5 steps to a better businessToo many businesses fall over because the owner has not established efficient business systems.
The results are all too familiar: tax obligations are not met, debtors go uninvoiced or uncollected, there is one cash flow crisis after another, poor recordkeeping and costings lead the business down the slippery path to failure. Here are some tips on good business housekeeping.
To be in business and to remain in business, become a business person! In order to run a business, you must be businesslike. It's not sufficient just to be very good at what you do. Lots of people who are 'very good at what they do' have failed. The common cry: "I'm far too busy for that" is also no excuse. Are you 'too busy' to be a competent business person? If so, your business won't last long.
To be a business person you have to make the effort to become something of an 'all rounder', not just a specialist player. You can produce the best service or the finest widgets in the world, but if you don't establish good business systems then you are not a business person and your business will likely fail.
How good business systems will help you
Good business systems will make your business stronger, more efficient and easier to run. They will also make your business far more attractive to future buyers because the business will be seen as an independently viable unit and less of a one person band.
Here are five steps to a better business:
1. Good record-keeping and book-keeping will help you keep on-side with the Inland Revenue Department. If you're able to meet your tax obligations through sensible planning you'll sleep better at night. You won't fear a tax audit and you'll know how your business is doing. You won't be caught by a 'sudden tax demand out of the blue' because no such thing exists for a well-run business. You should always know which taxes are due, and when. You'll suffer less stress.
2. Good business planning will help you set goals for your business, with specific steps on how to achieve these goals. Without goals, where do you think you're going? Running a business without goals is like turning up at an airport and saying, "I'd like to go somewhere." The person at the ticket desk would think you're clueless, to say the least!
3. Good cash flow forecasting will enable you to anticipate a possible cashflow problem (something all growing businesses experience from time to time) and take steps before the problem becomes a crisis. Banks will respect you if you anticipate problems and make plans in advance. Banks will not respect you - and will indeed categorise you as incompetent - if you tell them you've been 'caught out' by a crisis. Banks don't like crises. They like you to go to them well in advance of any possible crisis with a plan in hand. This shows them you're in charge of your business.
4. Good creditor and debtor control will improve your cash flow because you establish favourable terms with your suppliers and you invoice promptly and collect debts on time. Sloppiness in this department is one of the most common causes of small business owners experiencing stress and anxiety. Pay your creditors on time. Don't let your debtors use you as free banking service.
5. Good pricing and costing will ensure that you run your business in a competitive but profitable way. Poor skills in this regard could mean that you're operating at unrealistic levels - even at a loss.
You don't have to be an expert at everything. For example, you might hate bookkeeping. Fine - but do get someone else to do it for you - don't rely on a shoebox for your accounts!
Becoming a better business-person is something you keep working on and will lead to having a "better business". It's a journey, not a destination.
This article was provided by The Small Business Co - tsbc.co.nz
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