Posts

Why Your Business Needs to Conduct Research

/in /by

When you are trying to run a successful business, you need to think about all avenues of the company. And this means you have to consider the key techniques that will help you when it comes to success as a company. There are a lot of ideas that play a role in helping you to improve your company, and this is something that you need to focus on.

There are a lot of things every new business needs to succeed, and there are a lot of ideas and elements that you have to think about when it helps you achieve this. You need to try to think about some of the best ways of helping your business conduct the right research to help it grow, and these are some of the reasons why that matters so much.

You Need a Grasp of Data

Data is one of the key aspects of running a modern company, and this is something you should be looking to make the best of. There is so much data and information that modern businesses are needing to deal with these days, and you need to come up with some of the key ideas that will help you improve upon this. You have to make sure you understand the data your company is dealing with, as this can have a huge impact on the way your company can be more successful.

It’s Important to Know Your Market

Knowing your market is one of the best ways of being able to take things that further and be successful as a company. You have to conduct market research in order to get a better idea of your audience and the people you should be trying to focus on. Now, there are a lot of factors that play a role in helping you to know your market and understand your business more effectively. And research is one of the most pertinent ways of being able to achieve this moving forward.

Have a Plan for the Future

You need your company to have a plan for the future, and carrying out statistical analysis of data, as well as things like meta-analysis can help you when it comes to improving the business and making plans for the future. You need to know about the best ways of being able to achieve success and have a plan for the future, which is something that research and analysis can help with, as it gives you the information and data you need to plan for the future.

You have so many ideas that you can use when it comes to improving your business and planning for the future. There are a lot of ideas that you can use to help you when it comes to making the most of this, and there are a lot of elements that play a role in this. Trying to focus on conducting research and understanding data is really important when it comes to taking things to the next level.

Small Business Cash Flow Management: Why It’s Important and How to Deal With Problems

/in /by

StrategyDriven Managing Your Finances Article | Small Business Cash Flow Management: Why It’s Important and How to Deal With ProblemsThe businesses that fail to manage cash flow effectively are often doomed to failure. Put simply, you need to have more cash coming in from sales than you have going out for expenses. Being able to pay your debts on time and ensuring you have enough reserves to cover all expenses is key to success. Read on to find out why cash flow is so important and how you can manage it effectively.

Why Is Cash Flow Important to a Small Business?

  • Business expansion – You can’t grow without having cash reserves on hand. Keep money set aside for opening new premises, buying new stock, and marketing to new clients
  • Manage emergencies – You never know when disaster might strike; having enough in the bank to cover emergency kit repair, economic downturns, and other unforeseen circumstances is vital
  • Cover debts and protect your business credit – Proper management of your cash receipts means you’ll always be able to pay your debts and suppliers on time. This means your business credit score will stay healthy and you won’t get trapped in a disastrous debt cycle
  • Negotiating power – Being able to pay suppliers upfront can often lead to more favorable terms and discounts. Plus, not needing to take out credit can give you more flexibility to negotiate

Common Small Business Cash Flow Problems

  • Not holding enough reserves – You should always aim to have cash in the bank to cover at least three to six months of expenses. Small businesses that fail to do this can get hammered by unforeseen costs, go into steep debt, and potentially close completely
  • Growing too fast – While this seems counterintuitive it’s actually incredibly common for new businesses. For example, you could take on 100 new orders in one week but won’t receive payment for these for at least 30 days. Meanwhile, you still need to cover the cost of those sales. Without adequate cash reserves, you’ll fail to meet your orders
  • Late payments – Almost every single small business, freelancer, and entrepreneur in America has faced the problem of late payments of invoices. You’ll almost certainly need to dip into cash reserves to cover costs until you get paid
  • Bad pricing – Sell your goods and services at too high a price and you’ll scare off customers; going too low can lead to business failure. Many brand new small businesses struggle to hit this balance and can find cash reserves taking a hit

Examples of Cash Flow Management Problems in Business

Let’s take a look at a typical cash flow statement to use as an example. Remember cash flows aren’t like your income or profit and loss statement. A cash flow simply records when cash goes in or out of your business for any reason. Any movements in red represent cash going out in our example below.

Cash flow from operations for XYZ Company
Net income $50,000
Additions to cash
Depreciation $4,000
Increase in accounts payable $3,000
Subtractions from cash
Increase in accounts receivable ($40,000)
Increase in inventory ($15,000)
Net cash from operations
$7000
Cash flow from Investing
Purchase of equipment ($3,000)
Cash flow from financing
Notes payable $1,500
Cash Flow at 31st August 20XX
$5,500

Looking at XYZ’s performance it seems we have a clear victim of overtrading. With a huge increase in accounts receivable it looks like the organization has taken on a big order and has spent a significant sum of cash on inventory and equipment to fulfill it.

However, all of those sales have gone into accounts receivable, meaning it won’t receive this cash for at least a month or more. This leaves the company on dangerously low cash reserves of just $5,500 to cover any emergencies this month.

In addition, there’s always a risk that these clients come up short or pay late leaving a very risky $40,000 the company might not receive any time soon.

Plus, looking at the low increase in payables it seems like XYZ company is paying its debts on time or early. It might want to negotiate better payment terms to improve cash flow or it may even need to miss payments if cash runs out.

Finally, with the large purchase in inventory to cover the order at almost half the cost of sales, it suggests XYZ might be pricing its goods far too low and might want to up prices.

Effective Cash Flow Management Tips for Small Businesses

  1. Don’t be too lenient with customers – You’ll want to strike a balance between giving your clients enough time to pay but not being too charitable. Don’t be afraid to chase unpaid invoices and know you’ll always have the option to take formal action where necessary. If you’ve built a good relationship from the start with clients and suppliers this shouldn’t be much of an issue, though
  2. Build a cash reserve – Always try to put some of your profits aside each month into your emergency cash reserves. Having liquid cash on hand is absolutely essential for the survival of any small business. This should be around three to six month’s worth of your average expenses. You can use the rest of your cash to invest and grow
  3. Get good accounting software – The larger your business gets the more complicated the transactions become. If you’re still using simple spreadsheets it can be easy to lose track of invoices and payments. It’s almost always worth the extra cost to get a good piece of management software in to keep you on track
  4. Cash flow is more important than profit – Your business can show a profit on paper but if you don’t have the cash in the bank to back it up you could still end up failing. Liquid cash should always be your number one priority when managing any business. If you check your earnings against your break-even point, but money still feels tight, it’s likely you need to fix your cash flow
  5. Encourage early repayments – You’ll want your clients to pay you as soon as possible so you might want to put early repayment discounts on your invoices to encourage faster receipt of cash. Plus, if you have a large invoice it’s worth splitting it up over several payments to make it easier for customers to pay back and you’ll be guaranteed some cash every month
  6. Reduce or delay expenses – Conversely, while you want customers to pay quickly, you should be trying to extend your own payment deadlines as long as you can. Try to negotiate extensions where you can and opt for Net 30 vendors where possible. Plus, you should always be looking for ways to boost efficiency and decrease expenses
  7. Manage your inventory – If you run an e-commerce store or retail business that needs a lot of stock you’ll need to manage it carefully. Buying too much can mean your cash flow takes a hit while buying too little means you’ll struggle to fill orders. You might want to consider buying some stock management software to track seasonal variations and other fluctuations

Conclusion

While small business cash flow management might seem a little confusing at first, with a little time and effort you can really start to see where you can make some savings. If it’s not something you’re actively managing right now, we highly recommend making it your number one priority.

Those organizations that successfully manage cash flows are much more likely to succeed and turn a tidy profit. Remember to keep chasing your invoices, ensure you always have a healthy cash reserve, and reduce your expenses as much as you can.

9 Keys to Success Strategy Guide

/in /by

StrategyDriven Entrepreneurship Article | 9 Keys to Success Strategy Guide1. Start with a Clear Purpose.

Successful entrepreneurs are driven by a purpose bigger than themselves. While they realize they need to make money to be sustainable, none of the 100 entrepreneurs we interviewed mentioned money as a primary driver. It is not what motivates them. Instead, they want to do something they are passionate about, solve a problem that intrigues them, create jobs in their town, provide phenomenal customer service, and change the world in their own way.

2. Build on What You Know.

Successful entrepreneurs build companies in industries they understand. About one-third of the entrepreneurs we interviewed worked in the industry in which they started their business. Another third had worked in a related industry. The remaining third were serious and frequent users of the products, so they understood the industry from the customer’s perspective. The better you know your industry, the greater your chances for success.

3. Launch Opportunities Not Ideas.

Ideas and business opportunities are not the same thing. Our business failure rate is high because people launch ideas. A true business opportunity meets the conditions of the NERCM test: (1) Need, (2) Experience, (3) Resources, (4) Customers, and (5) Model. Your chances for success go up significantly when you prove there is a need for your product, you have adequate experience, you bring together sufficient resources, you have customers committed to buy, and your business model is sound.

4. Develop Your Supporting Cast.

Successful entrepreneurs thrive on the experience of others. They recruit talented individuals to fill in the gaps in their skill set. They build teamwork at three levels: (1) they create a “Brain Trust” of mentors with expertise they need, (2) they build a core team of partners who join them in the venture, and (3) they develop strategic partnerships with individuals and companies who can help them grow their business. Talented teams can go further and faster than any individual working alone.

5.Maximize All Available Resources.

Effectiveness is achieving important company objectives. Efficiency is doing it with as few resources as possible. Successful entrepreneurs are masters of efficiency – they have a real knack for finding and utilizing a host of resources other than money. They borrow rather than buy, defer compensation, partner with their first customers, negotiate excellent terms with suppliers, and use someone else’s plant rather than build one – they think resources first, cash second.

6. Work with a Zealous Tenacity.

Successful entrepreneurs are high energy people. They have two related and vital qualities: (1) a tremendous zeal for their business, and (2) a dogged tenacity to win. Zeal is the fire that fuels the venture, and tenacity is the trait that produces the results. These two qualities combined get you through the challenges of building a business and dramatically increase your chances for success.

7. Build a Community of Raving Fans.

Customers approach companies with preconceived notions of how they should be treated. If their expectations are met, they are basically satisfied. The problem is, satisfied customers are not always loyal customers – they will patronize competitors’ businesses as well. Giving customers more than they expect to receive will set you apart from your competitors and help you create a community of raving fans that love your business.

8. Pivot to Multiple Revenue Streams

Winning entrepreneurs continue to seek out and develop multiple streams of revenue. They do this by (1) offering related products to their growing customer base, (2) finding new markets for their growing product line, and (3) utilizing their growing resources to create new ventures. Over time, they end up juggling a reasonable number of projects in the same or related industries. Having multiple revenue streams reduces the vulnerability of a single product line, and increases the chances for long-term success.

9. Serve Your Broader Community

Successful entrepreneurs are intimately involved in the fabric of their communities. They are using their resources to assist individuals and organizations that need their skills, experience and expertise. They are addressing issues in education, literacy, health care, and the environment. Their communities end up saying, “This business supports us, so let’s support this business,” even though this was not the original intent of the service offered. Serving communities is good for everyone.

About the Author

Mike GlauserMike Glauser is an entrepreneur, business consultant and university professor who has built successful companies in the retail, wholesale, and consulting industries. His passion is helping people create successful businesses, gain financial freedom, and live the life of their dreams. His latest book, Main Street Entrepreneur: Build Your Dream Company Doing What You Love Where You Live (Entrepreneur Press), is a roadmap for doing exactly that. Learn more about Mike at: www.mikeglauser.com.

Top Tips For Starting A Construction Business

/in /by

StrategyDriven Starting Your Business Article | Top Tips For Starting A Construction BusinessStarting a construction company can be a smart move. There is always a need for skilled construction companies and it can be work that is incredibly rewarding and enjoyable, plus you will find that every project is different so it can be varied too. While there are many perks to starting a construction company, you will also find that it does pose a few challenges and it is quite different to starting a typical office-based business. With this in mind, read on for a few tips that will hopefully help you to hit the ground running and find success.

Secure Enough Funding

One of the biggest challenges for starting a construction company is securing enough funding. There are many startup and ongoing costs to cover, such as vehicles, equipment, staff, materials, marketing and insurance. You need to have a high-quality business plan in place, calculate your startup costs and then find ways to secure this funding. A few options for securing funding include:

  • Investors
  • Bank loans
  • Crowdfunding
  • Grants
  • Savings

Recruit The Right People

One of the biggest challenges when starting a construction company is recruiting the right people. Obviously, you want to find people that have the required skills and knowledge to take on different kinds of projects, but this is not the only consideration. You also need to make sure that you are recruiting people that will be a good fit, have a strong work ethic, good communication skills and the right personality for your business. Keep in mind that you can use training to bring people up to speed, so it is smart to focus on finding those that will be a good fit.

Rent Heavy-Duty Equipment

When you take on construction projects, you are likely to require heavy-duty equipment like cranes for lifting. You will find it best to rent this equipment from specialists, such as Birmingham crane hire companies that can provide you with industry-leading equipment for affordable prices. They will be able to make the best recommendations based on your needs and ensure that your projects go smoothly.

Create A Strong Online Presence

As with any industry, you need to have a strong presence online in order to win over potential clients and compete with other companies. You should invest in professional web design and digital marketing to create a strong presence for your brand and then use social media to promote your business, showcase your work and engage with potential customers. It is hard when getting started, but you need to build an online portfolio of your work that will help you to show your experience and what you are capable of.

Encourage Word-Of-Mouth Marketing

Word-of-mouth marketing remains hugely important when it comes to construction, so you need to encourage this within your network in order to find new opportunities. You will also find it helpful to network at every opportunity to build brand awareness and to form important connections that could lead to more work down the line.

Hopefully, these tips will come in useful and help you to find early success with your construction business.

8 Best Degrees for Entrepreneurs – Launch Your Business the Right Way

/in /by

StrategyDriven Entrepreneurship Article | 8 Best Degrees for Entrepreneurs - Launch Your Business the Right WayEntrepreneurship is one of the most rewarding paths to take in life, but it’s also a risky road fraught with dangers. If you’ve decided that entrepreneurship is right for you, then there are certain degrees that will give you a much better chance of success. The following qualifications will help provide the foundation you need when starting your own business:

1. Economics

If you’re going to start a business, then it’s important to know how businesses operate. A degree in economics will teach you about microeconomics and macroeconomics, which will give you a solid understanding of how companies work from top to bottom. You’ll learn about different types of markets so that, when creating your company, customers have plenty of options from which to choose. And if you plan on hiring employees, then an economics degree will teach you how to run a company so that it makes the most profit possible.

2. Mathematics

Whether studying pure mathematics or applied mathematics, this course of study will provide all sorts of knowledge that is essential for entrepreneurs. You’ll learn the fundamentals like writing equations and simplifying them before moving on to calculus and differential equations. If your business requires any sort of statistical analysis (which it probably does), then you should opt for a degree in statistics instead. Like with economics, studying math will give you a better understanding of how businesses operate and make decisions so that when it comes time to make yours, you’re prepared.

3. Engineering

An engineering degree is one way to avoid getting ripped off when looking for help with certain issues facing entrepreneurs such as patents. An engineer’s job isn’t just about creating solutions though: it’s also about identifying problems before they occur by making sure things are built properly from scratch. Studying this course of study will give you the technical know-how needed to be successful alongside the critical thinking skills needed to identify problems before they become too big to solve.

4. Sales and Marketing

Entrepreneurs are natural salespeople, but that doesn’t mean that you can just skip out on studying this course of study altogether! Whether you go for a degree in marketing or public relations, learning the ins and outs of salesmanship is essential for anyone looking to start their own company. This way, when creating your offer, there will be no doubt in the minds of potential customers about why they should buy from you.

5. Economics/Mathematics

Pairing two degrees is always an excellent choice, since you’ll learn twice as much for half the price. Studying both economics and mathematics will give you a strong foundation for starting your own company. You’ll understand both the practical and theoretical sides of the business, giving you a better chance to succeed than those with one or the other.

6. Business Administration

Studying this course of study will give you all the skills needed to manage a business properly. You’ll learn how to create budgets and forecasts as well as how to make plans for future growth and profitability. Since every entrepreneur needs at least some knowledge of these topics, it’s advisable that anyone looking to start their own company go for a degree in business administration if possible.

7. Entrepreneurship

A degree in entrepreneurship is one of the few ways you can study something that doesn’t exist anywhere except in your mind. You’ll learn all about how to start and market your business while also gaining some insight on what might go wrong before it does. If you want to be truly successful when launching your company, then this course of study will give you everything you need to know.

8. Law

With lots of accredited online law schools to make your learning easier, a law degree will open doors for you throughout the business world. You’ll learn how to draft contracts and create protection for your company while also learning how to resolve disputes and litigate in case any roadblocks come your way. If you plan on joining an existing company instead of creating one from scratch, then earning a degree in this field is virtually essential.

Studying any of these things will provide you with all the knowledge you need to start or run a company. Whether it’s a degree in entrepreneurship, economics/mathematics, sales and marketing, engineering, law, or business administration, this is one of the best ways to make sure your company thrives from the very beginning.