Marc Cuniberti: Keep your small business afloat
May 6, 2018
Running a small business is a task not suited for everyone. Many more people think they can do it then actually can. This reality is attested to by the fact nine out of 10 new businesses fail within three years and I personally think the three year mark is way overstated.
The pitfalls are many, and frankly, I am astounded as to how many business owners not only fall way short of keeping good track of what's happening money wise, but fail on such basics as returning phone calls or putting thought into what exactly it is they are selling.
Because so many business owners do fall short of being on the right side of the bell curve (being the best they can be versus being all out inept which is the left side of the curve), I suggest you celebrate the their deficiencies by realizing their shortfall means you, if you do things half right, will move to the right of them on the curve.
Covering all aspects of running a small business can be voluminous so due to lack of space here, we'll cover the very basics. These basics also make it unnecessary to be industry specific, which means whatever the business, from apple cart to zoo keeper, these are applicable to all of them.
Return your phone calls or you soon won't have any to return. This ones seems to be a no brainer but in actuality more people than not just don't get it. Simply put, the faster you return your calls, the more business you will have.
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It's a direct correlation based on many factors, but trust me, faster return phone calls mean more business and vice versa.
Be nice. This one also baffles me on occasion. I can never understand when I drop in or call a new business proprietor, they have the personality of the south end of a northbound moose.
People buy from who they like. Be likeable.
Solve customer problems to their satisfaction, not yours. The customer is indeed always right. Keep that in mind. That is if you want him to remain your customer.
Any business can take their money. But make a problem right in the customers mind and you've won a customer for life.
Remember, an unhappy customer has a big mouth and they will use it if you don't make them happy. Word of mouth cuts both ways. Make sure it cuts the other guy and not you.
Offer a good product or service at a good price. Another no brainer but finding the right price for your product is determined by the marketplace, not you. You will find out if your price is reasonable and your product is good by the amount of votes you get.
Votes in business are dollars. If you aren't making some of these, the market is telling you that you've done something wrong in either price or quality.
Don't be stubborn and shut your ears and eyes to what the voting public is telling you. If they're not throwing dollars in your direction you have a make a change and quickly.
Don't over expand and expand only into strength, not weakness. This means start small, the smaller the better. Large stores don't mean large sales, they mean large expenses.
Way too many new businesses spend way too much money on starting up. This instills a huge expense which drives the necessity to sell a lot to survive.
Sales should drive the need to expand, not the other way around. More often than not, the reason businesses fail is due to cash flow problems and those problems arise from too much monthly overhead initiated by an overzealous proprietor whose start up plans exceed his pocketbook.
Handling sales & expansion
Another common pitfall along these lines is expanding to increase sales, expanding too soon or expanding into an inflationary environment.
The latter is for another day and another article but the first two mean an overabundance of sales should be the only reason to expand. You don't expand to sell more in the face of weak sales. Sales should drive expansion versus the mistake of expanding which then necessitate more sales to pay for it.
There are many reasons and methods for success and failure in running a small business and I have only detailed a few here. There are also a variety of educational resources available on the web on how to run a small business.
It's best to spend more time planning and only proceed when your business is detailed in ink and in every way conceivable.
I will be holding a seminar on "How to start up and run a small business" in June. Contact me at 530-559-1214 for details.
This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. He is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. He can be contacted at 530-559-1214 SMC Wealth Management, 164 Maple St #1, Auburn. SMC and Cambridge are not affiliated. His website is http://www.moneymanagementradio.com.