When you’re starting a new business, turning around an under performing company, or scaling up operations, experience comes in handy. But, if you don’t have experience and you find yourself delving into the shark tank alone, you’ll need to think on your feet.
For the most part, business success or failure depends on knowing the how and why of taking action. Remaining clear about which steps you should take next and never losing sight of your long term vision. Check out these 8 essential tips for running a successful business.
#1. Offer a Product That Solves a Problem
Many entrepreneurs waste time developing a service or product that they think will be successful, rather than developing one that already commands a portion of the market. OK, so you may have some competition in your market already, but competition is actually a good thing. Competition means that there’s proven demand and proven success in a given market. You’re not just venturing out into the unknown.
For example, instead of developing an entirely new sports shoe with a stylish design and trendy materials, look to focus on a niche of sports shoes to sell within a proven shoe category that customers are buying. It’s better to be selling a product that commands a small slice of a big market category than a big slice of no market at all.
#2. Keep a Steady Cash Flow
Maintaining a steady cash flow is vital for a business, in that it feeds your bottom-line profits. Jump start your cash flow quickly for business success.
If you provide a service, ask for upfront deposits with balances due when the work is completed. The same policy can apply in retail, particularly with specialty items. A deposit-based system positions the item as having added value and ensures delivery by a certain date.
You can also boost the value of generic items by rolling out private labels and/or launching continuity programs where customers pay a monthly fee to ensure the delivery of items they purchase regularly. Here, it’s important that there are no gaps between when you pay for stock inventory and labor and when you get paid.
With some creativity, you’ll be able to think of ways to acquire money upfront so that your cash flow is streaming in on a consistent basis.
#3. Be Creative in Keeping Costs Low
The kind of cash flow you want is positive cash flow, where you’re receiving more money than you pay out.
Essential to maintaining positive cash flow is to keep your expenses and costs low. Never pay retail prices, and look for used items to furnish your company space.
You also get better prices when you pay vendors upfront. Because there’s plenty of credit in today’s economic environment, vendors are pretty eager to offer you a creative financing plan that is great for your bottom line.
By looking into and researching the creative deals other business owners and vendors are making, you can try asking for the same kind of deal yourself.
#4. Always Underestimate Revenues and Overestimate Expenses
This isn’t meant to sound negative, but how many times in life have you expected to pay a certain price for something, only to find out it’s actually twice as much? Stay cautious with your accounting numbers, not so you can accept this as a new reality but so that you can be prepared for unforeseen expenses. This accounting method will help you better judge what efforts you need to put into marketing and sales down the line.
#5. Obsessively Nurture Your Sales Pipeline
Business is all about making the sale. In order to pull this off, you need a solid way to obtain leads, convert these into sales and garner repeat sales from your product or service customers.
This approach vitally depends on a united sales and marketing team that can see prospects through your sales pipeline to conversion. Make use of the data you have on existing customers to predict future buying habits. Obsessively nurture your sales pipeline. Some 98% of MQLs don’t end up as clients. Why? Because of lack of harmony between your marketing and sales teams.
Many business owners make the mistake of perfecting their brand before starting to generate leads. The opposite is the better way to do business. Leads are more important than building a brand, so invest most of your money in acquiring new customers rather than getting your brand right.
When you do this, you’ll find you can build your brand from the bottom up rather than spending a lot of time and money on building it from the top down, which is vastly more difficult.
#6. Find Ways to Increase Profits
There are five drivers in business that create profits. If you can keep costs low as you master them, you will have a successful business on your hands.
The drivers are acquiring more leads, converting your leads into customers, boosting the number of times customers buy your product or service, increasing the product or service price, and growing your profit margins.
Focus on any one of these drivers, while keeping costs low, and you will generate more profit. Focus on all of them and you will experience tremendous business success.
#7. Constantly Test and Measure
You can only find out if a profit-generating strategy is working for you if you’re repeatedly tracking, testing and measuring your results.
Just like a doctor needs to measure your heart rate, breathing and blood pressure before delivering a diagnosis; you need to know all the qualitative aspects of your profit strategies that will enable you to correct your course of action. If you don’t track and measure, how will you know that expensive ad campaign is delivering you customers?
#8. Add Value Instead of Discounting
Offering a discount directly impacts your bottom-line profit and isn’t worth implementing. Opt instead to increase your profit margins with no-cost or low-cost offerings and extras that stir up word-of-mouth and goodwill with your customer base. In the end, these types of offers cost nothing and the payoff can be significant.
Clarify your thinking and prioritize certain tasks and activities over others. Roll up your sleeves and get ready to run your business knowing that you’ll have to correct and change things from time to time. As long as you develop the right strategies that translate well into profits, your business will be a success.