Relationships, Time, And Finances Are Critical To Business Success
Much of what small business owners do is a balancing act. Consider the difference between a successful installation and one that you would rather forget. You can install a system that meets a customer’s budget, accommodates their need for the latest technology, and cleverly foresees future expansion. But if this “perfect” system overwhelms a not-so-tech-savvy customer with too many buttons and controls, perfection quickly turns to disaster.
Much of what small business owners do is a balancing act.
It’s easy to focus on one or more areas at the expense of another, but the trick is to keep all critical factors in view. When it comes to running your business, there are three main areas to keep in mind if you want to remain resilient, even during challenging times: relationships, time, and finances. Neglect one of these business essentials and you risk losing the balance that builds resilience. Here are some tips to help you think in ways that will create the right balance for your business.
STRONG RELATIONSHIPS, STRONG BUSINESS
An important part of building a resilient business involves maintaining good relationships, and at the top of the list are relationships with existing customers. Finding new customers is a major priority for any company, but business development is time consuming and expensive.
To get the most out of the investments that you have already made, look to existing customers because selling to them is often easier and cheaper than finding new ones. Review customer lists with an eye for installations that are in need of upgrades or replacement. Then commit to getting in touch by phone or in writing to propose add-ons or updates to existing systems.
PROVIDE EMPLOYEE INCENTIVES
When money is tight it takes solid teamwork to stay within budget. Help everyone on your team stay focused on costs and improve employee relationships with incentives that reward performance. You can also build efficiency and stronger employee morale just by asking for employees’ input. You might, for example, consider offering a reward for practical ideas that can save the company money. After all, some employees may understand certain day-to-day aspects of your business better than you do. So take advantage of it.
REVIEW VENDOR RELATIONSHIPS
As your business grows and evolves, so should your relationships with vendors. Conduct an annual audit of the vendors you rely on and evaluate whether they’re still meeting your needs. Perhaps there’s a better option, or maybe it’s just a case of rethinking what you really want from current vendors. Use this opportunity to make sure that you are receiving the best discounts and payment terms because longstanding relationships are often rewarded in a slow economy.
USE DOWNTIME WISELY
Small business owners and their employees usually have little time to spare, so if a slow economy has left you with downtime, use it wisely to regroup and tackle neglected projects. Does your website, for example, offer potential and existing clients the information they really need? If not, now is the perfect time to update it.
Richard Flynn is senior vice president and general manager for American Express OPEN, a leading issuer of card products for small business owners.
You can also use downtime to do research that will help you gain a competitive edge. Learn more about what your competitors are doing, and stay better informed of new technology and fast-moving custom electronics trends through trade magazines and trusted industry sites.
Also take this time to think about long-term plans. While expansion may not be possible right now, keep in mind that when that moment comes, time is the one thing you may not have. Get the facts on where the money might come from by researching equity options now, because being prepared can make all the difference. Many small businesses often turn to friends and family for funding. If you think this is a possibility, investigate the details. Friends and family can be a great source, but poor planning can jeopardize your business and your personal relationship with lenders. Learn what’s involved in limiting the risks for everyone with formalized agreements and appropriate legal counsel.
Angel investors are another option. These wealthy businesspeople are willing to lend money but also want to have a hand in the business. If that sounds appealing, remember that finding the right person requires lots of time for extensive networking and relationship building.
MANAGE CASH FLOW
A slow economy challenges nearly every business with cash-flow concerns, but don’t accept poor cash flow as a reality of the times. Take an active approach by looking for ways to accelerate cash inflows and delay outflows without paying late.
Taking advantage of charge cards can help even out cash flow and control business spending and expenses. Many vendors offer valued customers trade terms that reward early payment with a small discount and sometimes offer longer payment terms, so that you can hold on to cash a little longer. Larger, more established businesses will have an easier time negotiating these terms, but small businesses with a good reputation for timely payment will have some room for negotiation with vendors.
While collections may seem merely a question of persistence, learning how your client handles accounts payable can speed collections. Learn who actually handles payments and what his or her invoicing preferences are. Is mail or e-mail better, and does an invoice require a purchase order or vendor number? To speed payments, make sure invoices reach their destination promptly, by updating mailing addresses, fax numbers, and other contact information. In addition, accepting credit cards will help reduce billing and collections costs, so you can receive payment from credit card issuers in as few as three days.
REGISTER YOUR BUSINESS
Building a strong track record and then keeping it to yourself won’t help build a strong business. In fact, when applying for credit, it can hurt you. Make it easy for card issuers and other businesses to confirm that you’re an established business. You can do so by registering with commercial credit bureaus like Dun & Bradstreet and the Small Business Financial Exchange.
CLEAN UP FINANCIALS
If you have worked hard to maintain good credit, then make sure you are actually reaping the rewards. To enjoy the benefits of good credit, all credit bureaus’ records must reflect your diligence, so verify that all information in your credit report is accurate and check your company profile for errors. If you do find mistakes or irregularities, be sure to address them immediately to maintain good standing.
As you continue to build your plan for resilience, keep in mind that it’s not all about weathering slow times. The discipline you gain today will undoubtedly serve you well when the economy picks up.