As a business owner, it is important that you understand how to manage the pulse of your business. This will determine if you will still be in business one year from today.
The exhilaration of the decision
You have made the decision to start your business. Congratulations! An awesome network of professionals and clients, friends and family are cheering you on and glad to talk to their own networks about your business. Location; check; financing; check; Staff 001; check. You are the boss and you are on a roll.
Getting started and the disappointment of reality
It is always great when the orders are flying in, the deliveries flying out, and the pace is torrid, (at least for you it is). At the early stage, you are the jack of all trades. You make the goods, supervise the packaging, and oversee the delivery. You are even the chief accountant responsible for the accounts payable, accounts receivable, GST, HST, CPP, EI and the taxes deduction. Business is booming and everything looks rosy. You have sufficient working capital (that is what the bank called it). This is all thanks to the business Line of Credit provided by the bank along with the term loan to get the business started.
Long days, short nights and coffee, each day is filled with coffee and activity. The initial high from being the new kid on the block starts to fade. The orders are thinning and so is cash flow but the bills are growing. It becomes clear that there is more to business than a nice name and a good product. There is now a need to build a system, monitor and train it to operate like a well oiled machine.
READ ALSO: Useful Resources For Starting A Business in Canada
Monitoring the pulse
If you must build a successful business, you need to understand how to manage the pulse of your business daily. The following are key things to keep your eyes on to get a pulse on your business;
1. Sales
If you are not selling, you have an expensive hobby and not a business. Period! How do you remedy this situation?
- Find a mentor or coach who is excelling in sales and learn from them
- Find a good book on sales and read it, then put together a plan and EXECUTE it
- Hire sales people to bring the traffic through your doors and get your business growing
- Go for practical knowledge and training on how to sell
- Combine all four to turbo charge your selling acumen
2. Cash flow
No matter how much you sell, if you are not getting paid then your business is dead on arrival. Like the saying goes, profit is an accountant’s opinion but cash is king. How do you manage for cash?
- Ensure you get paid when you sell. Don’t let any clients owe you unless it is absolutely unavoidable and ensure the duration to payment is agreed and adhered to.
- Pay your bill in line with your contract terms. You don’t have to pay your bills on the date the goods or services are delivered if you are allowed a specified payment period. Look into your contract and use up any allowable time prior to paying your bills. That ensures that you retain a reasonable amount in the business. If you can defer expenses while trading with the funds and you are certain of a reasonable return. It is advisable to do so.
You can do this
As stated above, it is clear you need to understand how to manage the pulse of your business. When you have gotten a hang of how these two parameters ebb and flow in your line of enterprise, the next step will be to discuss profits, taxes, processes and the importance of talent. All very important components for managing a successful business. Now go and master your numbers!!!
This post was written by Stephen Mwabena. He is an Engineer focusing on content development and the impact of data on businesses.
