The goal of any small business is to make enough money to sustain operations and earn a profit. However, getting to this point and not only being able to sustain your business but expand it, can be a challenge.
But by steering clear of certain mistakes and managing to stick to the right principles, this is something that any viable business should be able to do. Here are 10 do’s and don’ts when growing a small business. We’ll also explain the details of each of these rules and why they’re so important to your business’ success.
1. Do Your Research
Do thorough research before you start your business. For example, know if you’ll need a business license before you open your doors. Do your due diligence too before you try to grow your business. Understand the types of records you’ll need to maintain for tax purposes and inventory. Learn how to make a budget and do sales projections. Don’t assume you have to do it all yourself. Network with other business owners and connect with experts like accountants and lawyers so you make the right decisions.
2. Don’t Neglect Your Taxes
Do not fail to give your taxes the time and attention they require. If you’re running a small business, you’ll have an income tax bill. If you own a partnership or own part of an LLC, you’ll have to pay an income taxes via a business tax return. If you own the business or the LLC by yourself, you’ll have to fill out a Schedule C and include it with your personal income tax return. If you don’t know how to fill out these forms correctly, do bring in a qualified accountant. You can’t afford to make a mistake with your tax bill.
There is a fair chance you’ll have to collect and pay sales tax. And payroll taxes are due the moment you have an employee on the payroll. If you fail to properly collect, pay and report these business taxes, it can tank your business. To top it all off, you may owe property taxes and other kinds of taxes. If you want to learn more about different business taxes and what they imply, you can click here to learn more.
3. Do Set Goals
Do take the time to set goals. Determine how much income you’d like to be generating per month and your desired profit margin. Maybe you want to increase sales of your top product by 20% by the end of the year or you want to cut costs 10% in the next three months without hurting the quality of service. If you don’t have goals, you won’t know if your business has improved, much less if your changes are having the desired impact. But don’t set unreasonable goals, though. Create “SMART” goals. These goals are specific, measurable, achievable, relevant and time-bound.
4. Don’t Try to Do Everything
We’ve already mentioned the importance of creating a network of professionals you can go to for advice. Don’t try to do your taxes yourself if it isn’t your strong suit. Do hire an accountant or tax preparer when it is too big to do yourself in addition to running the business. Don’t try to tackle legal issues on your own. Do learn when and how to say no to projects so you don’t burn out. Do have an idea of when you’re going to bring in help.
5. Do Draft a Contract for Everything
Don’t rely on informal agreements. Do take the time to put every business agreement in writing. It is the paper document that stands up in court. Writing it all down ensures that everyone knows what they are getting and when they should receive it. Take the time to write out contracts with partners, retailers, distributors, and any contractor you hire. You’re probably already doing this with your bank. Do draft a contract if you’re borrowing money from anyone else.
6. Do the Math
Don’t make the mistake of setting prices on what you think you need to break even. Do the math and calculate the exact costs for your business. Factor in overhead costs like rent, utilities, property taxes, and administration and add that to the cost of the products you manufacture or resell. Make sure you’re selling the products with enough of a profit margin to pay your operating expenses while having a little left over. Don’t undercharge your customers.
Know how much you’re spending on things like rent, payroll, taxes, and administration. Track your business income relative to ongoing and budgeted future expenses to make sure you don’t come up short. Do analyze your finances regularly since expenses may be creeping up or sales are trending down. Act early on to avoid disaster.
7. Don’t Waste Your Time
Don’t waste your time on low-value activities, whether it is trying to make products almost no one buys or pulling people away from core functions to perform non-value-added work. Don’t waste time continuing marketing strategies that don’t work, and don’t tolerate fraud and waste in the workplace.
If you find people or equipment idle, find ways to get them contributing to the bottom line. Track your time, too, so that you don’t waste it on unimportant tasks when there is real work to be done. Don’t undervalue your time and do work that you can delegate to someone else who is paid less.
8. Do Make your Team More Efficient
For many businesses, one of their most important expenses will revolve around their employees. So, you have to be able to track your employees work better and see if there are any improvements that could be made.
Salaries and benefits are also one factor you have to consider. The effort and time your employees spend on the job have to be efficient, or they might actually be making your business less profitable and causing your business to lose revenue.
If you’re in a tech-related company, costs related to poor communication between employees, not using the latest technology to facilitate processes, and spending an excessive amount of time on low-value, albeit essential, tasks can also end up eroding your profitability.
9. Don’t Neglect Customer Service
In this day and age where the principle of word of mouth marketing has taken a whole new dimension, it’s still surprising to see how many companies think they can get away with sub-par customer service. If you aren’t giving the best service to your new and existing clients, the world will know, and it’ll be difficult to shed that public image of a company that simply doesn’t care about its clientele.
This is why you should be pulling all stops to make sure that you offer the best customer and post-sale service that you can. Make sure that you make returning customers feel special. They will then be more inclined to recommend you to their friends, family, and followers and increase visibility for you and your brand.
This also means going the extra mile to listen to your clients and their needs and/or concerns. Your customers are the lifeblood of your business. Do take the time to ask them what they think of your business. Ask them what they think of the product, your facilities, and your service.
Often, your clients will be the ones with a better perspective on how to expand your business the right way. They’ll often be able to give you information on what they need, which type of products you should be launching, and in which direction the company should be heading. However, you shouldn’t go after every opportunity they suggest to you. If something sounds promising, do your research.
Try to get your customers’ feedback whichever way you can. Ask them to answer surveys and submit reviews. Get as proactive as possible and make sure that you follow up with them after every sale, so you can get their observations. This will allow you to get an inventory of what you’re actually doing right and some of your customers’ pain points as well.
10. Do Keep Looking for New Customers
While it’s important to work on keeping your current client base happy, you also can’t neglect new prospects. Unless you have a clear strategy on how to expand your customer base, you won’t be able to grow your business’s profits.
This is why it’s essential that you run a market analysis so you can identify new possible customers. You’ll be able to discover where they work, hang out and live, or even get some valuable information on things like which social media platforms they prefer, so you’ll be able to better target them.
Try to find new clients that share similarities with your current client base. And consider adding new services and/or products that will not only be congruent with your brand but attract new customers as well.
Conclusion
Growing a business is exciting, and when done right, it can be quite profitable. Follow our guidelines to maximize your odds of success with as few hiccups as possible.
