7 things you can do every day to keep your small business profitable and growing
I have been a business owner for almost 13 years now.
I have learned a lot from observing my clients, and of course from my own experiences.
My process is not perfect. I am a firm believer in change and re-invention, so my process is always evolving.
My staff will read this and no doubt point out that I don’t do these things every day.
Let’s just say that I do these things almost every single day. I usually have these tasks completed by 10am.
1. Walk into the office with the right attitude.
Probably the most important thing in business and life is to have the right attitude.
When you run a business, some say, ‘the fish rots from the head down’. If you have a poor attitude as a business owner, this will infect the other staff members and eventually your clients.
It also follows that, poor attitudes and poor behaviour of staff can spread like a disease throughout your organization.
If you aren’t feeling it, then the staff won’t either, and eventually this flows to your bottom line.
Check your attitude as it will influence the attitude of others.
Don’t get me wrong, it is not all sunshine and lollipops. You don’t rock into the office singing hallelujah everyday, but your attitude should match the circumstances.
What do I mean by this?
If you have issues with clients or customers, your team should know that there is going to be a degree of pressure, or sense of urgency that needs to be felt.
Keep in mind this is very different to having a volatile attitude and a moody persona. Nobody likes to deal with a team member whose personality is unexplainably volatile.
One of the best books I have read on this topic is called: Fish! Remarkable Way To Boost Morale And Improve Results, it’s a short story that illustrates what I am talking about here.
2. Open my company bank account and check how much money is there.
When I worked in financial markets, a trader once told me that “a good trader always knows his position”.
This is a good indicator for every type of business owner.
I meet 5-25 business owners each and every week.
As a financier, it always makes me uncomfortable when I start asking the business owner about their business and they don’t know the answers off the top of their head.
I could even go as far as to say that it is a glimpse of what is to come for this business. Business owners who don’t know their cash position won’t be around too long.
(This is almost as bad as if they send somebody else to a meeting that deals with their finances.)
Knowing your cash position is business 101. Checking your bank balance is a the best way to do it.
Get into the habit of knowing the cash position of your business each and every day.
One more reason to do this: Viewing your bank account helps solidify in your mind the reality of how long it takes to turn a profit into actual money in your hand. It is possible to be profitable, but insolvent. This topic is probably best explored in more in depth in it’s own post.
3. Look at what money left the company bank account yesterday.
In most small businesses, you want to make sure you are approving each and every payment that is made to your creditors.
I personally like to eyeball the actual payments.
This gives me an idea of the rate at which money is flowing out of my business. It also allows me to query anything that does not look right.
It is a very popular, yet sad excuse when I meet with businesses that have cash flow problems as a result of staff or their accountant channelling money to their own accounts.
Yes you can prosecute them for this theft, you can even insure against, but it is best not to put yourself in that position in the first place. Often these types of thefts occur over a period of time and are not one off payments. Checking your payments each day will arrest the problem before it gets too big.
4. Open my receivables ledger and check who owes me money. Who is late? Work out why and get the money collected.
One of my key focus’ is encouraging my staff to encourage our clients to keep the ledger in line.
This means in line with the Dunning Cycle of each customer of the ledger. This means according to agreed trading terms. It is important to police and enforce your trading terms aggressively with customers.
The implications of not keeping this in line with agreed terms is massive on the bottom line.
To give you an idea of the impact; it costs an SME 2.5% of the actual receivable per 30 days that it is not paid. If your Gross Profit of each sale is 30%, you are losing almost 10% of it every 30 days.
If a payment is late, it is important to rectify the payment and get it paid as swiftly as possible.
It is a myth that a Debtor Finance provider likes the invoices to run as we make more margin on our finances. The reality; the increased risk of non-payment goes up exponentially with each day the invoice is not paid.
The risk as time goes on to the financier is more than the tiny margin we make on our money.
5. Look at my payables and check how much money is going to leave my account shortly.
Set trading terms with your suppliers and make sure they are practical in terms of your processes.
Of course you need to be flexible as often things come up in business. Having said that, plan to pay your invoices as and when they are agreed to be due and payable.
Trade credit from your suppliers can be a great source of credit, but it is best done by negotiation. It costs your business more to drag out your payables. Here are some good reasons why:
- You get a bad credit rating from suppliers, yes they all talk, and it gets around if you are a bad payer, restricting your access to more (cheap) trade credit
- If you are late, your staff will have to down tools to deal with collection calls from creditors instead of getting on with their jobs. You as the boss will get calls as well, this takes time away from more important tasks
- If you are late on your finance commitments you may be asked to refinance, which could be hard to do if you never pay them on time
I like to pay my payables once per month.
I like batching my routines so that they are done in one hit, so I am not continually down tools up tools.
Keeping an eye on my payables, means I know I can budget my cash flow and make sure I have sufficient liquidity to meet them. It allows me to make sure I have enough liquidity to service each existing and new client.
This last point is important for all types of businesses, businesses fail when they are experiencing rapid growth because they require large amounts of working capital to service this growth.
The trap for the young players is that they don’t appreciate how much working capital they need. They then subsequently start banking their creditors, and whammy they are now one small step closer to insolvency.
6. Have a daily huddle with staff. Make sure everybody is standing for this meeting.
This is a great way to get a finger on the pulse of the business.
How engaged are staff?
Do people in your team care?
Look at the team in their eyes, what is their body language telling you? Solicit feedback from the staff in an open and non-judgmental manner. Some things cannot be covered in this forum, but it is a great place to start.
In these meetings I like to discuss the following:
- Current opportunity pipeline, what have we got in the go in terms of new business? All staff get to see what we have going on and where the business is headed in terms of growth.
- Existing accounts discussion, here is where staff have the chance to point out any issues they feel represent a risk. Here staff once again are on notice as to what clients are going well, and who may be exiting.
- General feedback about anything frustrating the team. Here is where you can really obtain feedback on how engaged they are in the bigger picture of the company. If staff don’t have frustrations or cannot highlight areas that need improvement, then this may be an indication of apathy creeping in. As the leader of your team, it is your job to keep staff engaged and moving forwards. This can be easier said than done (at times).
7. Check my appointment schedule.
If you know me and how I operate, you know I have very little control on a tactical level over my schedule.
You may or may not also know that sales volume does have a significant correlation with activity.
It follows, that if I am meeting a lot of new clients, this will translate into a lot of new accounts.
I check my schedule every morning and gauge how full my forward bookings are.
If there is not a lot going on, I do get concerned. I know that something is not working as well as it should.
This is my best gauge of how well my promotional activities are working.
If my appointment book is full for the next week at a minimum, then I know that we are doing a good job in terms of marketing. If it is empty, then I know we are not doing a good enough job on the promotional side. This lack of face time activity will eventually translate into a hole in my budget.
What do you do everyday that you find invaluable?