RUNNING A SUCCESSFUL BUSINESS

Running a successful business requires a delicate mix of many different ingredients. By paying attention to these key ingredients you are sure to be onto a winning recipe.

A Vision with a Plan - Dreams meeting Reality

One of the most important aspects of running any business is to have a clear vision of what you want that business to be like. What do you want to be known for in the marketplace? What kind of clients do you desire? What level of service do you want to provide? Do you want to be "one among many" or do you want to be considered a leader in your industry?

A business plan which incorporates your vision is perhaps one of the most powerful tools of business. Whether you are contemplating starting out in business or have been trading for 20 years, spending the time to develop a business plan is a worthwhile exercise.

A business plan, in effect, transforms your dreams and vision into a tangible plan. Once you have spent the time to develop your plan, do not let it gather dust. Review your plan on a regular basis to remind yourself of your original goals and to help you find focus and motivation for the future.

Set aside time on a regular basis (at least quarterly) for strategic planning, allowing yourself time to work on your business rather than in it. Remember to update your business plan to ensure that it reflects your changing business and its evolving goals for the future. 

Structure

When starting up in business take time to ensure that you are trading within the most appropriate business structure. Whether a company, partnership or sole trader entity is most appropriate will depend upon your circumstances. However issues such as asset protection, income splitting and other tax implications should be considered. You may also wish to consider taking advantage of the “Qualifying Company” and “Loss Attributing Qualifying Company” (LAQC) regimes. These are issues that should be discussed in more depth with your professional advisor. 

Financing 

It is imperative that the business has the working capital/cash flow it needs in order to operate at optimum productivity. Too often fundamentally good businesses are strangled by insufficient capital.

Before buying or starting up in business, consideration should be given to the necessary financing requirements, for both working capital and long term capital funding. If outside finance is necessary try to find a financier that understands your business. When structuring debt within a business due consideration should be given to factors such as:

- Interest rates

- Cash flow requirements

- Other charges

- Ability to make repayments

- Term

- Tax implications

- Security to be given

- Flexibility and control

 

Record Keeping ‑ What you can Measure you can Manage 

Take responsibility for producing financial information that you can understand and use to maximise your business. If you are not confident in this area spend some time with an accountant, book keeper or mentor to implement recording systems that you are comfortable with and that give information that you can rely upon.

Keep up to date with your record keeping. Remember your financial accounts are a valuable management tool, they are not merely an Inconvenience insisted upon by the “tax man”. Set an annual budget and use it to compare your actual financial results on a monthly basis. You may find it helpful to break certain key areas such as sales down into daily targets - this will ensure you have your finger on the pulse of the financial heart of your business. 

Management Skills

A common thread in failed businesses is a distinct lack of management skills. All too often a talented trades person will decide that it’s time to “go it alone”, unfortunately with a total disregard of the range of skills required to run a business.

Over night that trade's person becomes the accounts person, marketing consultant, debt collector and human relationships manager. In many cases this transition eventually proves to be too much and many important aspects of the management are neglected or ignored.

If you fall into this category do not despair, once you have recognised the importance of good management skills there are many ways in which you can develop your skills or supplement them with the expertise of others. A mentor, who you respect and feel comfortable with and who is willing to share their knowledge, is invaluable. Also speak to other successful managers and do not be afraid to ask lots of questions. Join networking groups, take courses, read business improvement books e.g. E-myth Revisited, use government funded services, or seek professional advice. But whatever you do, do not under estimate the value of sound management skills.

Get the Right Team on Board

This is probably one of the most crucial and yet, often most overlooked aspects of running a business. As a business owner you need to hire the right type of people and also be prepared to fire the ones that don't perform.

There needs to be a commitment to training employees and ensuring the team knows what is going on. Holding regular staff meetings as a means to keep people informed is a great way to gain the buy in of your team. Additionally, be open to ideas that may come from your team members.

It will be very difficult to achieve your long-term goals if your team members either don't understand your vision or haven't bought into it. When you hire people, make sure they understand what you are trying to achieve. Whether you are dealing with new members of the team or seasoned folks, everyone must be willing to be a part of the plan. When they are, you will have a much greater chance for success.

Marketing and Networking 

One of the most important aspects of running any type of business is to know whom your market is. You can't be all things to all people. Contrary to what some would like to believe, not everyone is his or her market. There is a much astute saying in marketing, "If everyone is your market, then no one is your market." The clearer you are on whom you are targeting the easier it will be to focus your efforts on reaching those individuals and/or companies.

Take a much focused approach to reaching your market. Just because you have determined who your market it, doesn't mean you are done. You must now be willing to have a very focused approach to targeting your market. Whether that is through direct mail, advertising, newsletters, informational seminars or any number of methods, you have to be willing to keep your name in front of your market.

When planning your marketing do not forget your existing customers. We are all familiar with the 80/20 rule, 80% of your profit often comes from 20% of your customer base however how much energy are you giving these key customers? Is the majority of your effort directed at those problem customers that add very little value to your business? Spend time to develop a solid relationship with your key clients.

Also do not forget to nurture and reward your “advocates”, often you will find that certain customers are continually singing your praises - look after these customers, give them reason to rave and reward their referrals. When spending your marketing dollar try to think outside the square, be creative and make it memorable (within reason of course). The more impact you have the longer your potential customers will remember you and the longer that marketing dollar will continue to work for you. Never under estimate the value of networking within your business and personal life. Sometimes customers seem to come from the most unlikely sources. 

Profitability

Whether in a manufacturing or service industry, accurate costing of your product or service is essential. Know what your profit margin should be and monitor it regularly against your budget. Calculate your break even point so you know what sales you should accept and which sales should be left for your competitors.

Optimise stock and capital equipment levels to ensure that you are not over capitalised and monitor overheads religiously. Remember there is no point in making those extra sales and putting in those extra hours only to be making a loss on each sale.

Hard Work & Time Management 

Owning your own business is hard work especially in the initial start up years. Sometime it may seem an impossible juggling act; however there are ways of maximising your efforts. Time management techniques such as prioritising tasks and planning your month/week/day ahead of time can help. Learning to effectively delegate is also a valuable skill to learn. “Work smart” - take time to work on the business (or task at hand) before leaping into the detail.

Most importantly look after yourself, remember 10 minutes spent on a task with a refreshed clear mind could be as productive as one hours work if your mind is cluttered and exhausted. Reward yourself every now and then for your hard work. 

Passion

To really succeed you need a true passion for what you are doing. Given the investment of time spent in your business it is important that you receive enjoyment and fulfilment from your business. Passion is the factor that will give you extra motivation when times are hard and the vision for a successful future.

Sharing your passion and vision with your staff and other team members as well as family and supporters will help give them a sense of “ownership” and motivation similar to your own. Staff and supporters are your most important resource, it is important that they feel a part of the vision.

The X Factor 

Running and marketing a business is an ongoing process. The greatest mistake people make in virtually any industry is they try something once and expect instant results. You must be in this for the long haul. Have total confidence in yourself and the belief that you can achieve your dream. Be open to opportunity and new ideas; do not be afraid to step outside the square to achieve what you believe in.

Running a successful business requires a delicate mix of many different ingredients. However by paying attention to these key ingredients you are sure to be onto a “winning recipe”.