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Six Simple Tips For Small Business Success

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If you are like millions of taxpayers trying to make a living running a small business, you know it is tough out there. Here are six ideas to help your business survive and thrive.

Understand your cash flow.

One of the biggest causes of business failure is not understanding cash flow. You need enough cash to pay your vendors and employees all year long. If you run a seasonal business you understand this challenge. The peak seasonal sales need to be ample enough to support you during slow non-seasonal periods.

Recommendation: Create a 12-month rolling forecast of revenue and expenses to help understand your cash needs.

Know what drives your success.

When looking at your business, there are a few major items that drive your business success. Focus on the top four of these drivers to see increased growth.

Recommendation: Look at last year’s tax return and identify the key financial drivers of your business. Do the same thing with your day-to-day operations and staffing.

Manage your inventory.

If your business sells physical product, you need an effective inventory management system. This “system” does not have to be complex; it just needs to help you keep control of your inventory. Cash turned into inventory that becomes stuck as inventory can create a major problem.

Recommendation: Develop an inventory system with periodic counts to ensure you do not have theft issues. This system can also help identify when you need to take action to liquidate old inventory.

Know your customers.

Who are your current customers? Are there enough of them? Where can you get more of them? How loyal are they? Are they happy? A few large customers can drive a business or create tremendous risk should they decide to go to a competitor.

Recommendation: Know who your target audience is and cater your business to them.

Emphasize what makes your company unique.

Once you know who your customers are, understand why they buy your product or service. What makes your product or service different from companies that sell something similar?

Recommendation: If you do not know what makes your business better than others, ask your key customers. Use the information they provide to find new customers.

Maintain an effective support team.

Successful small business owners know they cannot do it all themselves. Do you have a good group of support professionals helping you? You will need accounting, tax, legal, insurance and employment help, along with your traditional suppliers.

Recommendation: Conduct an annual review of your resources, and be prepared to review your suppliers and make improvements where necessary.

While libraries are filled with small business advisory books, sometimes focusing on a few basic ideas can improve your business’s outlook. Please call us if you wish to discuss your current situation.

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