When your business starts to stagnate or head in the wrong direction, its easy to blame external forces. While the economy, customer demands and other broad factors do have an impact, there are actions you can take inside your business to minimise or avoid any negative impacts.
Keeping up with Demand?
Have you experienced a rapid phase of sales growth followed by an equally rapid drop off in demand? This could be due to an inability of your internal systems to keep up with this rapid growth.
You may be perfectly capable of selling hundreds of items a day but can you deliver that many? How quickly can you restock? If you can not quickly follow through with the sales and restock for new sales in a rapid turnaround time frame you will disappoint your newly acquired customers who will not return for repeat sales. If negative feedback or shortcomings are not addressed then public opinion and word of mouth will stop your growth in its tracks.
If you are aiming for growth, you need to ensure that your internal systems are scalable and actually capable of achieving and following through with your growth goals. Make sure you have extra capacity or the ability to rapidly add the capacity you need to give your business the room it needs to move forward.
Room to Move?
If you are operating at full capacity, you and your business don't have any room to move. With no room to move, you will likely need to hire additional staff to achieve higher capacity. Hiring the right staff is a long process and will not be conducive to rapid growth.
The best way to achieve rapid growth is to ensure that as many of your internal processes as possible are automated. Automating processes with the use of technology will free up your time, and the time of any staff, to focus on value adding and growth driving initiatives and production.
Keeping Pace with your Customers?
Your customers have expectations, you need to keep up with them in order to keep them happy. This means you need to stock the goods that they want to buy, when they want to buy them. Deliver them in a timely manner and restock as soon as possible. Everything needs to be right and it all starts with a well trained sales team.
Your sales team needs to be familiar with your customers and their needs. If they are not familiar with their needs, it is impossible for their service to meet their expectations. This is a handbrake of growth that can only be overcome by having the right staff or by retraining your existing team so they are capable of understanding your ideal customer and giving them a high value service experience.
Sales Up, Profit Down?
It can be a shock wen you have a really busy month and you feel like you are making a small fortune, then at months end your bank account is lower than usual. You need to understand the profitability of your customers. This may sound odd but some of your favorite types of customers may not actually be as profitable as you think. Your margins may be a lot tighter then you think.
Assess the cost, return and margin on each segment of your business. Perhaps, some of the customers you are targeting are not as valuable as you think, maybe the margins on your products are not covering your overheads and the more of those products you sell, the less profit you have at months end as you have no time left to focus on selling the larger margin items.
Cash Flow Pinched?
The flow of cash in your business is one of the main challenges that all small business owners face. The time between when you buy an item, sell it and when your customer finally pays for it can put a lot of pressure on a small business. Constraints on cash flow will impact your ability to respond to changes in the market and will limit your ability to respond to and take advantage of new opportunities.
The best way to reduce the pinch on your cash flow is to use automated accounts receivable technology to chase up debtors while you focus on the important things. Most cloud accounting software can automatically send out debtor statements to chase up overdue payments. Following up regularly can help to reduce debtor days which in turn reduces interest charges for your business and boosts the cash available for you to use to achieve your growth goals.
Do You Actually Have an Eye on the Ball?
To make effective decisions you need accurate, reliable data. With up to date information on the performance of your business, you can pivot your business to take advantage of every opportunity. With a cloud based solution, kept up to date, you don't have to wait until the end of the year to see how you are doing, or even the end of the month. You can assess performance in near real time and make the changes you need in order to optimise your operation.
Good quality forecasting tools can also help you to gauge what may happen in the future and how you could best respond.
The performance of your business will rise and fall with the impact of economic forces outside of your control, however, you can take a number of action from within your business to minimise these impacts. Planning and understanding your business inside and out is key. Utilising modern software and systems can help to automate some tasks, build capacity and improve cashflow. The start of the new financial year is the perfect time for you to assess your business and highlight areas for improvement. It is also a perfect time to implement any new technologies that may help to move your business in the right direction.
This advice is general in nature. Every situation is unique and requires tailored advice. MBP have the expertise to help you make informed decisions about your business and areas that could be outsourced to preserve cashflow and create efficiencies while you focus on the things you love doing, including growing your business. Our Cloud Solutions team can advise of technology to streamline your business operations. Get in touch for a free consultation by emailing firstname.lastname@example.org or call us on (07) 378 6655.