So, you think your small business is on good footing? Sales are up and deals are easier to come by than ever.
That’s a perfect spot to be in, but many business’s operations run deeper than just that top line. Keeping the pulse of your company’s health is an on-going process even during prosperous times.
Being so committed to the details of your business’s health can be laborious, but it’s necessary to be as detailed as possible so you can modify some of your assumptions and update projections as the situation changes.
Here are five steps that you can take to always know how your business is doing beyond the day-to-day:
1. Monitor Cash Flow – A cash flow statement shows how money moves throughout your business. It’s vital to understand any cash flow problems that you might have. If you’re having cash flow issues, minimize fixed expenses. Carefully select your suppliers and see if there are any ways you can cut costs. It’s also important to collect from customers (accounts receivables) who have outstanding debt with you. By properly managing your cash flow, you’re getting a significantly more accurate read on the financial health of your business. Your cash flow projections can tell you exactly what’s happening, so you can plan ahead. Make sure your cash flow forecast is as accurate as possible, analyze your business indicators and estimate your sales booking timeline.
2. Listen To Customer Feedback – Cash isn’t the only way to measure success for your small business. One sure sign that things are going well is positive feedback from your customers. If you’re already generating that kind of enthusiasm it’s important to actually be in a position to recognize your success and capitalize on it. Take online reviews into account as well. The main thing is to make sure it’s something you’re staying on top of. Retention numbers are also important. Strong retention numbers mean that your business has staying power. Plus, it’s always more affordable to upsell current customers than acquire new ones. A focus on retention is always good for your bottom line.
3. Marketing – A web presence is essential, especially when the competition has strong brand loyalty. Social media is an excellent low-cost and low-risk way to promote your business. LinkedIn, Facebook, Twitter and Instagram are a few good tools to build a social presence and attract attention to your business. Don’t underestimate the power of personal interaction. Attend an industry-specific conference or networking event. In addition to meeting potential business clients and vendors, you can strengthen your brand presence, establish yourself as an expert in your field (offer to lead a discussion or act as a panelist) and stay on top of trends, opportunities and challenges.
4. Appreciate employees – Whether you have two or 20 employees, it’s important to appreciate the work that each employee does for your small business. Invest in training or tools to improve employee productivity. Give them some flexibility and promote a strong work-life balance. Cash bonuses may be outside of your budget, so find ways to reward your employees for their loyalty. Show how they have positively impacted the business and give them opportunities to grow their skills. If your company will be looking to hire new employees, look no further than current employees for references. Offer referral bonuses or hours of PTO once that person has completed at least 90 days of employment.
5. Develop Management Skills – Small business owners can educate themselves on skills they lack. A successful manager is also a good leader who creates a work climate that encourages productivity. Take a course in an area that needs improvement. Could you benefit from help with cost management or digital marketing? Are you on top of changes in your industry? There are a myriad of online webinars and courses available and many are free or low-cost, making them both convenient and accessible for busy entrepreneurs. Local courses – provided by business development organizations, colleges, chambers of commerce, and others – can also help you build your community network and presence.
When you’re looking for ways to measure the success of your business, it can be hard to know if you’re evaluating the right numbers. Go beyond the top-line financial picture and take stock of these other factors. It may save you from trouble down the line.