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No matter what industry you're in or product you're looking to sell, there are a few ingredients that underpin every small business in Geelong.
The first is your product or service – you need to be selling something that people want to buy. The second is people – you need the right staff in place if you're going to create a viable business that's more than a sole trader.
Finally, you need a strategy – something that lays out why your business exists, what it wants to achieve and how you're going to get it there. To help you get this strategy right, here are five tips and tricks to keep your business expanding.
1) Start by actually writing a business strategy
It sounds simple, but many business owners have never actually taken the time to put down on a page what their business is trying to achieve. If you're starting your own small business, or looking to expand your existing one, putting together a business strategy is vital.
Doing everything isn't a strategy either. When you're locked into the everyday running of a company, it's easy to take on too much, to lose focus on the company's core capabilities and to then struggle to reach key goals. That's why it's so important to take the time to write down what the business strategy is, to help you keep a laser focus on delivering it.
2) Expect demand to fluctuate
For many small businesses, the challenges to growth come from factors beyond their control. So even though your company's growing well, those external factors can change quickly. This is something that will already be familiar to farmers, for example, who have to manage fluctuating global commodity prices, or those working in the construction sector who are managing changes in house prices.
In fact, according to figures published by the Australian Bureau of Statistics and the Reserve Bank, fluctuating business conditions have a disproportionately large impact on small businesses. So they grow fast when market conditions are positive, but are then at greater risk of taking a financial loss when these conditions change.
If you want to build a successful business, it has to be one that can not just survive fluctuating demand, but thrive. This means approaching your business planning with a view to understand worst-case scenarios and how your finances would perform.
3) Build a plan to balance accounts payable and receivable
It's a common problem for small business owners; how do you manage payments coming in, against the demands of suppliers who have their own payment deadlines to meet? Maybe you've hit a busy patch, for example, where there's a lot of projects nearing completion, but suppliers are chasing for payments for materials and you haven't been able to send out invoices yet.
Even when there's plenty of business coming through the door, these delays can trip up even seasoned entrepreneurs.
How you manage accounts payable and receivable will depend a lot on your industry and the type of work you're doing. Business owners in areas like construction will obviously have to be planning ahead with their pricing and contractual negotiations to make sure they're able to pay suppliers and subcontractors. Either way, balancing these two to ensure you're cash flow remains strong is a tricky task for any business owner.
4) Beware of expanding overheads
Of course, even when accounts are being paid on time and you're maintaining good relationships with suppliers, it can still be possible for businesses to find themselves expanding in an unsustainable way. This can often happen for newer businesses that might struggle to maintain planned growth.
Let's say you're a year-old business that saw massive growth in year one, so you've invested in an expanded team, new equipment or inventory, and a larger premises. If sales start to plateau in year two, those earlier projections might start to look overly optimistic. It's why professional accounting services can help to ensure revenue forecasts are right for a business, so they can keep expenses in step.
For a small business, it's often easier to get out and talk to customers face-to-face.
5) Bring the customer voice into your strategy
One of the biggest perils when building a business strategy is that it is purely a product of the business – it's crafted without the input of external stakeholders, especially customers.
Larger companies will usually do this by running a customer feedback programme, with surveys and net promoter scores that are then used to set targets and KPIs. For a small business though, it's often easier to just get out and talk to customers face-to-face or with a small online survey over email.
To bring this voice into your strategy work, ask customers what they're pain points are, both in general and with your services (and those of your competitors). When you can bring these insights into your planning and use them to inform everything from your product development to your marketing, you'll be in a much stronger position to win new business and retain a loyal customer base.
If you're looking to rethink your approach to business planning, get in touch with the experts at WMC Accounting. Their Geelong-based team can help you take your business planning to the next level.
