The Pains of Running Your Own Business
If it was easy there’d be a book you could follow step by step, and out you’d pop at the other end with a highly successful business. Of course it’s not easy, and as a result there are 1000’s of business books, and millions of business articles, all designed to help you on the way to success. Yet still only relatively few businesses truly succeed, and even less get anywhere near to maximising their potential.
But it’s also nothing like as complicated as one might think. Most of the challenges of creating and running a successful business can be broken down into just three core focal areas:
- Generating more revenue;
- Maximising the value derived from the people you employ; and
- Having a sufficient supply of cash.
Practically everything one needs to do when running a business, fits into one or more of these three focal areas.
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There aren’t many businesses that don’t strive to increase sales. The constant battle of practically all businesses is to maximise the acquisition of new clients and to increase revenues from existing clients. Naturally that doesn’t mean any old revenue as it has to be business you want, that fits with your business’s goals, objectives and raison d’etre.
“Increase sales”. Easy to say, but rarely straightforward to achieve. It involves many aspects of the business, each of which needs to be optimised in order to maximise the business’s growth potential, and all of which involves ongoing attention to continually improve and fine tune, such as:
- Brand, target market definition, competitor analysis, positioning, proposition, values, style and messaging;
- Lead generation, lead nurturing, lead conversion;
- Client retention, revenue maximisation, pricing;
- Product/service offering and its competitiveness, geographical markets, international expansion;
- Routes to market, direct and indirect business partners and relationships;
- Sales people recruitment, sales team leadership, sales methodologies and performance.
How often have you heard something like this said by a business owner: “The biggest challenge I have in my business is people. Finding people who are truly good, who really care about the business and will go the extra mile, who don’t give me lots of hassle and extra work, and who have the loyalty not to leave at the first opportunity”? Yes, it can be a challenge, and the starting point is to see employing great people as a fantastic opportunity to build the business successfully, not to see it as a pain or a problem.
All truly successful businesses employ great people. Everything stems from the business owner: good people have a choice about where they work, and will therefore only choose and stay with businesses where they admire and respect their employer, where there’s interesting work and exciting opportunities, and it’s a culture and environment they’re going to enjoy.
How is this to be achieved? By recognising how critically important this is to your business, by not laughing off your people skills as ‘not that good’, by taking it seriously, constantly improving your own skills, and taking advice and help when you need it. Key areas to focus on:
- The way you behave and your style of people management is the single most important factor in the achievement of success
- Culture definition, development and communication
- Identifying and recruiting great people
- Retention and motivation
- Management style
- Training and development
- Pay and benefits
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|Cash Is The Tactic
How to maximise cash balances,
survive, fund growth and reduce
“Cash is King”. “Cash is the lifeblood of business”. These are said often enough because they’re true. Businesses go bust because they run out of cash, not profit, not sales, cash. Businesses can’t grow because they don’t have the necessary cash to invest in order to achieve growth. Conversely, with cash you can take a few risks, you can invest in top quality people, you can optimise your marketing activities, you can develop products, you can expand geographically. And you can sleep better at night.
This doesn’t necessarily mean that bank loans, angel investors or PE/VC backing is needed. They may be, although for many businesses the need is to focus on managing their finances more effectively in order to maximise cash availability – which gives them the ability to self-fund.
Some of the main areas to look at are:
- Business planning. It’s a cardinal sin of business management to run out of cash without being aware of the risk of this happening and having taken sensible steps a) to prevent it and b) to put in place, well in advance, ways of managing such an eventuality.
- Cashflow planning. It’s part of business planning, but many businesses put too much focus on profit and loss and not enough on cash. You can make a profit and still go bust – you can make a loss and not go bust – it’s cash that matters.
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Credit control. Top quality credit control will result in more cash in the business. It’s as simple as that.
- How can the business grow its revenues without corresponding increases in overheads?
- What steps can the business take to reduce overheads whilst still providing the required levels of quality and service?
- What impact on volume does moving price up or down have?
- Revenue is only really exciting from a cash perspective when it’s profitable. So knowing what your margins are on what you’re selling is critical, and make sure those margins take account of an appropriate allocation of overheads.
- Sourcing and buying. The price you’re paying for raw materials is critical to margin, and your payment terms have a critical impact on cash.
There are other challenges of course, elements of which perhaps fall outside the scope of revenue, people and cash, such as mergers and acquisitions and maximising capital value, but even then, optimising these three core areas covers 80-90% of such activities.
We’ll be expanding some of the specific areas mentioned above in future articles. Make sure you don’t miss them by completing your name and email address in the ‘subscribe to our blog’ section at the bottom of this page. You can also follow us on social media.
If there’s anything specific on which you’d like more information, please drop me a line at email@example.com – I’d be delighted to help.
Top 3 Takeaways
- If you are spending work effort on anything that doesn’t have a positive impact on revenue, people or cash, review whether you should be.
- Don’t make running a business any more complicated than it has to be.
- Master revenue generation, people leadership and cash management and life’s a breeze.
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