In the world of small business, achieving success is not always easy. However, numerous studies have shown that there are commonalities among the entrepreneurs who do have success. We’ve put together a list of some of the essential items on the “To Do” lists of small business owners who are meeting the day-to-day challenges of running their own operations and thriving in today’s ever-changing marketplace.
Have a Plan
Writing a business plan can often seem like a daunting task, and many entrepreneurs and small business owners avoid doing so. However, it’s important to know what you are trying to accomplish in order to achieve success.
A business plan doesn’t need to be long or complicated to be effective. For instance, a one-page business plan simplifies the planning process and creates a tool that can be useful over time. It forces entrepreneurs and small business owners to focus only on what they really need to know in order to develop a thriving business, making it simpler to develop their strategy and track the progress toward their goals.
Regardless of the format you choose, a business plan empowers you to articulate your vision, objectives, and action items today – and refine your strategy over time to support business growth.
Manage Your Cash Flow
Building a successful business is not only about making money – it’s about building wealth by learning how to manage cash flow. That said, managing cash flow is one of the most common challenges entrepreneurs encounter. The inability to cover operating expenses can put the future of your business at risk. In fact, a study by U.S. Bank reported that 82% of business failures are attributed to poor cash flow management.
There are many ways to manage cash flow in order to improve the growth and profitability of your small business – from staying on top of accounts receivable and eliminating unnecessary spending to leasing business equipment instead of buying it. Developing a strategy for optimizing your cash management not only makes it easier to plan and budget for future growth, but it also gives you the money you need to handle day-to-day business fluctuations.
Focus on Prospecting
Smart entrepreneurs stay focused on continually generating new leads and closing new business. Prospecting is a daily, weekly, and monthly challenge for every entrepreneur, and creating a system for bringing in new customers is critical. The first step is to make sure you know exactly who your ideal buyer is. Then you can target your outreach efforts, focus your resources, and prioritize the marketing channels that will help you connect with the right prospects. At the same time, make sure you deliver consistently excellent service to keep current customers loyal.
Remember to diversify your client base so that no single client makes up more than 50% of your income. While landing a large client may be a short-term boon, it can become a long-term liability if you find yourself acting as their sub-contractor and they stop paying or decide to take their business elsewhere. Instead, invest in building a referral network that will sustain the ebbs and flows of your business.
Spend Money on Marketing
Successful small business owners understand the value of promoting their company’s brand and creating compelling and consistent marketing messages that connect with their audience. However, many businesses spend less on marketing than on payroll, rent, equipment, and technology.
As a general rule, businesses with revenues less than $5 million should allocate 7% to 8% of their revenues to marketing. This percentage assumes you have margins in the range of 10% to 12% after you’ve covered other expenses, including marketing. The budget should be split between brand development expenses, including your website, blog, and sales collateral, and the costs of promoting your business such as advertising and special events.
If your budget is limited, aim to strike a balance between spending too much and too little. Keep in mind that marketing is an investment, not an expense, so a $5,000 campaign that generates $10,000 of new business is worth the cost.
Network
Many business professionals consider networking a waste of time and effort. Savvy entrepreneurs know that networking is an essential means of building the relationships that lead to long-term success. Whether it’s through in-person meetings or via social media, networking is the tool most often cited by business owners for developing invaluable connections with individuals in allied services and industries.
Like all successful business endeavors, networking requires a sound plan and proper execution to achieve the best results. It’s a skill that doesn’t come naturally for everyone, so don’t be afraid to try different approaches and to make mistakes. Remember that every business leader has a responsibility to stretch beyond the borders of their day-to-day. Networking offers ongoing opportunities to develop strategic partnerships that can provide genuine value for you and your business.
Find a Financing Partner
Successful entrepreneurs often reinvest in their businesses and contribute their own savings. However, they also know that at some point they are likely to need working capital to grow – and they do not assume they can finance all of their business from cash flow.
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Small business owners often find it challenging to secure the financing they need to expand. Summit Financial Resources welcomes this challenge. We’ll put our expertise to work to determine the optimal funding choice to help your business grow. We offer invoice factoring, asset-based loans, inventory financing, and equipment term loans in a broad range of industries, including manufacturing, freight and trucking, distribution and wholesale, and professional services. We structure our credit facilities based on your needs, allowing for maximum flexibility and minimum restrictions.
Manage Change
In today’s fast-paced business world, change is as much a constant as the shift in seasons from spring to summer. Running a small business in a dynamic market requires you to adapt and evolve in order to keep pace. Developing a change management process helps small business owners in growth mode steer their organizations smoothly through inevitable ups and downs.
Failing to plan for growth can tax your current operations, potentially damaging quality and customer satisfaction. Your accounting, HR, and IT systems must be sophisticated enough to support a more complex business model, and workloads must be managed carefully to avoid placing too much pressure on staff and risking increased turnover. With a sound strategy in place and a willingness to embrace the new, you can position your small business for long-term success.
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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.