Small businesses seemingly face all the challenges in the world. From fighting fires operationally, to satisfying daunting customer demands using scant resources, small business owners must wear multiple hats and plan their time efficiently.
Business efficiency is challenging to achieve in a small business due to many reasons. Chief among these is a relative lack of resources. The average small business owner’s drive to do everything themselves can also be a roadblock to smooth functioning.
Here are 4 small business management tips that will save every owner time and money.
Handle Your Finances First
In a rush to develop smooth operations, many business owners neglect finances. The reasons are understandable. Financial tasks can seem daunting at first and are littered with jargon that we don’t encounter every day. For instance, figuring out your DSO and clearing your AR backlog won’t make much sense to anyone except business owners.
These 6 money management tips for small businesses will save you a ton of time and even make you money. While these tips cover the basics of financial management, you must adopt the right mindset towards financial tasks. Always hire out tasks that you’re uncomfortable executing, instead of trying to solve the issue yourself.
For instance, if you cannot understand how to project your working capital needs, ask for help. Many owners are used to solving problems by themselves. However, you’ll only waste your precious time reengineering the wheel by doing things this way. Instead, use your time efficiently by hiring someone with the expertise to solve your issues.
Another top tip is to embrace automation. Financial software packages are smart enough to classify and group your entries in the right areas, leaving you with very little to do beyond entering numbers. What’s more, you’ll learn the ins and outs of business accounting by adopting these software.
Your employees are your strongest resource. As a small business owner, the right employee can make or break your business. Typically, many owners seek to make the most cost-efficient hire. However, this is the wrong approach. Attitudes to work are changing, and you cannot afford to minimize your biggest resources.
For instance, if someone is well-qualified for the job and can potentially take on additional responsibility, it makes sense to pay this person more than the market average. Compared to another applicant who is reasonably qualified and cannot bear additional responsibilities, the former is a much better investment.
For far too long, business owners have viewed employees as a cost center. However, they’re an asset and deserve investment. Devote resources towards their professional development and help them achieve their career goals. They’ll reward you with loyalty (reduced turnover) and excellent work that will save you time.
Remember that money isn’t the only incentive people have to work. Other factors such as remote work, workplace support, and social responsibility also play important roles these days.
Invest in the Right Tools
Automation is a touchy subject these days. Given the rate at which software abilities are rising, many people are afraid of job displacement. The truth is that automation at the small business level increases both employee and business efficiency and augments job roles, instead of replacing them.
For instance, a small business will likely not be able to afford warehouse robots and self-organizing inventory software. They’ll likely use heavily scaled-down versions of these technologies and thereby provide more employment.
Many small business owners have a significant impact on their local communities. Providing employment is a primary means of increasing the overall well-being of the people living in an area. However, don’t assume that automation removes job opportunities at small businesses. Adopting these software increases job satisfaction, saves you time and money, and increases your profits. Finances, marketing functions, customer service, and sales benefit immensely from automation.
Always Negotiate Terms
One of the great things about running a business is that you are in complete charge of your financial destiny. Sure, market forces determine prices and supplier margins, but there’s always room to negotiate. If you’re in a B2B sector, you can even negotiate prices with your customers every quarter.
Some business owners view the task of negotiation negatively and believe their customers and suppliers will walk. However, pushing to improve your margins is good business practice, and your counterparties will appreciate the effort you’re making to improve your business.
Obviously, you don’t want to assume a hostile stance when negotiating. Frame it as a win-win situation and deliver value to your customers at all times. You’ll find them more than willing to bear increased prices. Pay your suppliers early and ask for early payment discounts. Reducing their credit cycle will help you increase your business margins.
Tough But Rewarding
Running a small business is a tough task but is an immensely rewarding one. From providing employment to guiding your financial fortune, small business owners seemingly can overcome all kinds of challenges and scale greater heights. These 4 tips will help you create an efficient business and deliver value at all times.