Starting a new business strategy and getting organized
If you're like most business owners I talk to, a lot of them struggle with knowing where to start when trying to build a properly structured business strategy. With that, I get a lot of the same questions.
Where do I start?
How do I scale my business for growth?
How do I know if my business is healthy?
I figured a lot of other business owners have similar questions, so I put together my top five commonly asked questions and provided a list of answers to help you get started on your organizational journey.
1. Where do I start?
- Define your vision and strategy, and consider what do you want out of your business for yourself and your family.
- Decide on your business entity and find out what licensing you may need.
- Come up with a business plan, or at a minimum, do a sales and marketing plan.
- Understand your unique customer advantage.
- Don’t forget to make use of email, social media and web marketing.
- Under-estimate your sales and over-estimate your expenses.
- Build your team, provide the funding, and delegate.
- Take calculated risks.
- Get help from a business lawyer, an accountant, and a business coach, as well as a few mentors.
2. How do I scale my business for growth?
- Document and understand your current capabilities by asking questions about your business processes.
- Develop new processes around which you can train and build a positive culture.
- Ensure you have the right people in the appropriate roles and train them on the new processes.
- Understand your business capacity to get current work done and build a plan to handle increased workload.
- Look at your personal workload and make room for the work you will need to take on for growth by building a management structure under you.
3. How do I know my margins are correct?
- It’s important to realize that the gross and net margins given by your accountant are for the whole business and not specific to any part of your business.
- You should calculate your true margins per product or service provided.
- Calculate your business cost per hour by dividing your total expenses by time spent for a specific period, i.e., monthly or quarterly.
- Use cost per hour to calculate margins of individual activities in your business, which will indicate if you are making money or losing it.
- You may need to get rid of some individual products or services to correct your margins.
- Adjust your pricing based on individual margins and competitive analysis.
4. How do I make more revenue?
- Capture more leads by throwing your net wider, which means do more marketing or hire marketing help.
- Convert more sales by improving your sales methods, which means getting better at selling to your leads, i.e., get sales training.
- Compound your clients, which means find more ways to do more business with your current and previous clients, i.e., cross-sales, up-sales, down-sales, and other special offers.
5. How do I know if my business is healthy?
- Cash flow is the biggest indication of a healthy business. This is the amount of money flowing in and out of the business. Health is determined by the ability to generate positive cash flows and maximize long-term free cash flow.
- Next is data. For example: sales data like average prices, customer trends, most purchased products, etc., and production data such as timings and yields, and other variable data.
- Healthy companies are “Data Driven” because data changes behavior for the good.
- Finally, ask your clients and customers what works and what doesn't, then listen and act. Regular customer satisfaction surveys are the best way to know if your company will continue to do well in the future.
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