Introduction
Small businesses have certainly started to play an important role in the growth and development of a lot of economies in the world today, and they are becoming increasingly popular. The reasons for this are not particularly hard to discern. More and more individuals are joining the small business for a variety of reasons that include the search for extra income, independence and for convenience purposes. As an established serial entrepreneur, I have had my share of personal experiences on the critical success path towards success in small businesses. During this period, I have had the chance to discover a lot about the most critical things that you need to become successful in managing your small business. Use this guide as your checklist to determine whether your business plan is on the right path or whether you need more information as regards your strategy and the business market you are venturing into.
Essential steps to successful business management
The first step is to make sure you offer what people want to buy, not what you feel comfortable selling. Many small businesses often make the biggest mistake in this stage. You are much better off selling products that fall under proven category than venturing into an entirely new market. The risks associated with such a venture are very large in measure that small businesses cannot sustain. The next step is to get your cash flowing immediately because cash flows remain the lifeline of any business. You can easily do this by requesting for work up- front and arranging to pay the balance on delivery. Lussier (107) illustrates that.
You can do the same in retail, especially on high-ticket or specialty item and position it as an added value and a way to insure delivery by a specific date and you can also add value to generic items by creating private labels, and develop continuity programs where customers pay an up-front monthly fee to insure delivery or availability of items they will buy on a repeat basis.
You must be strategically positioned to have first hand news in order to keep your costs at their minimum levels. In business, “All the cash flow in the world is worthless if it’s not positive cash flow, which means you have to bring in more cash than you pay out” (Pilgrim, 37). To achieve this, you must ensure that your costs and expense remain at bare minimum.
In addition to the above, the major driving factor behind any business unit is a good return on investment. It is necessary to spend a good fraction of your time exploring ways to increase your profits. This involves analyzing the five business drivers that include leads, conversion rates, average dollar sale, average number of transactions and profit margins and how they relate to each other. If you can develop the capacity to master them while at the same time keep your costs low, then you are on your way to success. “In planning, it is far more important to overestimate your expenses and underestimate your revenues” (Pilgrim, 39).
Accountants and economists with tell you that “Being conservative in your numbers doesn’t mean you are willing to accept those numbers, it just means you are arming yourself with information you can work with and work over” (Hodgetts, 90). The mistake here is to focus on raising your brand before you get your leads. Leads are far more essential than brands because they define your brands and not vice versa. In addition to the above, test and measure everything because in business, you cannot charge what you cannot measure and you cannot tell the impact of a strategy if you cannot track its results. You must accept that learning is process and indeed a continuous one in this filed and do not be tempted to think that once your last annual sales were exemplary, you are bound to ride on the same trend.
Conclusion
Research articles on the rise of small business in the market today reveal that more and more people are opting to retire early and use their savings for personal businesses. In fact, over 30% percent of businesses are managed by early retirees and 25% of those that made use of the strategy listed above have demonstrated the tenacity to survive. While managing your personal business comes along with a number of challenges, the satisfaction derived from increased income and high levels of independence warrants a trial. Do not fear venturing into a small business, many have tried and succeeded. This could be your gate-way to freedom and run-away from the stressful workplace and a tyrant boss.
Works Cited
Hodgetts, Richard M. Effective Small Business Management. Journal of Business Management. 4.3. (1992): 89-99.
Lussier, Robert, N. Management Fundamentals: Concepts, Applications, Skill Development. Journal of Business Management. 11.2. (2008): 107-128.
Pilgrim, Bruce. Talking to My Cats: A Small Business Journal. Journal of Small Business. 5.2. (2007): 37-44.