If you’re a business owner feeling frustrated because you can’t seem to stay ahead of costs, you aren’t alone.
Some businesses struggle from the start, while others may find some initial success and then find customers turning elsewhere. According to the SBA, about 30 percent of businesses don’t make it past their first 2 years. Here are some sound practices you should follow to ensure you stay profitable.
Understand your customers
Analysis of your market segment and what kind of marketing appeals to them is critical. But keeping customers is even more important. You should provide great customer service to give purchasers a good experience. You may want to invest in CRM (customer relationship management) software. Having details on each customer at your fingertips enables you to provide a personalized approach to every interaction.
Don’t get overwhelmed
When you’re rushing to meet deadlines, things are going to go wrong. You may tend to let quality slide, or spend more money just to make sure things get done. A good rule of thumb is to stay below 85 percent of capacity. If you’re offered work you can’t handle, think about passing it on to a competitor and maybe asking for a commission.
Always ask for referrals
When you’ve got a happy customer, ask them to recommend you to their associates. You could offer them some kind of incentive, such as a free gift or big discount if they provide you additional customers. You could even print this message on a small flyer, and absolutely mention it on your web site. Set up an online page to ask for testimonials.
Save your money
There will come a time when you need emergency funds for things like slow periods or legal help, not to mention great opportunities. The alternative to coming up with quick cash is borrowing at interest or selling your assets. Instead, set a reasonable amount as your cash reserve and put two or three percent of your profits into a separate account until you get there.
Protect your assets
Any loss of equipment, goods, or simple vandalism could affect productivity, resulting in a loss of income and possibly reputation on top of material costs. Property insurance is essential, and it’s worth it to ensure business continuity. Security in place on your premises is just as important. Discourage criminal activity with bright lights, surveillance cameras, electronic locks, and a good alarm system. If part of your business involves transporting cash between two or more locations, you may even want to consider hiring a security contractor such as Security Services Northwest, Inc. to help you protect those assets.
Building up a good cash flow should be your first priority. But sustainability is about how you use the money to please customers and prepare for emergencies.