Being a small business owner takes a lot of energy, passion, perseverance, and thick skin. It’s not a job for the weak of heart. But as a business owner, you also need to understand different financial, operational, and marketing fundamentals in order to successfully return a profit and stimulate growth.
We understand that most small business owners are not accounting or marketing experts, so we’ve gathered up our four best tips that should maximize your profitability:
Know the numbers
You know the most about your business and have the most control over it. However, a lot of small business owners have trouble understanding financial statements and therefore can’t use them to make educated decisions involving managing and improving the company. Your accountant can prepare financials, provide advice, etc., but you need to understand the numbers on the financial documents in order to truly understand how the business is doing. Budgeting, planning, and forecasting all start with the financial statements and are a must to properly plan for the future and ultimately help your business grow.
Understand, then delegate
It’s imperative to understand all operations, large and small, in your business. Otherwise, how will you know the most effective and efficient processes to accomplish tasks? How will you be able to judge if an employee is doing good work and should be promoted? For example, imagine you own a coffee shop: when just starting out you should couple your role as a manager/owner with working as a cashier, barista, and server to understand what it takes to do the job functions as well as the best methods to perform the work.
Once you understand all the moving parts of your company’s operations and experienced it firsthand, you can then delegate work more effectively through your ‘customized’ training. Because, let’s face it – you’re busy and can’t do all of the work for your business. The more customers you expect to have, the more people you will have to hire to ensure all tasks get done properly and on time. You need insightful knowledge of what skills and experience someone should have in order to perform a certain job. Then you’ll be able to effectively train your managers and employees on techniques that will benefit your business and increase its productivity.
Research the customer
Before you start a business, it’s critical to thoroughly research your target audience and their habits. By doing things like creating a customer profile, analyzing your business’s (or competitors’) interactions with its customers and generating market research, you will have a firmer grasp on what matters to your customers, the types of products or services they’re shopping for, how/where they make purchases, and price points. Make sure you know who you are targeting and that the group isn’t too broad. This will ensure that your products or services will appear attractive to your target audience and that your marketing and sales efforts will reach them.
Have a strong backbone before you begin
Your business’ backbone is its accounting and logistics management. You as the business owner should not ignore the back-office work and must fluently understand these crucial pieces in order to make the best decisions for your company. As these jobs are not usually done inhouse, work closely with your accounting and other outsourced business functions to make sure you will be moving in the right direction. Having the right people in these essential job roles is the cornerstone to small business success.
Do you have financial questions pertaining to your business? Would you like help better understanding financial documents or planning for the future? Contact the accounting experts at Paragon Accountants for assistance!
