Groundhog Day brings with it the annual return of the famous rodent meteorologist, Punxsutawney Phil. It may also conjure memories of the 1993 movie of the same name, in which a character played by Bill Murray relives the exact same day again and again.
Both of these references offer lessons for small business owners who feel stuck in a rut.
According to tradition, if Phil comes out of his hole and sees his shadow, there will be six more weeks of winter (spoiler alert: he did see it this morning.) If he does not, spring will arrive early. Bill Murray’s character finally realizes that he can break the repetitive cycle by making small changes to improve himself and the lives of those around him.
The first lesson here is you cannot do the same thing over and over again and expect to get different results. The second lesson is in order to pull yourself out of the hole you’re in and move your business forward, you will need to make some changes.
Here are some of the common traps small business owners fall into with customers, employees, and vendors and some steps you can take to generate different results.
Doing everything yourself.
Small business owners are notorious for wearing too many hats. While at first this may seem like a successful and money-saving strategy, it can take its toll as the workload gradually increases. Mistakes can multiply and quality can decline, costing you time, money, and customers in the long run.
Breaking free from the mentality that you have to do it all yourself is a struggle for small business owners. Asking for help is not a sign of weakness. Enlist colleagues or service providers who can quickly take care of problems that may take you days to resolve on your own. Consider hiring professional consultants or two to three key employees to whom you can delegate time-consuming tasks. It will be a short-term expense but a wise investment in your company’s future.
Focusing on the details.
Are you mired in the minutia of day-to-day tasks? If so, then chances are you are not investing enough time in thinking strategically about how to better manage your business.
Make time to consider what’s working and what needs changing. Pause and look around at where you and your company are today. Set aside some time each week where you do nothing but analyze and plan for the future. Sometimes taking a step back can help you move forward.
Hiring the wrong people.
Do you keep hiring the same type of employees with the same kind of backgrounds? This may feel safe, but as your business grows it’s important to find people with different talents, skill sets, and personalities to help you take things to another level.
In a small business, each new hire impacts the company’s culture and productivity far more than at a large firm. It’s important to cast a wider net and invest in high-quality employees. We’ve put together some hiring tips to help you effectively expand your team.
Making marketing an afterthought.
Many entrepreneurs and small business owners focus on creating a great product or service and consider marketing an after-thought. However, businesses that fail to allocate time and money to marketing will find it difficult to gain new customers, increase sales, or produce repeat customer orders and retention. They also run the risk of being out-maneuvered by competitors when new opportunities emerge.
Make marketing a central part of your business plan. Executing a formal marketing plan and establishing a dedicated marketing budget is essential to building customer awareness and generating business. Tie specific goals to your marketing tactics, and don’t forget to measure and adjust your plan along the way.
Failing to forecast cash flow.
The key to success for any small business is managing cash flow. A good cash flow forecast is an essential tool that projects your income and expenses throughout the year. Without a plan in place, small business owners may run short of the cash they need to cover day-to-day operations, purchase inventory or equipment, and pay their employees.
Accounting software such as QuickBooks makes it easy to create a cash flow forecast. Once it’s in place, keep an eye on it. Cash flow analysis lets you track the flow of funds in and out of your business. Analyze your situation regularly and develop the habit of examining your finances at least monthly. If your business needs working capital to finance operations or manage growth, the team at Summit Financial will work with you to determine the optimal funding choice from our array of quick-lending options for small businesses.
Trying to be all things to all people.
One of the biggest problems small business owners face is a lack of focus. You may be easily distracted by every good idea your team proposes, or so afraid of losing customers that you try to serve everyone. This strategy can often backfire, weakening the identity of your brand and confusing your customers or clients.
The most effective way for smaller companies to compete is to target a niche and resist the temptation to jump on every new opportunity to expand or diversify. Focus your products or services on a specific market segment, and develop a solid plan to consistently reach current customers and prospects.
As you finalize your business plans for 2017, consider taking a page from Groundhog Day. Identify the things you and your team have been doing repeatedly that are holding your company back, and commit to altering your approach. Small changes can have a huge impact on your bottom line.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.