Running a new business can be a daunting endeavor. As soon as you form a business, you'll face many important decisions, ranging from mundane to critical. While much of what you must learn comes through trial and error, other lessons can be learned by observing what other business owners have experienced. Here are seven tips to help you hit the ground running.
- Break your goals into sub-goals. Generating revenue and earning profits are goals that all businesses pursue. However, it makes sense to break such important goals into sub-goals. For example, instead of focusing exclusively on earning a profit, a sub-goal could be to make five sales calls per day. The more sales calls you make, the more likely you'll earn revenue and book a profit. Breaking it down into sub-goals can make the process more manageable and provide quicker feedback.
- Track cash flow religiously. Businesses must generate cash flow to survive. Yet too often, business owners spend little time monitoring how money moves through their business. In addition to an income statement and balance sheet, prepare a cash flow statement that tracks how changes in the balance sheet and income statement affect cash.
- Don't spread yourself too thin. As a small business owner, there's a never-ending list of tasks that require your attention. However, by attempting to cover every task by yourself, you'll inevitably struggle to deliver. Learn to delegate to employees or contractors. While doing so may feel uncomfortable to begin with, it's crucial that you don't attempt to accomplish too much by yourself because it will lead to burnout.
- Resist the temptation to grow too fast. For some businesses, there's no shortage of ways to grow. Nonetheless, if your business grows too quickly, you may run the risk of failing to deliver on lofty customer expectations. Forecast how fast you can grow your business without overstretching your operations. If you experience growth beyond that rate, look into accelerating your plans for expansion, which might include hiring more employees or executives or opening a new facility. However, only expand if your business can support the expansion without becoming financially stretched.
- Keep your costs low. Many businesses find themselves struggling to stay afloat due to crippling overhead costs. From the moment you establish the business, do your best to minimize your overhead costs. For example, instead of hiring full-time employees, consider engaging contractors. Instead of renting an office, run the business out of your home for a while. Keeping your overhead low also prepares your business to survive changes in economic conditions, such as a recession or the loss of a key customer.
- Hire slowly and carefully. When the time comes to hire your first employee, make sure you create a stringent application process and avoid taking shortcuts. Don't be in a rush to fill vacancies. Hiring the wrong employee can have catastrophic consequences. During the interview process, make sure you provide a detailed description of the job to ensure the candidate understands the role. Present the candidate with real-world challenges to test his or her ability to problem-solve. And while it takes time to contact a candidate's references, set aside the time to do so because it can uncover critical information.
- Know when to ask others for help. Running a small business can stretch even the most accomplished owners. Don't be afraid to ask others for help in navigating the inevitable challenges you'll face. To that end, build a team of mentors who can help provide a fresh perspective to problems that may seem insurmountable. You might also consider hiring a coach who specializes in helping small business owners. They can provide an impartial third-party perspective and share best practices from other small business owners they advise.
Survive and Thrive
As an entrepreneur, you'll face countless challenges in running your business. Your ability to survive and thrive depends on a broad range of factors. However, the steps noted here can help position your business to compete no matter what type of market conditions you face.