Before we go into some business tips for the SME owner, let’s start by defining a small business.
What is a small business?
There are multiple ways to define a small business, depending on which definitions you follow, but the EU definition is as follows:
Small Business = less than 50 employees and turnover under £10 million
Medium Business = less than 250 employees and turnover under £50 million
At the start of 2016 there were a record 5.5 million private businesses in the UK. Of those 99.3% were small businesses and 99.9% were SMEs (statistics taken from the Department for Business, Energy and Industrial Strategy).
There are two million more SMEs now, compared with the year 2000, and many of these new business owners may never have run a business before. So there are more and more business owners seeking help, advice and business tips.
So what are the most important business tips to help you, the business owner, achieve business success.
Scaling your business
Being able to scale your business and achieve growth is key to creating a valuable business that you can later sell on. And scalability is easier when you keep it simple.
A lot of business owners end up diversifying, until they have such a broad list of products and services that it becomes difficult for anyone other than the business owner to run the business.
The three elements of scalability
This is one of the most important business tips and will ensure your business doesn’t become overly complicated and ultimately difficult to scale.
Choose a small set of products or services to sell and ensure that what you’re doing is teachable, valuable to your customers and repeatable.
That’s it! The secret to scaling is simply selling fewer options to many more people.
This gives you much greater potential for business growth.
Create a business plan
If you’re the captain of a ship but you have no destination in mind, no maps and charts, and no course set, what are the chances of you getting to where you want to go?
Creating a business plan will ensure you know where you’re heading so that you can put in place all the things you need to get there. It doesn’t have to be a fixed plan – your goals may change over time – but if you don’t have one then you’re sailing blind then business growth is likely to be haphazard.
Cash is king
Good cash flow is critical and the availability of cash (or the lack of it) can sink a business fast.
Take a look at the cash in your own business and brainstorm ways to improve the flow. Keep your mind open to new possibilities and see if there are other options. Just because something isn’t traditionally done in your industry, it doesn’t mean you can’t be the first.
Things that can help to improve cash flow include:
· Ask your clients to pay you sooner. Always send a statement as soon as the payment day comes round, and consider sending a friendly reminder before the due date.
· Invoice more often! There is no law that says you can only invoice once a month.
· Consider offering less than 30 days terms. Give a “due by” date.
· Encourage clients to pay upfront. Potentially you could offer them an incentive for upfront payment.
· Set-up automated payments via GoCardless.
In summary, you need to speed up how people pay you, and prevent late payment before it happens.
Applying just some of these business tips will put you on a quicker path to business success.
BizSmart helps business owners of small and medium sized businesses to create value and scale their businesses through sound practical business support by providing insight, clarity and business support with a real determination to help you succeed. You can access blogs like this and more besides through our free SmartRoom service here.