Running your small business day-to-day
Posted on 11/07/2016
 

It can be a challenge to stay on top of your business, because it certainly won’t manage itself. The more effectively you can fasten the nuts and bolts of business operations, the more bottom line you can realize for the long-term. 

Small-business owners often get held up in the administrative day-to-day, which can deter from the big picture. The important financial levers to oversee are overhead costs, cash flow, and successful marketing. Read on for tips on how to control these gauges.

 

1.       Overhead costs. Overheads are the fixed costs of running your business and typically include things like phones, office supplies, salaries, leases, insurance and utilities. To see if your overheads are outpacing your sales, divide overheads by annual sales and constantly monitor this ratio, particularly if your profit is assuming a downward trend. If it is, look for the three usual suspects: advertising, vehicle expenses, and telecom. Scattered advertising is usually a money sink, so be sure to stick to your marketing plan and target your advertising. Also examine vehicular use: consider paying an allowance by distance and promoting carpooling. Finally, beware the excessive costs of data usage with phone packages. Set a budget for your employees linked to productivity and sales.

2.       Cash flow. It’s crucial that you forecast and closely follow your business’ cash flow. By utilizing a cash flow forecast, you’ll be able to plan for rough patches. First, put time and thought into incorporating accurate figures. Any assumptions you make should also be called out. Second, rely on solid market research as well as your sales history to estimate sales. Take into account peak seasonal periods, as cash flow is hardly consistent. Third, estimate costs, and here keep your salary at a realistic level. Fourth, check your capacity, and ensure that number makes sense. Fifth and last, scour your industry for benchmarks. If your figures are markedly different from the average, you should have a decent explanation.

3.       Effective marketing. Identify your target market, tailor your message to them and employ the marketing methods most likely to reach them. Bear this advert formula in mind when designing your advertising: Attention, Interest, Desire, and Action (or AIDA). You’ll want to capture their attention, stir interest, spark desire, and prompt them to action. Repetition will drive the idea home. Always favor advertising with measurable outcomes. For example, you could include a special promotion code on a monthly newsletter to keep track of how many new sales it inspires. For online advertising, choose your options wisely based on overlap with your target market. And remember, social media is your friend: build buzz with potential and existing clients through your various accounts.

If you can intelligently rein in your small business’ overhead costs, cash flow, and advertising, you’re well on your way to running a successful business. 

 

Danielle Issa, Beirutista 

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