Small business owners are in the driver’s seat when it comes to running their small business – however, just as you need to find your keys before setting off for your morning drive to work, you also need to find the keys to running your business.
Think of your key ring. You’ve probably got quite a few keys on that ring – you may have even forgotten what some of them are for. But we’ll bet that you’ve got a few “key” keys on that ring that you know exactly what they’re for and you couldn’t do without.
That’s a pretty good analogy when it comes to key business drivers. Just as different cars open with different keys, different types of small businesses can have different business drivers. However, when you back out of your driveway in the morning, there are a few key things you’ve got to do such as put on your seat belt, adjust your seat, check your mirrors and, before you pull out, you’d better make absolutely sure the road is clear and there’s nobody and nothing behind your vehicle. No matter who you are, or where you’re going – everybody needs to perform key activities in order to drive safely.
When you’re in the driver’s seat running your small business here are fivekeys you want to make sure you’ve got on your ring to run your business successfully:
- Risk Reduction
- Time Management
- Cash Flow
- Your Customers
Risk Reduction. We know there’s the whole “successful small business owners are risk takers” school of thought – but successful small business owners are also very successful at reducing risk.
Rock climbers and parachutists are certainly willing to take risks – but the most successful rock climbers and parachutists (meaning they make it off the mountain to climb another day and experience soft landings after jumping out of a plane at 10,000 feet) make sure they are properly trained in safety measures and use safety devices related to those risks.
Similarly, the most successful small business owners are those who focus on minimizing risks. Risk reduction may not be as sexy as seeing ourselves as risk takers. For instance, a call to your insurance broker to review your policies or creating contingency and disaster plans probably doesn’t get your adrenaline flowing. Making sure your small business is compliance with government and industry regulations might not be your idea of an exciting task. But both of these examples are risk reducers, and reducing risk is just as important as taking risks.
Efficiency. Being efficient isn’t limited to meaning being good at what you do. American Heritage Dictionary of Business Terms business efficiency is:
A measure of productivity that compares output to inputs. In automobile manufacturing one measure of efficiency is the number of labor hours required to produce a vehicle.
The example Heritage provides is a good one, but it is important to understand the meaning of the words “input” and “output” when measuring business efficiencies. For instance, a new computer program or deploying a new process to produce vehicles is an “input” that can “output” – but you won’t be able to quantify that impact unless you monitor and measure output.
The point is that successful small business owners just don’t deploy new “efficiencies” – they measure the impact of those efficiencies (such as a new customer service policy) on output.
Time Management. Outside of cash (which we’ll get to in just a minute) it seems there’s never enough time and not just not enough time to get everything that needs to be done completed – but we don’t seem to have enough time to figure out what our priorities are in order to “best spend” our time.
However, when time is not properly managed it is almost always wasted. Which makes more sense – to schedule time to strategically approach how time is used at your small business, or waste untold hours chasing your own tail? When time is not managed properly it is almost a certainty that productivity and profitability are reduced.
At the very least take time to “chunk out” daily, weekly, monthly, quarterly, and annual tasks. Prioritize those tasks, realistically assign the number of hours those tasks will take to perform, and then schedule accordingly.
Cash Flow. Amazingly there are a vast number of small businesses operating without properly monitoring or predicting necessary cash flow. Monitoring cash flow is the most important risk reducer in your small business toolbox. Establishing historical cash flow is what allows you to adequately forecast future cash requirements as well as keep your business operating on a day-to-day basis.
Finding out that you don’t have the necessary cash on hand when needed simply isn’t good business. It is bad business – bad enough to cause you to close your doors. The more you understand and can establish times when cash flows freely as well as when the river tends to run dry the more you can take the necessary steps to arrange for additional funds ahead of time instead of being caught in a cash crisis.
Your Customers. Simply put, your customers are everything. No customers, no business. Today’s consumers are the most informed consumers since trade began. Additionally, today’s customer isn’t interested in “paternal” approaches where businesses “tell them what is best for them.” Instead your customers are looking for relationships with businesses that partner with them to meet their specific needs and solve their specific problems. This means that communication with your customer is a key success driver for your small business. Every communication – from advertising to content marketing – needs to be presented from the perspective of your customer, not your business. This approach may seem to be “putting the cart before the horse” but, just as we no longer use carts pulled by horses to deliver our products or services, today you attract and retain customers by “putting your customer before your business.”