Characteristics and Essentials to Make Your Business Profitable
Sophisticated new business models and the rewarding desire to build upon a venture or concept from the ground up are the underlying factors we have to thank for the increase in start-up failure rates.
Those beating the path to turn their entrepreneurial dreams into profits are met with almost insurmountable challenges along with a competitive environment that generations before may not have had to consider.
Unconventional business structures like freelancers and people generating regular (and quite decent), income from platforms or apps are fundamentally changing the way we conduct business forever.
The Profit First concept is a beneficial guide with a wealth of information to steer your business in a more profitable direction. Find out more about our Profit First packages and assessments today.
Here are our top seven essentials that’ll help deem your small business idea market-relevant and ensure you start seeing profitable dollars a little sooner than those discouraging stats might indicate.
Start with solid foundations
Obviously no one sets out with a plan to fail. However, depending on your experience, some business models are often well-researched and guided while others lack specifics, goals and even financial estimates.
Instead of jotting down vague and unmeasurable ideas, write out a detailed business plan outlining all key areas from the get-go including:
*What exactly your business sells or services it provides and how you’re adding value to your customers’ lives.
*Specific day to day operations and who is responsible for each task, department etc.
*Cost estimates for all expenses, overheads and staff for the first 12 months.
*Plan where the money will come from to ensure all expenses are realistically affordable.
Build your best team from the beginning
Always think long term when selecting the team that’s going to take your business to new heights. Constantly employing people, training them and familiarising them with operations and values is extremely costly and painfully counter-productive.
Realise from the start that building relationships (this applies to contractors too), should be the priority following skills and experience when building your dream team.
Seek people who share and envision the same goals as you and plan on sticking around for the long haul. Plus, the chances of being able to handle everything on your own are likely slim to none, even for the most seasoned and established business owners out there.
Prior experience and proper competitor research
It can be exponentially more difficult to succeed without any real-world experience working within the industry you’re promoting. Competitive research is one of the qualifying requirements for earning entry into the business world.
Try to find some casual or flexible work within the field and practice what you’re setting out to preach through your own business before making any big decisions.
Comparing aspects like competitor price points, marketing campaigns, customer demographics and a range of other determinants provides you with a more accurate starting point to devise how you’ll differentiate your brand from others’.
Know your industry and rehearse your pitch
Get yourself up to speed with the numbers, stats and facts related to your market and its demand structure.
Is your product or service season-specific? Why are people requesting this? How can you ensure you’re providing better value than competitors? These are all important questions you should be asking yourself and have short, sharp answers for when potential customers ask.
Oftentimes business owners are capable of managing their business and its administrative duties, but not so skilled at actually selling their goods from a personal level. Put in some groundwork and really nail that sales pitch for increased conversions.
Understand the importance of positive cashflow
Generating and sustaining positive cashflow could be the most important essential for small businesses. This effectively ties in with our first point and must be considered in your initial business plan as it’s associated with the source of your money and how much is required.
A business operating with consistent negative cashflow is a business destined to fail. Struggling to survive each week isn’t allowing you to capitalise or profit, but rather sees your business remain in existence for maybe a few more months in its best case.
Make some necessary cutbacks and rejuvenate your business’s financial health. Take a look at our Profit First information for further details on improving cashflow and how to pay yourself first as a business owner – you’d be surprised at how much money could be saved by implementing small changes.
Network effectively
Connecting yourself with the right people is a way of establishing relationships within the industry spaces relating to your business processes. If introducing a partner into your business doesn’t sit well with you, then linking yourself to the appropriate professionals is the next best thing.
Industry experts are a wealth of information and you can benefit from their input and knowledge immensely in a variety of ways.
Too many inexperienced entrepreneurs prioritise chasing volumes of connections rather than surrounding themselves with just a few, relevant and genuinely helpful individuals.
In some circumstances less is more, and this happens to be one of them. There’s not much purpose in ‘knowing’ a thousand people that don’t know the first thing about your business’s industry or its markets. A close-knit handful of professionals is who you should be targeting.
Focus on one business
You’ll need to commit yourself, your time and every resource to a single business for it to prove profitable and sustainably viable. Attempting to run before you can walk due to overenthusiasm will land you in all sorts of financial trouble, overexerting yourself and almost always leads to burnout.
Wise selection of business model is crucial as it should be something you’ll feel happy to pursue, grow and expand upon over years or even decades into the future.
To quit the stability of a job or leave a promising career behind and follow a passion is perceived as incredibly brave and requires you to take the ultimate risk for what is, hopefully, the ultimate reward.
There’s a tonne of disheartening facts and information out there attempting to influence those with inspiring concepts to never act on them. However, adopting some characteristic traits and putting these essentials into practise is plenty of reassuring reason to take a calculated risk.
Onboarding a few tips from the experts combined with thorough market research and implementing a motivational strategy for yourself and employees is the right first step for any small business.
See our other recent articles including Tips on Managing Workplace Distractions as a Business Owner for further information on developing more effective business management planning.
Get in touch with Ironbark Industries Bookkeeping to conduct a Profit First instant assessment of your business or to discuss all other bookkeeping requirements.