Ready Your Business for Success
The findings of a small business survey1 were discussed at a Business Thought Leadership Panel held in Toronto, ON, in May 2011. Moderated by the Business Development Bank of Canada2, the panel included experts from Business Innovative Solutions3, evancarmichael.com4, LinkedIn5, and Sage 50 Accounting6.
This paper highlights four key best practices for business success as discussed by the panelists, including: focusing on what you are good at, hiring the right people to help you, managing your finances, and setting up effective, low-cost marketing and sales.
Focus on what you're good at.
"I need to do everything" is a mantra many business owners fall into. However, rarely is someone good at all tasks required to run a business. Understanding your strengths and core skill set is important when prioritizing how much time to spend on various business activities. Focusing your efforts on the tasks in which you excel (as long as some are the revenue-generating kind) is a key element to running a successful business. As for the other essential jobs that need to be managed, look at outsourcing to people—a topic we'll cover later in this paper—or technology instead of trying to tackle them yourself.
Take the task of dealing with government-mandated financial reporting—identified by survey respondents as one of the least favourable aspects of doing business in Canada. As Dan Mason, President, Chief Executive Officer of Business Innovation Technologies explains: "A big challenge for small business owners, including myself, is that we view regulatory reporting as a non-productive task because it does not generate revenue." So it's no surprise that this type of financial tracking quickly becomes a low priority for many.
A certain amount of bureaucracy or financial compliance is unavoidable, however. Fortunately, this is where businesses can turn to technology—in this case, accounting software—to help make the process as easy as possible. According to Hugo Croft-Levesque from Sage 50 Accounting, "Using a tool like Sage 50 Accounting breaks down financial reporting into simple steps that any user can follow and frees up business owners for more strategic activities."
Many business activities—such as purchasing inventory, assembling items, paying bills, creating invoices, and generating sales—can easily be captured by accounting software as the transaction occurs, making overall financial management easier and more reliable. "So when it comes time to submit sales tax information, for example," says Hugo Croft-Levesque, "accounting software can automatically gather the pertinent information and remit it to the government." Instead of spending hours or days sifting through papers and receipts to track down required data, a business can meet regulatory financial requirements within a matter of minutes and quickly get on with the business of generating revenue.
Review all your options when it comes to approaching a business task you are uncertain of or simply aren't skilled enough to accomplish in a timely manner. Your time is valuable and is not always best spent on business related to-dos that are not part of your core skill set. We've covered a great example on how to outsource to technology to meet some of your business needs, now let's take a look at another option—leveraging people resources.
Hire the right people to help you.
One of the key challenges to growing a business involves hiring people. If you are a solo entrepreneur, leveraging technology will make you more efficient but you still only have so many hours in the day to focus on your business. Substantial growth can only come from hiring great people to run the day-to-day operations, allowing you to focus on more strategic projects.
"Even if you start by hiring someone for one hour a day to manage data entry, you now have one extra hour to focus on your business," advises Evan Carmicheal of evancarmicheal.com. Outsourcing smaller tasks, by using part-time workers through employment services—without having to go through the expense of a full-time hire—is a risk-free way to start growing your team.
It's important to note that hiring the wrong person could cost you thousands of dollars in training and lost time. "A bad hiring decision is a lot more costly than anyone actually realizes," declares Dan Mason. "Business owners tend to allow the excitement and optimism of a great interview to dominate their hiring decisions instead of also relying on background checks and references."
So how would you go about finding the right person? Using the services of human resources recruiters is a good place to start if you don't have the time to manage all aspects of the hiring process. Other great options include investigating internship programs through high schools and universities for short-term and inexpensive hires, cites Dan Mason. Gary Fearnall of LinkedIn points out that free tools like LinkedIn are great for recommendations and searches for candidates who meet the right criteria.
Bottom line, a great hire provides enormous payoff. A core team of passionate people will always go the extra mile for the company they work for. This is especially true for smaller businesses—the first few hires are key, you need them to be the driving force of success for your business.
Manage your finances.
Many entrepreneurs in the business market still tend to rely on gut instinct instead of detailed financial data to help guide their business decisions. In fact, when Dan Mason approaches business owners and asks them to calculate and identify their top 10 products by cost of sale, many are surprised at the results—the products requiring the most effort and time aren't always generating revenue for the business.
In today's competitive marketplace, Hugo Croft-Levesque points out how imperative it is for business owners to have reliable data at their fingertips to answer such questions as "What is my cost of sale by product?" "Do I have money to cover the bills this month?" and "What customers owe me money and how much?" A disciplined and timely approach to financial management is key to running a successful business. Waiting for bank statements to arrive in the mail (information that can be upwards of 30 days old) or digging through a box of receipts and/or invoices to reconcile financial accounts or determine a cash flow position is not a viable way to manage a business.
So where do you start? According to survey respondents and our expert panelists, efficient invoicing and billing, managing costs, and cash flow are the top three financial management tasks for business success. Shaun Rath, from the Business Development Bank of Canada, asked the panelists to discuss each of these in more detail:
Invoicing and Billing
Accurate invoicing and billing provide a firm foundation for generating cash for your business. The quicker invoices are sent out, the quicker they get paid.
"Invoicing becomes a nightmare if you're not using accounting software," according to Evan Carmicheal. You want to look to software that can automatically create professional-looking invoices for your business. Manual invoices are inefficient to create, difficult to track, and often hard to collect from customers. Keeping track of paper invoices from vendors and suppliers can be error-prone and costly—you run the risk of making duplicate payments to some suppliers or missing others completely.
And for service-related enterprises, the ability to track time for billing purposes is also important. You want to avoid guessing how many hours you actually spend on a project by logging your time as you progress through your work.
Cash Flow
Establishing a process to manage invoices and bills will also help you consolidate receivables data (money you receive or expect to receive from customers) and payables (bills that are due to suppliers and vendors in the future)—a necessary step in determining cash flow for the business.
All the panelists agree that preparing accurate cash flow projections is one of the most important things a business can do—alerting you to potential problems before they arise. Having ample cash on hand ensures that bills can be paid on time and allows for investment back into the business.
Managing Costs
"Revenue-generating activity must support your business expenses," states Hugo Croft Levesque. The best strategy for any business is to accurately keep track of expenses on a regular basis and plan ahead to ensure you have the cash on hand to pay your bills. As Evan Carmicheal points out, it can be as simple as downloading bank statement information into accounting software that auto-categorizes expenses and income to quickly give you an accurate picture of business expenditures.
As a business owner, you cannot afford to rely on gut instinct to run your business. Having a disciplined approach to invoicing and billing, cash flow, and cost management will save you time and money in the long run. As your tracking and understanding of your financial position improve, you'll be better equipped to make productive business decisions.
Set up effective, low cost sales and marketing.
After taking control of your business finances, marketing and sales fall next on the list of key elements that drive business success—yet few businesses have dedicated plans around this crucial undertaking.
In fact, according to survey respondents, many businesses are simply uncomfortable with sales functions. "Assertive selling techniques, like outbound calls, can be a struggle for owners," mentions Evan Carmicheal. These tasks tend to be avoided or dropped lower on the priority list. Marketing is a great way to bridge that gap, establishing a more subtle selling approach.
Let's look at a simple and cost-effective sales and marketing strategy that business owners can put into practice immediately: social media.
Leveraging social media is an excellent way to establish a consistent marketing and sales practices for little or no money. Gary Fearnall of LinkedIn underscores that "social media channels such Facebook, Twitter, and LinkedIn, are phenomenal tools for businesses." In the past, many have shied away from social media because of its immediacy, interactivity and lingering availability of information, but it's no longer an option not to participate. "Having a social media strategy in place is a must for all businesses," maintains Fearnall.
"LinkedIn is most well-known as a job hunting tool but it can also be considered a great sales tool," continues Fearnall "When calling on or researching potential customers, a bevy of information—where someone went to school, where they've worked, current work responsibilities etc.—is available through LinkedIn to help drive that sales conversation. You can also use LinkedIn as a customer relationship management tool by linking your email application into LinkedIn, allowing you to track conversations during the sales cycle—a critical function for most businesses."
"You also have an opportunity to create company pages and fan pages on Facebook and LinkedIn that help build your reputation and create connections with people," resumes Fearnall. "All it takes is regular monitoring to ensure you are staying abreast of questions, comments, concerns and accolades—all of which can be used to better your business and validate your reputation in the market."
Twitter is another tool for broadcasting messages and sharing information with people in your network that you want to reach out to and maintain a dialogue with. It's a non-intrusive and interactive way to engage customers on a regular basis.
And it's all free—so why wouldn't you take advantage of the power of social media? Many business owners—including panelist Dan Mason—who've embraced social media can attest to receiving in-bound calls and e-mails from clients they would never have done business with before.
Next Steps.
Looking for more detailed information on how to run your business? The Sage 50 Accounting Business Resource Centre contains the latest industry news, articles, and check-lists for business owners who are looking to successfully grow their operations.
The panelists agree that a great first step for any business to start readying for success is by using accounting software to help set up an organized and accurate process for managing your finances. We suggest you take a look at Sage 50 Accounting. It allows you to do what you do best—run your business—and gives you access to a diverse line of accounting options as your business changes and grows.
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