The Things Every New Business Needs To Succeed

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StrategyDriven Starting Your Business Article |New Business|The Things Every New Business Needs To SucceedThere are a lot of things that every new business needs to succeed. Having a plan, understanding your market, and building a brand identity are a few examples. Creating a plan for your business is one of the most important things you can do to ensure success. If you want to start your own business, it’s not enough just to have an idea anymore – now you need to know where to start and what steps need to be taken in order for it to succeed.

Every entrepreneur starts off with a dream and a passion for what they want to do. However, a lot of people fail to turn their dreams into a reality. So it really does help to have a bit of an idea of what you need to do in order to get to where you want to be.

What Makes a Successful Business?

The things that make a business a success can vary. For some, it will be their marketing strategy, for others it will be their product idea. But, it’s safe to say that there will be some unity in most cases. And so, if you like the idea of starting out right, it’s a good idea to follow a few set steps.

Getting to Know Your Business Goals

Business goals are essential for any company to succeed in the long run. The goal of a business is not to make a lot of money or be famous – it’s to make a profit and provide its customers with what they need.

It is important for a business owner to know their business goals and how to measure them in order for them to improve their company’s performance. This is an effective way that you can understand your business objectives.

In order for them to understand their business goals, you should identify your organization’s vision, mission, and values. It is also important that you set up clear limits on what you want from your company in order to determine how successful it can be.

Developing Your Company’s Mission Statement & Values

Companies need to have a clear mission and vision to guide them while they’re growing. This can be done by creating a mission statement and values that will foster the company’s culture, ideals, and beliefs.

Essentially, a mission statement defines what you do and why you do it for your customers. It should be concise, but focused on what inspires you to wake up in the morning and work hard.

A company’s values should also guide its decision making process, so knowing what your company stands for will help all of your employees work together towards a common goal. That’s why we recommend having clear intentions with your values so that everyone knows where they stand at any given moment.

Identifying Your Target Audience and Reaching Your Customers

Next, you need to make sure that you know who your audience is. While the target audience is an important step in any marketing strategy, it is not always easy to identify who they are and how best to reach them.

The first step for identifying your target audience is understanding what your business does and who its customers are. If you know this, then it will be easier for you to figure out who your ideal customer is. You can then create profiles on who they are and work out a strategy to target them.

Creating a Successful Marketing Strategy that Gets Results

Now you need to work out how you’re going to target your audience by marketing to them. A successful marketing strategy depends on three things: where you want to go, what you sell and how you sell it.

This starts with your company’s core offer and understanding what makes a product or service stand out from its competitors. This will help you create a marketable message. You then need to choose the platforms you’ll deliver this on too.

In order to make sure that your marketing strategy is successful, you need to make sure that it aligns with your company’s goals. Your business will be able to grow as a result of the strategy as well as the product or service itself.

How to Create an Online Presence with Social Media

Right now, having some kind of presence on social media is always going to be a great idea. But if you want to create your online presence with social media, the first thing you need to do is build up your following.

This means that you need to know how to create content that will engage your target audience on your chosen platform. You need to interact with them and get them to engage with your content or move to your site. You could even look to do paid campaigns or work with influencers to make this happen.

Working With Experts That Can Add Value to Your Business

But then also, it’s important to recognize the value in working with experts and professionals in your business. It’s important to get the right expertise for your business and the best way to do that is by finding people who can add value to your business.

To do this, you need to identify who and what you need. Do you need an accountant or financial specialist? Or maybe you need complete on-site & in house welding services for your product? It might even be a great idea to hire a business expert or consult to help you grow and reach your goals too.

Having Determination To Succeed and A Vision of What Success Looks Like

It is easy to be determined when your vision is clear and you have the drive to achieve success. You will know that you are on the right path when things get tough and you don’t stop.

It’s not always easy to see success because we can’t predict how different things will turn out in the future. But we do know what it takes to succeed. It’s taking action and working hard every day, no matter how much it seems like nobody wants or likes what we do.

Small Business Cash Flow Management: Why It’s Important and How to Deal With Problems

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StrategyDriven Managing Your Finances Article | Small Business Cash Flow Management: Why It’s Important and How to Deal With ProblemsThe businesses that fail to manage cash flow effectively are often doomed to failure. Put simply, you need to have more cash coming in from sales than you have going out for expenses. Being able to pay your debts on time and ensuring you have enough reserves to cover all expenses is key to success. Read on to find out why cash flow is so important and how you can manage it effectively.

Why Is Cash Flow Important to a Small Business?

  • Business expansion – You can’t grow without having cash reserves on hand. Keep money set aside for opening new premises, buying new stock, and marketing to new clients
  • Manage emergencies – You never know when disaster might strike; having enough in the bank to cover emergency kit repair, economic downturns, and other unforeseen circumstances is vital
  • Cover debts and protect your business credit – Proper management of your cash receipts means you’ll always be able to pay your debts and suppliers on time. This means your business credit score will stay healthy and you won’t get trapped in a disastrous debt cycle
  • Negotiating power – Being able to pay suppliers upfront can often lead to more favorable terms and discounts. Plus, not needing to take out credit can give you more flexibility to negotiate

Common Small Business Cash Flow Problems

  • Not holding enough reserves – You should always aim to have cash in the bank to cover at least three to six months of expenses. Small businesses that fail to do this can get hammered by unforeseen costs, go into steep debt, and potentially close completely
  • Growing too fast – While this seems counterintuitive it’s actually incredibly common for new businesses. For example, you could take on 100 new orders in one week but won’t receive payment for these for at least 30 days. Meanwhile, you still need to cover the cost of those sales. Without adequate cash reserves, you’ll fail to meet your orders
  • Late payments – Almost every single small business, freelancer, and entrepreneur in America has faced the problem of late payments of invoices. You’ll almost certainly need to dip into cash reserves to cover costs until you get paid
  • Bad pricing – Sell your goods and services at too high a price and you’ll scare off customers; going too low can lead to business failure. Many brand new small businesses struggle to hit this balance and can find cash reserves taking a hit

Examples of Cash Flow Management Problems in Business

Let’s take a look at a typical cash flow statement to use as an example. Remember cash flows aren’t like your income or profit and loss statement. A cash flow simply records when cash goes in or out of your business for any reason. Any movements in red represent cash going out in our example below.

Cash flow from operations for XYZ Company
Net income $50,000
Additions to cash
Depreciation $4,000
Increase in accounts payable $3,000
Subtractions from cash
Increase in accounts receivable ($40,000)
Increase in inventory ($15,000)
Net cash from operations
$7000
Cash flow from Investing
Purchase of equipment ($3,000)
Cash flow from financing
Notes payable $1,500
Cash Flow at 31st August 20XX
$5,500

Looking at XYZ’s performance it seems we have a clear victim of overtrading. With a huge increase in accounts receivable it looks like the organization has taken on a big order and has spent a significant sum of cash on inventory and equipment to fulfill it.

However, all of those sales have gone into accounts receivable, meaning it won’t receive this cash for at least a month or more. This leaves the company on dangerously low cash reserves of just $5,500 to cover any emergencies this month.

In addition, there’s always a risk that these clients come up short or pay late leaving a very risky $40,000 the company might not receive any time soon.

Plus, looking at the low increase in payables it seems like XYZ company is paying its debts on time or early. It might want to negotiate better payment terms to improve cash flow or it may even need to miss payments if cash runs out.

Finally, with the large purchase in inventory to cover the order at almost half the cost of sales, it suggests XYZ might be pricing its goods far too low and might want to up prices.

Effective Cash Flow Management Tips for Small Businesses

  1. Don’t be too lenient with customers – You’ll want to strike a balance between giving your clients enough time to pay but not being too charitable. Don’t be afraid to chase unpaid invoices and know you’ll always have the option to take formal action where necessary. If you’ve built a good relationship from the start with clients and suppliers this shouldn’t be much of an issue, though
  2. Build a cash reserve – Always try to put some of your profits aside each month into your emergency cash reserves. Having liquid cash on hand is absolutely essential for the survival of any small business. This should be around three to six month’s worth of your average expenses. You can use the rest of your cash to invest and grow
  3. Get good accounting software – The larger your business gets the more complicated the transactions become. If you’re still using simple spreadsheets it can be easy to lose track of invoices and payments. It’s almost always worth the extra cost to get a good piece of management software in to keep you on track
  4. Cash flow is more important than profit – Your business can show a profit on paper but if you don’t have the cash in the bank to back it up you could still end up failing. Liquid cash should always be your number one priority when managing any business. If you check your earnings against your break-even point, but money still feels tight, it’s likely you need to fix your cash flow
  5. Encourage early repayments – You’ll want your clients to pay you as soon as possible so you might want to put early repayment discounts on your invoices to encourage faster receipt of cash. Plus, if you have a large invoice it’s worth splitting it up over several payments to make it easier for customers to pay back and you’ll be guaranteed some cash every month
  6. Reduce or delay expenses – Conversely, while you want customers to pay quickly, you should be trying to extend your own payment deadlines as long as you can. Try to negotiate extensions where you can and opt for Net 30 vendors where possible. Plus, you should always be looking for ways to boost efficiency and decrease expenses
  7. Manage your inventory – If you run an e-commerce store or retail business that needs a lot of stock you’ll need to manage it carefully. Buying too much can mean your cash flow takes a hit while buying too little means you’ll struggle to fill orders. You might want to consider buying some stock management software to track seasonal variations and other fluctuations

Conclusion

While small business cash flow management might seem a little confusing at first, with a little time and effort you can really start to see where you can make some savings. If it’s not something you’re actively managing right now, we highly recommend making it your number one priority.

Those organizations that successfully manage cash flows are much more likely to succeed and turn a tidy profit. Remember to keep chasing your invoices, ensure you always have a healthy cash reserve, and reduce your expenses as much as you can.

Creating More Fun Working Conditions

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StrategyDriven Managing Your People Article |Fun Working Conditions|Creating More Fun Working ConditionsAny company can make the working conditions at their company an asset for their employees. A report by CMI Workplace found that if workers feel happy in their office surroundings they are less likely to be stressed at work. This is especially relevant given more than half of Americans report exposure to unpleasant and potentially hazardous working conditions and nearly one in five American workers are exposed to a hostile or threatening social environment at work, as reported by the American Working Conditions Survey. Here’s some examples of how companies are making working conditions at their companies more fun today.

  • Relationship-driven leadership consulting firm SkyeTeam, based in Broomfield, Colorado doesn’t just tell its staff that working with the firm will be fun. They mean it. To help its stakeholders to remember, expect, and demonstrate fun, four of their eight core values are “Have Fun.” Founder and CEO Morag Barrett says, “Having fun is infectious. It immediately breaks down barriers and connects people—clients and associates. When we share experiences and enjoy each other, it’s easier to figure out the real problems and the best solutions.” CSO Ruby Vesely, who has been known to dress up in a KISS rock band costume, considers the whole team as personal friends. “I don’t get up in the morning to work for myself, I work for us, our families, each other.” COO Eric Spencer agrees. Spencer recently designed and delivered a safety program for the oil and gas industry. He feels his genuine, and friendly banter before and during sessions helped to build trust with his groups. The result: the client experienced a 17 percent drop in safety problems. “We show up as ourselves. We’re authentic, prepared, we listen, and have fun. And get great results,” says Spencer.
  • When noted author and celebrated raconteur Peter Jensen was editing articles for Sunset magazine, the Building Editor brought eight hats to work one day. Why? “We used to have some fairly deadly department meetings until the editor had us each put one on and conduct ourselves with a little more levity than usual,” says Jensen. “We had a good laugh and got a lot done.”
  • “Tax season is a time of stress, long days, and longer weeks. In fact, we work pretty much every Saturday from January through April 15th,” said an associate with Horovitz, Rudoy & Rogan, a Pittsburgh, Pennsylvania CPA firm. To lighten things up, they observe Saturday Fun Days with themes like Alternate Profession Day, College Day, Pajama Day, and Cartoon Day. People dress in clothing and decorate their offices to match the day’s theme. “At noon we vote on the best outfit and office. We keep a leaderboard in the lunchroom and at the end of the season, the top three scores win gift cards,” the associate added. “Even our customers get involved; calling to see what Saturday’s theme is going to be so they can come dressed to ‘fit in’.”
  • At the Denver, Colorado and San Francisco, California offices of Gusto’s, a payroll software business, workers enjoy a “no shoes” policy. Cofounders Josh Reeves, Edward Kim, and Tomer London were all raised in “no shoes” households, so when they started working together out of a house, there was never a shoe in sight. When the company moved to its first conventional office, the no-shoes tradition came too. “Companies can be sterile and cold,” Josh told The New York Times. “We want our workplace to be really comfortable. In some ways, people feel more like themselves when their shoes are off.” Visitors to the company can see over 600 pairs of shoes stored in slots at the entrance, and they are asked to remove their own shoes. Then they’re given a choice of wearing slippers, spa sandals, or company-branded socks. Gusto’s mission is to help people find a community at work and let work empower them to lead better lives, and the “no shoes” tradition ties into it. Traditional work footwear is also not a requirement at Houzz, an interior design application firm located in Palo Alto, California. On their first day of work, workers receive complimentary slippers to wear around the office.
  • Online retailer Zappos, headquartered in Las Vegas, Nevada, has a huge reputation as a fun place to work. The dress code is extremely casual, and anyone entering the building wearing a tie has it cut in half and pinned to the wall in the lobby. Desks have stuffed animals, and Blue Man Group-designed sculptures line the walls and emit sounds. “Create fun and a little weirdness” is written in the Zappos corporate charter.
  • The president of Belmont University in Nashville, TN took a sabbatical to learn more about high-performing organizations by visiting successful companies. He learned that there was a strong correlation between performance and having fun, so when he returned, he created a Fun Committee and placed them in charge of creating more fun on the campus from events, activities, celebrations, and more.
  • Perkins Coie, a law firm headquartered in Seattle, Washington, has a Happiness Committee made up of anonymous employees, any one of who can decide, “It’s time to do something.” Committee members perform anonymous acts of kindness, such as leaving gifts at workstations. Offices also hold monthly birthday parties, regular happy hours, and spontaneous celebrations throughout the year, like a picnic on the roof, and Popsicle socials. An elaborate, annual holiday party features skits from new attorneys and appearances by the firm’s managing partner, who has appeared as many characters including a Vegas showgirl, Dolly Parton, and an Oompa Loompa.
  • About once a month, employees at TechniGraphics, the engineering data company headquartered in Wooster, Massachusetts, completely empty the building during lunch time. They may go bowling, ice skate, or meet at Acres of Fun, where they can drive go-karts or play mini golf. Richard Danby, human resources director, said these and other social events are needed because employees work in units separated from each other. “This is an opportunity for a morale builder and an opportunity for employees to get to know each other better,” he said. Sometimes they host onsite events like chili cook-offs and ping-pong tournaments, as long as they promote fun.
  • “At Zoom, employee appreciation and happiness is not a day, it’s a way of life,” says Heather Swan, Chief Happiness Officer/Strategic Alliances. A video communications business headquartered in San Jose, California, the company offers the expected Silicon Valley benefits. “Our executive team and volunteer employee Happiness Crew also deliver happiness to our employees, customers, and community through unique activities, perks, experiences, and more,” Swan adds. Specific programs include:
  • Reimbursing workers for any book they/their family members buy, with no cap
  • Reimbursing workers for fitness or gym memberships/classes, with no cap
  • Executives taking turns hosting monthly breakfasts for their teams

As you can see by the above examples, having fun doesn’t have to take a lot of money or time. Start small with something your employees are excited about and build from there. As your workers better enjoy their work environment, they can’t help but better enjoy their work as well, and as a result they’ll be more productive and excited about who they are working with, who they are serving and what they are accomplishing for the company and themselves.

About the Author

StrategyDriven Expert Contributor | Bob NelsonStrategyDriven Expert Contributor | Mario TamayoBob Nelson, Ph.D., is the leading worldwide advocate for employee recognition and engagement. Mario Tamayo is a principal with Tamayo Group Inc. and has more than 30 years of experience in maximizing human performance. Together they co-authored Work Made Fun Gets Done! East Ways to Boost Energy, Morale, and Results (Berrett-Koehler, 2021).

Time For a New Career? Here’s How to Scope Out Your Options

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StrategyDriven Professional Development Article |New Career|Time For a New Career? Here's How to Scope Out Your OptionsRight now, there are a lot of people looking for new roles. The reasons for this are various and as individual as each person searching the jobs boards. A major cause of people looking for employment is the coronavirus and Covid-19 pandemic. Throughout the course of the pandemic, many people lost their work – whether that was due to the company they worked for collapsing or being made redundant. Many people also took time on furlough or between jobs and have had time to reconsider what they’re doing, realising that the work they’re currently carrying out isn’t for them and that they’d like to try something new. Whatever your reason for looking for a new job, you can rest assured that there are plenty of options out there. Here’s how you can whittle them down and find the right position for you and your needs.

Industry or Sector

First, consider what industry or sector you want to go into. Many people have a vague idea of what kind of work they’d like to do and would find fulfilling. Knowing a general industry or sector can help you to determine what roles are available and conduct more research into them. Some popular industries and sectors include retail, hospitality, healthcare, IT and more.

Training

If you’re entering a completely new field, you may find that certain roles require training or qualifications that can take time, money and effort to receive. You need to determine whether this is something that you are willing to do to be able to land the position you have in mind. If you want to go into medicine, you could have a long, seven year degree ahead of you. If you want to become a security guard, you may need to undertake security guard training. If you want to become an accountant, there will be all sorts of specific courses to the area that you live in that you will need to complete. Determine whether you’re willing to undertake the necessary training before setting your heart on any given role.

Location

The location of a job can determine whether it’s right for you. You need to determine where you want to live and then you can start job hunting within the area. The good news is that most roles are available in most areas. For example, if you want to become a social media manager, chances are, most locations will have a company in need of this. However, for more specific roles, you may need to relocate. For example, if you want to become a marine biologist, chances are, you’re going to have to be willing to live near the sea.

Salary

Of course, salary should be a consideration when applying for roles. What amount of money do you need to be able to provide yourself with a good quality of life. This figure will differ from person to person. If you have dependents, chances are, you’ll need to earn more than someone who lives alone and independently.

These are just a few areas to mull over during your job hunt. Hopefully, each will help you to find a position that works for you!

4 Steps to Build a Strong Board of Directors

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StrategyDriven Managing Your Business Article |Board of Directors|4 Steps to Build a Strong Board of DirectorsBuilding a board of directors can be difficult, but getting it right is essential. A well-run board of directors will help you achieve your strategic goals and ensure the long-term success of your business, whereas a disorganized and inefficient board will stunt business growth and harm profits and revenue.

Here are four steps you should take to build a strong board of directors:

Step 1: Choose board members wisely

You need to elect board members who have skills and expertise that align with your strategic business goals. Ideally, board members should have leadership and management experience in a field that is related to your business. They should also show a commitment to your organization and have the time and energy to fulfill their board responsibilities.

Step 2: Elect an experienced chairman

The chairman will preside over board meetings and facilitate good board governance and leadership. They will take on a senior and crucial role in your board of directors, and you must choose the right person for the job.

Research the characteristics of a strong chairman and elect someone who has several years of experience in a similar role. You need someone that can advise you on the best board governance practices, after all. Remember that the chairman you elect will have a significant impact on the overall effectiveness of your board of directors, so don’t make the decision lightly.

Step 3: Select the right number of directors

You must consider how many board members you will need for your company. According to advice on thebalancesmb.com, “five to seven members is plenty for small organizations. Larger, more complex organizations might want to select between 9 and 11 members at the minimum.” Various studies have found that organizations with a smaller board size tend to perform better than those with an excessively large board of directors.

Keep in mind that not every organization has a board of directors, and you might not need a formal board. An advisory board may be a more suitable option, especially if your company is small or a start-up. You can then transition to a formal board of directors when your company grows and becomes more complex.

Step 4: Offer effective board orientation

When a new member joins your board of directors, you must provide them with an effective orientation to prepare them for the role. Make sure this covers the roles and responsibilities of board members, your company background, and your strategic objectives.

An effective orientation process will make new board members feel welcomed and keep them engaged in their work. It will also provide them will the tools and knowledge that they can hit the ground running and add value to your organization.

Summary

Assembling a board of directors that will add value to your business can be a difficult and daunting task. However, you must get it right, as your board will play a vital role in business growth and development.

Follow these steps to create and maintain a strong board of directors that will drive profits and help you achieve your long-term objectives.