5 Practices Every Business Owner Must Do To Grow Their Business
The Small Business Administration states, “About half of all new establishments survive five years or more and about one-third survive 10 years or more”.
Let’s look at this again. 50% of new businesses survive 5 years or more. That means 50% fail. That’s a scary thought. We need to not just ask what the chances of failing are, but why so many businesses fail.
How can we prevent falling onto the negative side of that split success rate? We’ve compiled a list of 5 things that every business owner must do to grow their business (and hopefully avoid failure). Regardless of what industry you work in, these 5 practices are essential to maintaining a successful business.
1. Elevator Pitch
The elevator pitch is a 30 second explanation of your business that captures the essence of what you do and why people need your product or service. An elevator pitch should be enticing and easy to understand. A good way to end an elevator pitch is with a firm statement that will leave a person questioning how could they possibly survive another moment without your service or product.
2. Consistent Cash Flow
Cash Flow is oxygen to a business. Imagine a bucket. You fill that bucket with water (cash inflow) and it slowly comes out of the bottom (cash outflow). If you don’t have consistent cash flow, you’ll be in trouble very quickly.
What comes in and what goes out is important to know, but what’s more important is the timing of it all. You have to learn to forecast, or predict future cash flow, to prepare your business for earning the right amounts. If there’s more cash going out then coming in, you need to quickly find a way to reverse those processes before it’s too late.
Marketing is the way of letting others to know about your product or service. Let’s first make something clear… word-of-mouth is not enough. Word-of-mouth is the minimum that a business owner should be doing to market their business. You have to think outside of the box and connect with people in ways that word of mouth can’t.
Marketing can include social media, videos, speeches at events, flyers, email marketing, networking and more.
Did you know that 8-10% of your monthly revenue should be spent on Marketing per month? That’s right. If your monthly revenue is $10,000, that means $800-$1,000 should be spent on marketing.
4. Build Relationships
People buy from people they like. Point blank. If you spend time developing (genuine) relationships with others, you are more likely to sell to them and increase repeat customers. For example, let’s look at a restaurant. The owner who makes it a point to have their staff develop friendly relationships with customers during their stay will increase the chances of having those customers return.
Marketing is a great way to build relationships, whether it’s through social media, emails, branding, etc. However, you shouldn’t treat all customers in the same manner. A vegetarian wouldn’t be interested in an email campaign for a restaurant that’s promoting chicken or steak platters.
You can begin to get to know your audience better by funneling their interests and categorizing them into different demographics. Create different ad campaigns for different groups of people to show that you understand their needs and interests.
5. Know Your Numbers
Accounting is everything to a business. If you don’t know your numbers, you don’t know your business. Every business owner should have a Profit & Loss Statement (P&L) and Balance Sheet that they evaluate each month. If not you, there needs to be someone on your team who can dissect your P&L, know your numbers inside out, and be able to discuss what potential threats or red flags are present. Reports are nothing without the analysis. Make sure you have a comprehensive understanding of your business’s data to prevent making any wrong decisions with your numbers.
If you're already practicing these 5 tips, you're in good shape. Each task is just as important on their own as they are together for maintaining a successful business. If you've realized you still need to implement a few of the practices, don't worry. We at Financial GPS are committed to helping you grow your business, so check out our blog for more tips and advice.