Control your expenses
Many small business owners complain that they do not earn what they would like and focus their efforts on increasing their prices without realizing that many times those profits can be increased with adequate cost control without affecting the customers.
To have good expense control you have to have a lot of order in the purchasing and inventory processes. It is necessary to know the prices of all our products, and also to assign correctly the expenses related to the product, like freights, taxes, commissions, storage or handling.
These expenses are often inaccurate, and some products are overcharged while others are undercharged. This results in an incorrect sales pricing policy that will give us fictitious margins.
To solve this, there are software tools that make it easier for the entrepreneur to manage the purchase process, always considering previous reference prices, and the correct application of indirect costs to all products.
A system will make it easier for us to control inventories and determine the right quantities and times to order more product from the supplier. The benefit of doing it this way is immediately reflected in lower inventory costs, which you will be able to verify in the system’s reports.
Organizing the business in this way also allows the entrepreneur to identify the real profitability of each line of products or services, and this in turn ensures that he will focus his attention on increasing his profits, and eliminating losing products.
It is worth mentioning that we must maintain the traditional approach of negotiating good prices with suppliers and not spending on things that are not necessary for the business.
Keep your numbers in order
The company’s accounting is not only for tax purposes. It is the most important tool to know the performance of the business and for decision making, both operational and financial.
Many small businesses do their accounting externally and receive their accounting information untimely, so that it is not useful to correct problems because they never have it in a timely manner. On the other hand, having an accountant in-house can be very costly for some businesses, leaving entrepreneurs in a very difficult competitive environment.
Fortunately, there are business management systems that allow entrepreneurs to keep their numbers up to date and have accurate, real-time information to make better decisions. The problem is that most systems are expensive, so we must seek options that allow the small business to take control efficiently at an appropriate cost, so that the return on investment in the system is very fast.
An accounting system becomes the best ally of the entrepreneur because through its financial and operational reports allows you to know at all times their results and financial situation in a given period, so you can control your accounts receivable, the due dates of their invoices to customers and their payment commitments. This allows the businessman to plan his cash flows to protect his business from compromising situations.
Additionally, having an updated accounting, the entrepreneur can establish fiscal strategies in a timely manner minimizing his tax burden, allowing him to meet his commitments to the tax authorities in a timely manner.
Manage your time well
Many business owners become enslaved by the operation and stop enjoying life, their children, their homes, and the things they like to do because they have to keep an eye on the business. It’s true what the saying goes: “If you have a store, take care of it.” But this point should not be misunderstood to mean that “you can never again have free time.
The fact that you have free time also helps your business because you are more relaxed, less stressed, you can think more clearly and think much better. When you’re relaxed, you come up with good ideas and solutions to your problems.
Correct time management is fundamental for the entrepreneur, and to achieve it you must take into account the following:
- Learn to delegate operational tasks that are time consuming and add little value to the business. That is why it is important that you identify your employees who have the capacity to handle those daily responsibilities, whether they are operational or administrative. They will appreciate the confidence and opportunity to grow personally and professionally, and you will have the freedom to concentrate on more important things for the business.
- Automate processes: Having your business processes systematized will allow you to do them in a standardized and correct way always, and if you use a software system for this, you will free a lot of time from your daily agenda to pay attention to the most important things. In addition, you can be sure that your staff will do things the way they need to be done because they have the guidance and supervision that the system gives them.
- Focus on critical business activities, those that require information analysis for decision making, or those that involve greater responsibility. This is the boss’s job, that’s what you are there for. The rest can be done by your collaborators.
- Keep an agenda: This will allow you to get better organized and have clarity about the use of your time, which is very valuable. An organized agenda will also generate more satisfied customers because you will always be organized to attend them on time.
With your balanced schedule, and your mind focused on what is most important, you will be able to see your business grow and have time to enjoy the benefits it will produce.
Get trained.
Many entrepreneurs who have been running their businesses for many years think they know it all, so studying is a waste of time. Or, they consider that their business does not need to change because it has always worked well. This is a serious mistake because running a business, however small it may be, requires a lot of knowledge and analytical skills.
The current business environment is very complicated and entrepreneurs must have a broad vision complemented by multidisciplinary knowledge that allows them to decide on a better basis the direction that the business should take.
There are many options for you to train in business, but the most important thing is that you must understand that this is a continuous process that does not end with a course, whatever it may be.
Among the existing options there are business degrees, or courses at the bachelor or master level in universities. Another good option are the courses offered by specialized companies that can help you a lot in your growth as an entrepreneur.
You must decide in which areas it will be most profitable for you to train, but we recommend that you take into account training in sales and marketing, as these are the most important activities in any business.
An additional benefit of formal training is that in these courses you can meet other entrepreneurs and expand your network of relationships, which will generate new business opportunities, or establish strategic alliances with people who have the ability to grow your business.
Keeping up to date with knowledge and business trends will allow you to be aware of market changes, and will give you the basis to be able to innovate and keep your business’s value offer current in the face of competitors’ onslaughts or changes in customers’ preferences and needs.