Small business owners say that growth is their top priority.1 A growing business depends on a small business owner’s intense focus to meet sales, operations and financing demands.
Crises, diversions, and business practices that soak up an owner’s time can deprive a growing business of the owner’s unique skillset. Owners provide the vision and leadership that lead to growth. The owners of the fastest growing companies are 2x more likely to spend time thinking strategically about the business’s future.1 Keeping owners focused where they have the greatest growth impact means avoiding the diversions of unplanned crises and rethinking work to boost owner efficiency.
Small businesses, particularly those trying to expand, need to keep an owner’s attention on the activities that produce growth. Yet, business distress can sidetrack an owner and zap owner productivity. Cash crises are particularly crippling and can lead to slowed production and lost sales while adding the stress of raising cash and repairing damaged owner credit.1
According to SunTrust Research, business cash crises leave owners facing the prospect of using personal cash, forgoing owner salary or taking a personal loan.1 A few simple-to-implement actions can alleviate the pain of a cash shortfall.
- Start cash flow planning – Monitoring and forecasting cash is the top method small business owners cite to alleviate the stress of cash flow management.1 Create and regularly review a cash flow statement that tracks money coming in and going out. Use online or electronic banking to improve account reconciliation and provide easier access to up-to-the-minute cash levels.
- Increase profits with operating efficiencies – Controlling costs is the top priority for owners looking to increase profitability.1 The byproduct is increased cash flow. Greater cash flow results from reducing overhead (rent, utilities, travel, entertainment), fine tuning the full time and outsourced staff balance, and using technology that increases productivity.
- Control working capital levels –Actively managing receivables and payables means more control over cash inflows and outflows. Making electronic payments, offering alternate customer payment methods and managing vendor payment trade terms are all tactics that help reduce working capital needs.
- Build reserves –Turning extra cash flow into cash reserves creates a cushion for a business, eliminating the need for owners to use personal funds or other credit sources to provide liquidity when expected and unexpected cash needs arise.
Importance of Cash Reserves1
85% say they would use extra cash to build cash reserves
But, only 44% say they are doing well at building cash reserves
Focus owners where they make the biggest difference
Owners are naturally drawn into day-to-day selling. Since the #1 obstacle to growth is attracting more customers, and owners are the top source of sales for their companies,1 sales activities can easily capture an owner’s time.
Yet, the fastest growing company owners delegate more of their sales responsibilities and are much more likely to rely on performance-based or outside sales teams.1 Leaving sales to the sales team and only jumping in selectively frees owners for critical issues that they are uniquely qualified to handle, like company strategy and finding funding for growth.
To keep owners out of the sales “weeds”:
- Segment and target the most promising opportunities – Sell more efficiently by understanding your market and customers to accurately target products and services. Finding profitable niche markets and unmet needs can create a competitive advantage and increase sales.
- Build skills and lead the team to market and sell – Lack of marketing skills is the top challenge preventing owners from achieving their desired business goals.1 Hiring experienced sales and marketing staff will pay for itself as sales numbers increase, growth goals are met and leaders are able to take on more strategic business initiatives.
- Add digital and social capabilities – Business owners enhancing and adding to their digital and social media presence will see the greatest impact on growth and profitability.1 Embracing today’s digital trend expands a company’s reach, establishes positive brand awareness and creates a broader buying audience.