When you’re operating a small business, there are a lot of hurdles you’ll have to clear. Unfortunately, a lot of small businesses fail, and it’s often due to complications outside of their control. However, despite success having a little bit of luck involved, there are things you can do to mitigate these risks. Below, we will cover just a selection of approaches you can choose to take.
Figure out your business finances
First and foremost, you need to figure out how much you have in the way of business finances. Figure out how much you personally need for your life, and figure out how much money is leftover for your business. After that, check out your cash flow, and try to figure out how much money you are putting into your business per week, and how much you’re taking in. Figure out where you can cut costs and increase profits, but…
Don’t sacrifice quality for short-term profit
One of the biggest mistakes small businesses make is when they allow the quality of their services to suffer all because they want to get short-term profit. While this can serve as a bandage, it’s not a proper fix to whatever ails you. You may be able to make money by making more profit at the time, but you’re sacrificing an advantage you may have. You should also be mindful that you don’t jack up prices too much.
Your customers have gotten used to a certain level of quality, and if they notice that your quality has suffered, they may not be as loyal as they used to be, especially if someone else is doing what you’re doing already. It may hurt to try to hold the line, make less money than you used to, and it may even cause your business to fail. However, if you want long-term success, your best bet is to maintain quality, while seeking alternative ways to offset losses or increase costs.
Look for ways to improve efficiency and reduce costs
A big problem that companies have, even successful ones, is having needless costs and time wasted. Not only can this cause your company to suffer financial harm, but it can also lead to employers cutting costs in worse areas. For example, firing employees instead of finding ways to cut costs with the fewest firings is only going to lower morale, which can snowball out of control for you. Instead, look for ways to better utilize your employees’ time and labor.
A good example of a way to do this is to look into internal documentation, basically creating a database in your company of info your workers need to know and/or refer to. This cuts down on research in a lot of companies, such as marketing or consumer-facing industries, which saves a lot of time. Knowledge workers spend 2.5 hours per day doing research.
However, despite knowing that you should avoid firing employees if you can avoid it in these situations, there may be no other reasonable choice. For example, if you’ve found a better way to do a certain task an employee was originally responsible for, then you either need to let them go or find something else for them to do.
Consider a small business loan
This is not something that should be done as a first resort, but it’s always an option to consider if you think you can weather the storm. If you want to get small business loans, there are certain things you have to do to qualify for one. For example, you need to be able to show that your business has adequate cash flow, otherwise they may deem it as too high of risk to give you the loan.
If you don’t have the cash flow, but believe that a small business loan could turn things around, another option would be to put something up as collateral. This is not necessarily a safe decision to make, given the fact that the gamble might not pay off. Yet, it’s a valid option nevertheless.
Keep your customers
This is self-explanatory, but there are a lot of things you can do to keep your customers. For small businesses, they have a lot to do to compete with larger businesses, including price, service, and more. Unfortunately, competing with Dollar General’s pricing model is not going to be easy for a grocery store, so the best solution is to convince your customers that sticking with you is the best idea.
This can be accomplished through a variety of ways. Using a grocery store as an example, having happy employees, relatively reasonable prices, and quality service are huge points of appeal for a lot of people. People tend to be willing to pay a little more if the service and atmosphere is superior. Further, make sure that the store is clean, organized, and that items are kept in stock.