Keeping any business afloat for a quarter century can be a challenge, as we have recently seen with General Motors and Chrysler. Who’d have thought that we would be witnessing the demise of large businesses such as these auto giants, or the investment banks, media companies and airlines we have also lost. These situations illustrate that no business is immune from the effects of an economic downturn. Small businesses are especially susceptible to difficulties during such downturns.
What kind of business perseveres during difficult times? What are the qualities that allow businesses to be successful even in the face of adverse conditions?
My own small business recently celebrated 25 years in business. I develop and market accounting software systems for small businesses. These include payroll, inventory control and other such accounting modules. My average user has been with me 17 years. What has been the major factor in my survival? It is because I pay attention.
I pay attention to my customers’ needs. I pay attention to what things cost me. It is lack of awareness that can sneak up and put you out of business. An unhappy customer lurking out there, feeling ignored and unsupported can be a real horror, especially if that customer makes his or her unhappiness known to others. Runaway overhead costs can put you behind the cash flow eight ball faster than anything else. Failing to collect your accounts receivable can damage your cash flow beyond repair.
It can seem overwhelming to pay attention to all the aspects of a business. The way I have dealt with this issue has been to limit my growth, and to limit the amount of new business I take on each year. This works for me because I am a one-person business. By staying small, I have the capacity to listen to each of my customers, limit the amount of overhead expense, and make sure I collect all my receivables each month.
This strategy cannot work for all small businesses. I have not had to worry much about marketing, as my customer base provides both new projects and sufficient referrals each year to keep things going at a brisk, but not daunting, pace. Many businesses in a variety of industries must market themselves in order to be successful. Many small businesses need growth to survive.
Being a small business owner implies that you have to keep your eye on ALL the balls in the air coming at you. Careful planning can be your greatest asset in dealing with all those balls. You need a yearly plan to help manage your expenses, and you need to monitor it and stick to it. That way you know what is being spent and where. You need a marketing plan in place so you know how you are going to generate new business. You need a customer service plan in place so you can make sure that your customers are cared for in the way you would want to be taken care of. In other words, you can leave nothing to chance.
If you are completely on your own, or if you do not feel expert enough in these areas to design and execute these plans yourself; help is available. The value of a good team of advisors cannot be overstated. A CPA can help you with the financial planning and accounting needed to keep the financial end of your business in shape. A good business attorney can help you in a number of ways, including choosing the best structure for your business (corporation, LLC and so forth). A good business attorney can review leases, advise you about trademarks, and assist you in establishing employment policies. Being careful and attentive in your hiring decisions can bring you skilled and hard working employees who will help your business grow.
In coming articles I will get more specific about several of these areas. Next time we will focus on the financial aspects of your business.
I’d like to close with a story about a fellow who embodies small business success. This man is a realtor. I tell people that when you look up realtor in the dictionary, there is a picture of Jason Boggs. When he is your realtor, he is your advocate. He listens carefully to your needs. He tells you the truth. He acts in your best interest. He does what he says he is going to do. If someone needs the services of a realtor, I always recommend him. As a result of the way he operates, he has been, and continues to be very successful. His value system is at the core of how every business should function.
So there you have it. You have to pay close attention, do what you say you’re going to do, and act in your customers’ best interest. We will discuss how best to do this in future articles.
GO Industries LLC