With the wealth of business advice available, it can seem over-whelming and complex to understand for business, however in three Simple Business Rules, is a good start:First Rule: Make sure customers pay you on time and its true value.
It is estimated that 4 out of 5 small businesses are owed money by their customers, which equates to approximately £6.9bn owed across the UK. This figure seems enormous but when you look in detail you can see ways in which it could be prevented:
- Consider running credit checks on your clients to provide you with a credit score to use in your discussions.
- Look at your payment terms. With the current capabilities in online payment platforms, there is no reason why payment cannot be processed upon work completion, even better upfront, rather than waiting up to 180 days due to payment terms. Waiting 90 days or more to be paid has all the hallmarks of cash flow problems.
- Make sure what you charge is the true value of what is being delivered to the client. Some businesses never reassess their pricing structure, even after 3 years, often more. Have a detailed internal costing, bottom up assessment of your pricing and then use this to forecast your growth, then decide the price increase required to meet this. Naturally, as with all services and competitive markets, consider price elasticity when testing increases in what you charge customers.
Building a business is about being able to scale your idea and business without relying on you personally. The way to do this is to build on the systemisation of your business rather than relying on people and instead have systems and processes that allow anyone to work in your organisation, thereby driving scale. The true difference between being self-employed, having a business and being an entrepreneur is whether the business can work without you, as described by business author Michael E. Gerber in ‘The E-Myth Revisited’.Third Rule: Allocate time to plan your business
Consider what the vision is for your business and allocate the time to plan in line with that vision. Planning can often be the last thing that comes to mind for many business owners, but without proactively making the time to plan and review business vision and strategy, this can be damaging in the medium to long term. To help you plan make sure you have systems in place to monitor progress against targets, not just turnover etc, but more predictive indicators such as lead generation and customer feedback. Benjamin Franklin famously shared “by failing to prepare, you are preparing to fail.”