings in substandard goods? Agree on penalties – if something goes wrong, you will at least have some extra money.
Bargain. Suppliers are interested in new customers. This means that there is a chance to knock yourself favorable conditions – for example, get a discount on a certain volume of goods, cheaper to buy things that are not selling well or negotiate for free delivery.
Do not allow breakage of payments. Fix the timing and volume of payments with each supplier and customer. Keep track of the fulfillment of agreements, and introduce liquidated damages for force majeure.
- You don’t carry everything on your back.
When you’re just starting in business, you’re perfectly capable of handling basic tasks on your own: your salesperson, courier, and accountant. As your sales grow, you’ll inevitably need employees-even the hardest-working entrepreneur can’t devote 24 hours a day to your business.
Even if he can, sooner or later he will get tired and burn out. This means that there will be mistakes, and that’s a good thing if it’s not too detrimental to the business.
At the time of expansion of the company is important as quickly as possible to organize the coordinated work of all departments. Otherwise, it turns out strange: you have subordinates with a clearly defined area of responsibility, but you still take most of the tasks on yourself. Gradually you get bogged down in routine, instead of developing the business and looking for new opportunities to increase profits.
What to do
Delegate. A manager’s job is not to get things done all at once, but to create a system that works without constant intervention. If each employee knows his or her tasks and understands the metrics by which his or her performance is measured, then the entrepreneur’s job comes down to controlling how those metrics are met.
Maintaining a balanced scorecard is a key tool available to business owners seeking quantifiable ways to gauge the overall health of a business and realize strategic objectives from a financial, growth, process, and service perspective.
Delegating doesn’t mean that you can let things slide as new employees come on board. You still have to monitor the work of your subordinates, but it is more convenient to do so with the help of smart controls. You need a system that allows you to check the sales statistics at any time and find out why not all customer requests are not converted into sales.
- You know how many customers your advertising leads
Promotion can eat a decent amount of money, but there’s no getting away from it. If you don’t talk about your benefits, the customer won’t know about them. And then a trap appears in the way of the entrepreneur: it seems that if you spend more on advertising, and clients will flow a river. In fact, they will not.
Shedding money on advertising that does not pay off, it’s about the same as turning on the heater in winter, when the room is open windows. Instead of investing in advertising for everyone around you and hoping that sooner or later it will work, reach out to your target audience.
What to do
Watch the return on your advertising investment. If you use multiple channels that have different conversion rates to sales, it makes sense to choose the ones where customers cost you less. Target your potential customers.
To achieve goals systematically, you need plans: a plan of sales, a plan of revenues, receipts and disposals, net profit. if you have them, the company knows in advance what awaits it and can build a route to a happy rich future.
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