Many small business owners are often faced with so many questions about their own business. Entrepreneur Matt Alderton shares his top tips to be aware of when starting or running a small business.
Start out the right way
What I love about business owners when they are just starting out, is how motivated, inspired and on purpose they are. Their mindset is success focused, and not clouded by the everyday challenges of being in small business. It is important to harness this excitement and remember the feeling and draw on this when times get tough (which they inevitably will). This will give you the resilience to overcome the many adversities and challenges you will face as a small business owner.
Surround yourself with support
As a small business owner, you are the expert in your area of tradecraft but not the expert on everything. Surround yourself with small business experts, get a mentor and find a business coach. You are the average of the seven people you spend the most amount of time with. So, surround yourself with experts in small business and you will learn from their experiences to create a strong, successful and sustainable business.
Planning is the foundation of success
Prepare for the worst, plan for the best. Planning is the foundation of a successful business.
1. Get expert legal advice: Your business structure, and good structuring, will save you mountains of money down the track, it may also save your business.
2. Get expert financial advice: The right accountant should be having phone conversations with you at least monthly and meeting face to face at least quarterly.
3. Cashflow planning: Understand and detail three scenarios for your businesses success. What are the best case, average and worst case scenarios?
What are some common challenges?
I speak to thousands of business owners every year about their businesses. I hear heaps of amazing success stories. However, it is overwhelming how tough some small business owners are doing it out there. There are plenty of challenges business owners talk about. These are the three that stand out.
- Cashflow: I have seen many businesses fail from lack of cash flow, even though they are profitable on paper.
- People: Transitioning from the solo-preneur to the manager and leader of team members is an incredibly hard step. They really struggle to find the ‘right’ people.
- Sales: Often I hear business owners struggling to get new clients as they are not salespeople. I then have to break it to them, that they are in fact a sales person. All business owners will need to be able to convert leads or prospects into paying clients.
What is your definition of success?
Success in small business is not a destination, it is a journey. It has five levels:
Level 1: Doors are open, I’m up and running, I’m getting clients and building momentum.
Level 2: I’m making a profit, I’m implementing systems, I have a plan to start employing.
Level 3: I’m building a team. My sales are growing considerably. I have solid systems, process and automation in my business. My leadership is strong.
Level 4: Profits and cash flow are strong. I’m building a business to create a legacy.
Level 5: I am a visionary leader, I inspire my people and I am making a difference in the world. My business is highly profitable, and I reinvest into new business opportunities, contribute financially to society, and are constantly adding value to the people around me.
What makes a good leader?
Great leaders are those that continually add value to others, they inspire people to take action, and lead others to success. Our leadership ability will always be the limiting factor to the success of our organisation. Great leaders have a high leadership lid, they inspire others to action, and their effectiveness in business and life is high. There are seven elements to a great leader:
- Character: your integrity and connection to people
- Ability: what are you capable of?
- Past successes: what is your track record?
- Experience: what challenges have you had in your past?
- Knowledge: are you a learner and do you know what you are doing?
- Relationships: are you surrounded with the right people? Do you value people?
- Intuition: do you lead with your ‘gut feel’
What should be done for small business?
There are two fundamental areas that small business requires and needs support on. The pure lack of access to funding for small business is a major issue. Given small business is such a critical part of our nation’s success, my personal feeling is that the Governments, State and Federal, need to take an active hand in providing finance for small business.
Business owners are generally experts in their area of tradecraft, however, are rarely knowledgeable in all areas of running a business. Business owners need to engage in training and education, on a regular and ongoing basis to stay at the top of their game.
How to achieve a balanced life?
When you are building a business there are sacrifices that must be made. This is no different to when you have family and kids, you have made a commitment to your family, and you need to commit time and energy to them.There are going to be times where you have to knuckle down, put in the long hours and make it all happen. The key to this is that you need to then allocate time to the important areas of your life. Balance is not something you can achieve in a day, week or month. It is a balance through managing priorities, commitments and ultimately deciding what is important to you.
What do small business owners tend to forget?
I often speak to business owners that are working incredibly hard in their business, crunching books and numbers after hours, implementing marketing, yet spend little to no time improving the experiences of their customers. I know sometimes we think, ‘business would be much easier without all those customers’. It might be easier, but cash flow would be a problem! We need to systemise the awesome customer experience and ensure we deliver it 100% of the time. We also sometimes forget that customers are the lifeblood of our business.
Cash flow is King
‘Cash is King’, we have all heard the adage, yet most business owners spend so little time ‘managing’ their cash flow. Successful business owners understand that irrespective of the size of the business, proactively managing your cash flow and ensuring you can meet all your commitments is critical. Furthermore, being able to manage days, weeks and months into the future is paramount.