Running a small business is challenging. Conditions are tough and the increasingly digital nature of most businesses has left small business owners scrambling to find the right resources. The key to long-term success in a small business is adaptability and building a margin of safety.
A margin of safety helps you withstand adverse shocks to your company and thrive when the tide turns. For instance, maintaining a steady amount of cash in the bank will help you draw capital when times get tough, even if you’re not capitalising your resources perfectly.
Here are 4 things all small business owners must keep in mind when running their businesses.
Get hold of your finances
It sounds obvious to state this, but many small business owners neglect their finances. For starters, separate your personal finances from that of your business. Mixing the two will cause confusion and create accounting headaches down the road.
The numbers surrounding financial statements might seem intimidating, but they offer you the best insights into the health of your business. They also simplify tax reporting when the time comes. Having your books in order is a staple of every tax season checklist for small businesses. Record all expenses and income meticulously and seek help if this task becomes tough for you.
Make sure you keep an eye on your cash flow. Small businesses face serious challenges regarding managing cash since business conditions change quickly. Keeping tabs on your cash will help you project working capital needs and plan infusions before cash flow holes develop.
Adopt data analysis
Business is data-driven these days, and there’s no getting around it. You must embrace digital channels to sell your goods and build a customer base. Social media will help you spread the word about your products. Most small business owners are intimidated by the thought of managing their social media accounts and running campaigns.
However, you don’t have to go wild with social media. Simply open an account and begin engaging with your audience. Invite existing and new customers to like your page and focus on local engagement. In addition to a social media account, you must also establish a website.
Tracking website visits and posting helpful content will help you understand your customers better. Metrics such as likes and comments on your social media posts will give you insight into how well your content is hitting the mark.
Prioritise recruitment and retaining
Staff turnover can cripple your business. Not only does high turnover create a lack of continuity, but you’ll also incur significant expenses in training and hiring new employees all the time. The trick is to prioritise recruitment since it gives you access to the greatest resource of them all: your employees.
Many small businesses prioritise their customers, as they rightly should, but neglect managing their employees. Thanks to the rise of remote work and opportunities worldwide, small businesses must work harder to treat their employees right and stop viewing them as a cost centre.
When recruiting people, create scorecards and test potential employees on the tasks you expect them to execute if hired. Always enforce respectful communication and go the extra mile to accommodate employee requests.
Treating your employees right will ensure they’re on your side during tough times when you need the most help. You’ll also avoid having to replace talent and can promote from within.
Pay attention to marketing ROI
To succeed in today’s business environment, you must embrace digital marketing. The good news is data underpins everything to do with digital marketing, and you can measure your way to success. Always focus on creating marketing campaigns that boost sales.
Many small business owners inadvertently create campaigns that boost awareness but do nothing for sales. For instance, SEO is often touted as a tool to boost sales. However, SEO and sales increases aren’t always connected. Someone might find your website interesting on Google’s search results and visit your page. However, visits do not guarantee sales.
Focus on creating content and ad copy that drives sales. There are plenty of small businesses that don’t show up on Google but experience high sales. Watch your metrics at all times to measure success and connect them to sales and profit margins.
For example, don’t measure just overall traffic. Measure traffic conversions and trends over time. Does increased traffic result in more sales? Are you increasing traffic over time but are sales flat? This situation is a problem since it tells you your marketing is ineffective in bringing in more sales.
Paid advertising offers direct ROI measurement so focus on lowering metrics like CPC and CPA at all times. Engage customers in nurturing campaigns by sending them newsletters periodically. This way, you won’t have to spend money acquiring them again and can drive repeat purchases.
Tough but rewarding
Small business ownership is a tough task. However, it is a highly rewarding endeavour. Modern business environments demand a modern approach. The tips in this article will help you create a robust business posture that has you sailing through tough times and thriving during the good.