For entrepreneurs and small business owners, one of the easiest mistakes to make is to actually start a company by just making sales and delivering to customers. There is a better way to ensure that the business is going to do well once it get a toehold.
Legal, Tax, and Insurance
One of the first steps in starting any business is to get the legal, tax, and insurance infrastructure set up. How much revenue will the company generate? Are there any risks to consumers? How many employees do you plan to hire? What is your exit strategy? These are all questions that legal, tax, and insurance providers can help an entrepreneur to answer. These providers can also make sure an entrepeneur is minimizing risk and building a solid businesses, even as the company begins to scale.
Implement Business Processes
Business processes are necessary to take on the work that sales will generate. Without clear processes, the business is inefficient and becomes more expensive to run as it scales. Writing down these processes means it's easier to make adjustments and correct mistakes. It also make bringing clients and employees on board easier, as they can quickly learn that there is a set way in which the company completes work.
Small Business Marketing
After the first two processes are set, marketing becomes the next most important thing a company must handle. Small business marketing helps grow your customer base and therefore, your revenue. However, it's important to determine the best type of customer for your company. At first, this category of "good customer" may be very broad, as your organization has no experience in dealing with customers, but it gives your marketing department a target, which will allow for less expensive advertising.
Sales are often something that companies focus on first, but that's not necessarily a good thing. In order to close a sale and keep customers happy, a company owner needs to have other metrics in line. That's why it's so important to have these three steps done first. This establishes the business, opens up both the owner's and the company's time for operations, and makes sure that the company is efficient enough to provide a service to a customer at a cost that's below what they would spend to produce the same result. Having a sales coach early on can help close sales and give you insight into how to produce leads that will close later on in the business's life.
The company has now generated some income. As revenue grows and expenses increase, it becomes problematic to track each by hand. Improving your bookkeeping allows you the option to check back and make sure that operations are running correctly, that the money spent on marketing is producing a required return on your investment (ROI), and that the business's needs are measured and nurtured. When your reports show a healthy cash flow, you can turn your attention to the decisions necessary to increase sales.
At this point, if the company is still up and running, it's not safe to say that the company has made it. But an entrepreneur can definitely take a moment to pat herself on the back before going back to work. The company is working smoothly and can be evaluated for potential opportunities.
What risks have you uncovered during the development of your business?