There really has never been a better time to start a business right now. Yes, there is plenty of uncertainty … And … there is massive opportunity.
Being in business for yourself can be exciting … and scary. So what are some basics you can master to help you push forward… even if you have doubts and fears?
Knowledge and information are truly powerful … and as I say, more businesses fail from a lack of knowledge over anything else (yes, including capital!).
So here are 5 basics to get right to get better results from your business … and they are simple enough to start working for you today:
1) Adopt the right mindset.
My definition of a successful business is a profitable, commercial enterprise that works… without you. When you started, you were probably doing a lot all by yourself. Is that still the case?
If you aren’t thinking about how to eventually run your business without having to work in it every day… you just have a glorified job.
To adopt the mindset of an entrepreneur, you need to see challenges as opportunities, know the “rules of the game” of business, learn how to keep score and finally, learn to have fun. So what are the “rules of the business game” you need to follow?
Learn to sell things people want to buy (instead of what you want to sell), know your cost of buying a customer and test and measure everything you do. How do you keep score?
Know your numbers inside and out … keeping maniacal track of your cashflow. Remember, you need to generate consistent cashflow before you consistently generate profit, so make sure you have a program in place to do so.
Also understand that you can have more fun in business by tracking your numbers and making the competitive side of business a game you and your team can play.
How can you increase your cashflow 10% in a week? How many more customers can you call in day? Who can set up the best “Thank You” system that most impresses your customers … and generates the most referrals?
Building a business is hard work… but you can always find ways to keep the “fun” in the “fundamentals.”
2) Plan and know your numbers BEFORE you go into business each day.
The more you know your numbers now, the better off you’ll be today, tomorrow and forever.
What’s a good benchmark for judging numbers on a new initiative or test? I’d say always increase the expense side by at least 30%… and decreases your revenue side by at least 20%. Then take a new look at your projections. Is there still cashflow or profit?
For your ongoing business, have a daily handle on the number of customers it takes to generate sales, cashflow and profits.
Let’s say you’ve figured out you need 12 sales per day to profit. To get to that number, you also figure you can convert 15% of your prospects into an actual customer. Armed with this information you can see you’ll need to get at least 80 people through your doors to be profitable. Now your money question becomes, “How can I get 80 people through my doors?”
A focus on the numbers means you’re making decisions on information, instead of guesses, wishes or whims. It also allows you to better plan and strategize the steps which will lead you to profit, which really is the most important part of your business.
3) Learn to love profit.
That said, you can’t have a successful business without profit, so if you have misgivings about making a profit or have the mindset that profit is somehow bad or evil or shameful, you’re going to have a hard time generating any in your business.
As long as you give value to your customers in the exchange and transaction and your product is something your customers want, need or desire, you in turn create value. You should be rewarded for that result … and that reward in time will show up as profits in your company.
Remember… even non-profits need “profits” to survive.
So if you are really anti-profit and can’t seem able or willing to shift your mindset, maybe you should re-think your position as a business owner, because there are a lot easier ways to do good than to put yourself through a bad and costly entrepreneurial experience.
4) Create marketing programs that buy customers.
You can’t always have a business that offers something cheaper, faster or even better. But marketing is one area in your company where you can create big advantages over your competition.
If you adopt the mindset that your goal is to generate leads over building a brand … and that your job is to “buy” as many customers as you can with your campaigns at the lowest possible price, you can turn any marketing expense into an investment.
Look at it this way …
If you could create a system that cost you $20 to get a new customer, but that customer spent $200 per visit, you’d track and continue to spend on that campaign, wouldn’t you? How about if it costs you $100 to get a new customer, but that customer only spent $50 with you?
One campaign is a winner and one should be killed before it kills your business … unless the lifetime value of that $50 first-time customer is very high.
If you’re not spending at least half of your time working on marketing, (with the other half focused on the distribution and customer service aspects of your product or service, NOT its production) … you are wasting valuable resources that could be making you loads more money.
5) Learn to Work ON … and not IN your business.
If you are a builder and spend your time hammering nails, you are not growing your business. Instead, learn “how” to build your own business … and be prepared to hire others for the “work,” while you work on the things that produce turnover and profits.
Understand your job as a business owner is not to bake the cakes or build the deck … your job is to systematically grow your business. Courage and confidence comes from learning as much as you can about business as possible, and being able to be flexible and stay on track when things go wrong … as they no doubt will.
No one is perfect in business. But having a good handle on the basics will give you the certainty to overcome any challenge.