by Nathaniel Davis
- Offer what people want to buy, not just what you want
to sell.
Too often, people jump into a business built
around a product or service they think will be successful, rather than one that
is already proven to have a market.
Instead of creating and selling a new sports shoe with the latest trendy design
and materials, you'd be much better off from a business perspective to focus on
shoe category generally (a proven category because which people buy shoes every
day) and then focus more specifically on the niche of high performance sports
shoes, (which you may even sell in a section of a shoe retail outlet). Better
to have a small slice of a large category than a large slice of no market at
all.
- Get cash flowing ASAP
Cash flow is the lifeblood of business, and is
absolutely essential to feed bottom-line profits. So you need to find ways to
jump start cash flow immediately.
How do you do that? In a professional services business, you can ask for
deposits on work up-front, with balances due on delivery.
You can do the same in retail, especially on high-ticket or specialty item and
position it as an added value and a way to insure delivery by a specific date.
You can also add value to generic items by creating private labels, and develop
continuity programs where customers pay an up-front monthly fee to insure
delivery or availability of items they will buy on a repeat basis. Of course,
the key is to make sure there is little or no gap between when you pay for
labor, stock inventory and when you actually get paid. Ideally, you'll find
ways to get money up front, and your cash gap will never be an issue.
- Always find new ways to keep costs low.
All the cash flow in the world is worthless if
it's not positive cash flow, which means you have to bring in more cash than
you pay out.
To do this, you need to keep your costs and expenses low. We've touched
on this before, especially in terms of outfitting a startup. The main idea is
to never pay retail, and look for used or gently used items to
furnish your office or your retail space.
Paying vendors up front also gives you leverage for negotiating better prices.
Especially in this economic environment, where credit is at a premium, vendors
are more willing than ever to find creative ways to finance transactions, and
that is a trend will likely continue over time.
So do some extra work and research now to discover how owners and vendors are
finding ways to work out deals, and you just may hit on whole new ways of doing
business.
- When planning, always overestimate expenses and underestimate
revenues
Being conservative in your numbers doesn't mean you are willing to accept
those numbers, it just means you are arming yourself with information you
can work with and work over. It means you can gauge the kinds of efforts
and activities you will need to put into sales and marketing.
- Focus on sales and marketing manically.
In business, nothing happens until a sale is
made. From the jump, you'll need to find a good way to get leads, convert leads
into sales, and make sure you keep getting repeat sales from your customers.
The way to do this is to find or create a marketing and sales funnel system
that you can work, test, measure; one that anyone in your company can utilize.
Too many entrepreneurs focus on getting their brand right before they start to
generate leads. That is exactly the wrong way to go about business. Leads are
always more important than your brand, so don't waste money getting your brand
right at the expense of spending that same money to buy new customers.
Soon, you'll discover you can build your brand from the ground up, versus
spending years and hundreds of thousands of dollars building it from the top
down. Don't presume you'll even survive that long, because without leads, you
won't!
- Find ways to exponentially increase profits.
In business, there are five drivers that impact profits. If you can master
them while keeping your costs in check, you will run a successful business.
It's as simple as getting more leads, converting more leads into customers,
increasing the number of times those customers buy from you, increasing the
average price point of your sales and increasing your profit margins.
Do any one of those, while also keeping costs down, you will see more profits.
Do all of them and you will see your business really take off.
- Test and measure everything. You can't change what you don't measure, and you
can't tell if a program or strategy is working if you are not faithfully
testing, measuring and tracking your results.
Another way to look at this is to think in terms of doctors. Most like to
get baseline stats of your heart rate, blood pressure and breathing before
they delve into identifying symptoms or recommending corrective courses of
action.
The same is true in your business. Why keep literally throwing money away
on an ad campaign that costs thousands of dollars but doesn't bring any
people through the door?
- Accept that learning more equals earning more.
If you've never run a million dollar
business, you don't know how to start a business--simple as that.
But you can learn to run one, even if it is your million dollar business you
are building from the ground up.
However, you need to accept right now that learning always comes before
"earning" (except in the dictionary). You'll need to be committed to
learning as much as you can about sales and marketing and operations if you
want to have a truly success business.
Once you do that, however, the sky is the limit. Knowing and applying those
simple fundamentals in a highly leveraged way is one of the reasons many top
executives and entrepreneurs earn so much.
Identify those areas and you then can decide to learn it yourself or hire an
expert and learn as much as you can from that person--because you never know
when you can run across a distinction in thinking or a strategy that can really
take you and your business to a new level of success.
- Don't discount, add value.
Whenever you discount, you are taking money
directly out of your pocket and directly from your bottom-line profit. So don't
do it. Instead, create added value propositions all the way up and down your
product or service line.
Whatever the industry is, look to hold your price points, increase your margins
with the low-cost or no-cost extras and any kind of premium offerings.
In the end, those little things won't cost you a lot, but will build up
tremendous goodwill and word-of-mouth with your customers and customer base.
- Get a consultant.
Even if you don't get a consultant at first to
help you and guide you in your planning and operation, get someone who is
objective and outside of your business you can rely on for “honest” business
advice and to hold you accountable for getting results.
Too often, we think we have all the answers and are the only people who can
really get things done. The reality is that another set of eyes can work
wonders for how you operate both on and in your business. An outsider can also
make sure you are getting the numbers you need both on the top line and the
bottom line to survive.
Use this as a checklist to make sure your
thinking and your business plan are on the right track, or if you need to get
more information, strategic education or clarity for yourself on your overall
vision, your market, or your product or service.
I hope this initial checklist will be valuable
in helping you clarify your thinking and helping you prioritize some activities
in your planning and start up mode.
There are no mysteries in business or in life,
there's just information you don't know yet.
Armed with the right strategies up front, you
can cut the time it will take you successfully get to your ultimate
destination--wherever it is that may be for you and your business.
