As a local business you’ve got lots on your plate. Anytime’s a good time to look at your business with a critical eye to see where it’s weak and what can be improved.
Keep in mind the 80/20 rule so you don’t waste hours and hours chasing down and fixing something which makes only a 1% difference to your customers.
A few of these 10 jump out at me.
1. Biz plan – you’ve gotta know the basics. Once you have these, like market data, demand, competition, your unique category in the market, then get going.
Remember Eisenhower “Plans are essential, planning is useless”. Your plan isn’t going to work out but it gives you a starting point to adapt once you’re in the doing part of your business.
2. Cash Flow Forecasting – it’s very important to do this on a cash basis not the “Accrual Accounting” method. It does you no good to have $2 million in receivables when your creditors are repoing your equipment.
It’s most useful to forecast 90 days out cash flow as well as 6 months out. Longer timeframes become dicey with their accuracy and less useful anyway because your business will have changed.
3. Accounts Receivable – a dreaded yoke to most local businesses but sometimes necessary. Collect on these sooner rather than later and make courteous, effective collection systems a priority in your small business at all levels.
4. 80/20 Customers – focus on your 20% of customers who bring in 80% of your profits. The rest won’t matter much and you’ll be a more accomplished company because you’re serving your biggest fans.
This will lead to way more referrals which are the monster growth engine for any business.
Full 10 tips are here at Young Entrepreneurs:
6. Evaluate your customers
Do you know who your best and worse customers are? How much profit are you making from each customer? If you don’t know, now is the right time to set up systems to track this and….
7. Remove unprofitable customers
Harsh as it may sound, concentrate on your best customers. Lavish them with attention. If you have unprofitable customers, cull them. You have no room for passengers.
8. Trim your product or service range
If you are carrying a wide range of stock trim it. Do this by calculating which of you stock lines are your worst performers; sell those lines quickly to release some cash. Reduce your overall investment in stock.
9. Look at your processes
Mistakes are costly so take a look at your processes. What can you tighten up or do differently to lower the chance of errors?
10. Create a budget
Having a budget isn’t about cutting costs, it is about managing costs.