The Secrets of Keeping Your Business in the Best Shape
People who prioritize the well-being of their careers, homes, and families have an intuitive understanding that it will all be ruined if they don’t take care of themselves in the first place. Recently, I’ve been thinking about how this concept works for small and medium-sized businesses. There is a similarity between taking care of your own well-being and taking care of your business's well-being. Experienced business owners and managers understand the importance of having their company in peak condition before venturing into new opportunities or expanding their existing business. By ensuring that their company is in top shape, they are better equipped to face the challenges that come with those opportunities. As the saying goes, you can’t make wealth without health.
Your Diet Shapes Who You Are
Like how food powers our bodies with essential energy, being focused on what drives our businesses provides the necessary direction and energy for them to thrive. We're all familiar with some pieces of fundamental dietary advice: Write down everything you consume during one or two weeks, so you gain an understanding of your real eating habits. Harsh diets backfire. Avoid categorically forbidding something to yourself. A list of forbidden foods can be demotivating, the same as rejecting a business idea without prior investigation.
So, how can proper eating habits correlate with effectively managing your business?
- 1. Observe and record. Consistently assess which activities bring the highest profit, are the most sustainable in the long term, and contribute most to the overall health of your business.
- 2. At the same time, don’t feel guilty if your attention isn't totally directed to the highest priorities of your task list. People who enjoy their job tend to be more productive. Just be cautious not to dive into the most pleasant tasks only while neglecting mundane and monotonous ones.
- 3. Never stop nourishing your business intelligence. Feed it with external professional advice or guidance and exchanging insights with colleagues, or consider taking a few courses. The internet has simplified the process of accessing information and gathering knowledge more than ever before.
- 4. But avoid junk food: The quality of input directly influences the quality of the result. Among the abundance of business blogs and forums, be cautious of encountering low-quality or irrelevant information. Identify the most trustworthy financial and entrepreneurial websites and make them the cornerstone of your information diet.
However, remember to also explore the lesser-known contributors. They are often fellow entrepreneurs or small business owners like yourself, and they frequently discuss cutting-edge technologies and inventive operational methods. It's quite likely that you'll stumble upon a valuable piece of business wisdom on one of these blogs, perhaps even on this one.
The allure of an idea doesn't guarantee its profitability. Once you've done with all the research and created a plan, assume the role of a skeptic and endeavor to challenge your own idea, weighing all possible pros and cons. Identify potential challenges and reasons why it might fail, allowing you to address these concerns before moving ahead.
What's Stored in Your Pantry?
If you stock a significant amount of unhealthy food, your dietary choices are likely to outweigh the impact of your exercise routine. This resembles how a company can hold onto outdated stuff and useless items, keeping them in disorder. What indicates that you need an examination of your current inventory management system?
- A multitude of discrepancies within your inventory database
- Lead times exceeding the expected
- Regularly running out of stock
- Excessive overall inventory volume
- High expenses associated with storage
- Sending out the wrong items
- Excessive working capital combined with insufficient sales
- Low customer retention
Just as you wouldn't allow yourself to become undernourished, ensure that you don't deprive your company. Having adequate cash reserves is essential for the overall well-being and stability of a business. To be financially prepared to navigate through various challenges and be able to seize opportunities, it’s better to have enough cash to cover approximately six months' worth of expenses, and it should be easily accessible. Take into account the expected payment timeline of your providers. If you provide credit, you should be able to cover these expenses until the payments come in. Also, remember to include your personal expenses in your calculations.
Get Up and Get Moving
Similar to how consistent physical activity keeps veins and arteries more flexible and elastic, maintaining elasticity is advantageous for your business.
Especially for small businesses, adaptability can be a survival trait, as those unable to promptly react to market changes, emerging technologies, and new approaches often face failure. Therefore, delve further into the insights you've gathered from business sources and find what strategies suit your needs most effectively. The thriving small businesses are those whose owners are ready to embrace a spirit of adventure, step out of their comfort zone, and undertake some risk (but well-considered!).
Cash is the lifeblood of your company, so ensure its smooth flow. Just like regular cardiovascular exercise strengthens the heart and enhances blood circulation, a well-structured approach to invoicing and using modern technologies to speed it up can significantly boost your company's financial health and ensure a steady stream of funds to support your operations and growth. Do you want to know how to collect payments faster and improve your cash circulation? Here’s one way to accomplish that.
Do Not Overdo It
Gradual progression is essential in exercising; if instead of increasing the difficulty step by step you immediately go to the accomplishment of great feats, you’ll suffer pain and discomfort the following day, which will make you significantly reduce or even cancel your training. And it is so challenging to start again!
The same scenario can happen to your business: facing a setback because your growth surpassed the available resources. It's unfortunately quite common for small businesses to exceed their capabilities, draining their cash reserves or committing to credit beyond their genuine affordability. If you are going to commit resources to prepare for servicing a major client, reflect on the potential outcome if they decide to withdraw.
This doesn't mean that you should not take a risk, but ensure that you've established a foundation of smaller clients to sustain your operations if the larger one decides to leave.
Take a More Relaxed Approach Sometimes
Periods of rest between intervals of intense physical activity allow your body to restore energy reserves and heal damaged tissues. Similarly, in your business endeavors, keeping the same load level all the time is exhausting. Distribute your efforts wisely, and the same principle applies to your staff. Otherwise, you’ll undermine the harmonious team spirit of cooperation you’ve been trying to establish (you’ve done that, right?). Discover a sustainable rhythm, and you will all be able to manage periods of intense activity when they come, as they inevitably will.
During times when your business is running smoothly, you might experience a sense of guilt for not making another significant push, but sometimes it’s the right decision to allow the business a moment to recuperate before launching new initiatives. It's not a bad idea to take a brief pause and allow things to settle and stabilize.
It also will help to acknowledge your achievements, rightfully credit yourselves, and motivate both you and your team, making you go on toward even more remarkable accomplishments. This can be the moment for some of the most effective training.
In your daily routine, taking little breaks and allowing your mind to fully detach from the work processes and discussions, even for a few minutes, will help you recharge and will enhance your productivity over time.
At this point, you're likely thinking, “Alright, so you're suggesting that I should 1) take additional time for research, 2) put some new ideas into practice, and 3) allow myself to take it a bit easier sometimes. How on earth am I supposed to allocate time for all of that?"
There is one established method to alleviate the burden: delegating tasks like procuring supplies, handling equipment, and completing government paperwork to online business-to-business services. Consider outsourcing repetitive and routine duties, particularly those that can be accomplished more affordably and effectively by specialized providers. Allocate your time and that of your team members wisely, considering your time investment the same as investment of company funds. As you invest this invaluable capital, maintain a focus on the ROI—what activities bring the highest results for your company compared to the time invested in them?
Have an Injury Recovery Plan
Have you developed a strategy to address potential threats that could harm your business? For instance, your client data is under hacker attack, and it results in losing most of your client base. Or your town is struck by a natural disaster, or a crucial team member can’t work for some time. If you have never thought about what you will do, then most likely you do not have an adequate disaster recovery plan.
Create a comprehensive list of the worst-case scenarios that you and your staff can envision, but also include the lesser potential events that, though not catastrophic, could significantly impact your business—a piece of equipment breaks down, your hard drive crashes, or a supplier doesn't meet their commitment. If several of these misfortunes occur one after another within a short period, they can add up to a catastrophe. Make your business more resilient by being adequately prepared for challenges. Know the emergencies specific to your type of business, and the first aid they require.
You don't have to be an expert in resolving every potential situation, but it's important to keep a reference list of where to ask for help and assistance. Write down everything! Ensure that everyone is aware of how to access the information, and don’t think you will always be there to instruct them. Keep a backup copy of the list, and don’t count on constant hard drive access or even internet access.
A vital task within your small to medium-sized business should never be solely dependent on a single team member. That knowledge should be distributed to multiple team members so one of them can cover for the others to reduce risk if someone is suddenly out of reach major when a major disruption threatens. Each process should have well-documented steps, and this documentation must be available to a wider circle of employees and regularly updated whenever a procedure is changed.
Therefore, in a small business or a startup, it becomes crucial to onboard individuals who are ready to lend a hand and support different roles as the need arises. Here’s a helpful piece of advice: In their resumes, look for variety in their interests and hobbies.
As the SMB owner, you should be capable of handling a wide range of tasks in a pinch if necessary. Or at the very least, have a basic understanding of how they are done. Therefore, encourage your knowledgeable staff to educate both you and each other on the fundamental aspects of their work. If you own or run a small to medium-sized business, willingness to learn is invaluable, but equally important is having the desire to teach. When hiring, seek people who are not possessive about sharing what they know, and are not hoarding their knowledge, but rather want to participate in some form of mentorship.
Keep an Eye on the "Bottom" Line
Similar to stepping onto a scale, know how to track and evaluate your company’s progress, and monitor your crucial indicators consistently: Are the methods you've traditionally used still effective? Are the prices of your product or service still adequate? Regularly review your cash flow projections to ensure that any newly incurred expenses are accurately included.
Have you ever known someone who dedicates two hours daily to cardio exercise yet still searches for the nearest parking spot at a fast-food place? Or anyone who keeps a healthy everyday diet but never takes even a brief walk around the neighborhood? Well, think about whether you are like them in any aspect.
The well-being of your business begins with similar sincere self-evaluation. Are you aware of your position compared to your competitors? Arrange consistent checkups to identify any signs that your business might be losing its competitive advantage. There are even special tools available to buy online that will assist you with this.
Entrepreneur.com gives recommendations for benchmarking your business. It’s important to compare your business to others within your industry. According to an article from Sageworks, an SMB research firm, comparing key metrics such as gross revenue, profit margins, net profits, liquidity, revenue growth, and turnover ratios provides a more comprehensive evaluation of your company's health.
Pair Up for Exercise
Numerous small businesses falter due to founders attempting to navigate the journey alone. The founder often possesses the ability to conceive a great idea and bring it to life, but those who are wise understand the importance of partnering with people who can handle the finer details necessary for smooth operations.
Or you might be a small business operator who occasionally becomes overly focused on the small, detailed aspects. If you tend to focus on the particulars, having a visionary partner is essential to keep a broad perspective. Value the people whose strong sides balance your lesser strengths, and be sure to tell them about it.
You can share your milestones and achievements right here in our comments section. Keeping our businesses healthy isn’t an easy task. Let’s inspire and support each other!
Entrepreneur-> How to Tell if Your Business is Healthy...or Floundering