Global inflation is real. In these difficult times, planning a small or medium business is a real challenge.
For those with minimal capital and big dreams at hand, there is no other way but to face the situation head on. Entrepreneurship is about risk, after all.
But, there are several ways to minimize the risks involved. In this article, we will share six business tips that can help you make the right decisions and plan your small business properly and safely.
Let’s check them out.
- Validate your plan
Seeking validation is not the healthiest of habits. But when it comes to SMEs, validation takes on a different definition. This is the equivalent of risk assessment.
Once you have an idea and are ready to work on a promising business plan, be sure to reach the audience and gain validation. We’re not asking you to make a public announcement, asking anyone and everyone if the plan is good.
Instead, we ask you to strategically validate your business idea. Research the existing demand for your product idea. Identify the target market and predict growth potential.
It’s a good idea to present your target market with a question that indirectly helps validate your business plan. For example, if you plan to launch a content marketing tool for LinkedIn experts, you can launch a LinkedIn survey or poll by asking:
Unique post ideas generate better engagement. Want unique post ideas delivered to you?
Their answer will help you predict whether you have a viable plan or not.
- Distribute funds in a 2:1 ratio
As a small business owner, you need a quick win to keep your boat moving. You cannot invest in long-term strategies to reap the rewards of your efforts years later.
Therefore, we recommend adopting a ratio of 2:1 regarding the distribution of funds. Spend twice as much on product or service development than on marketing.
As you improve your product or service, you will retain existing buyers and convert them into long-term customers. And the improvement process will often include acquiring and implementing customer feedback.
This, in turn, will establish you as a customer value company. Your target audience is more likely to trust you and the quality of your product will also improve.
Also, if you are starting your business or starting out without capital, you might want to consider these five ways to acquire capital for your small business.
- Maximize your borrowing power
Borrowing is also a smart way to fund your business. But you can only borrow a large sum if you strengthen your borrowing power.
Basically, borrowing power refers to the amount of credit or loan you can acquire from a financial institution. It depends on your credit score, financial history, and current needs. And working out your borrowing power is an important part of growing your business.
As a small business, you also need to work continuously to increase your borrowing power. You can do this by:
- Setting up a commercial credit
- Work with vendors who can report your positive payment history
- Open a business current account
- Repay any unpaid professional or personal debt
- Using a business credit card for business purposes
If you practice them, you can take out large loans with confidence and get the financing you need. And that’s because when financial institutions look at your financial history, they find nothing but a positive reputation and credibility.
- Start your journey with a management tool
Managing a small business is a very difficult task. You won’t have a large, well-sorted team. You and your employees will often have to wear several hats and manage different areas.
In such a scenario, it is difficult to track completed tasks, to-do lists, and in-progress tasks. And poor management ultimately results in losses, weak or slow growth, and unhappy employees.
For this reason, we recommend that small and medium-sized businesses take a sharp approach to management. You can use free SaaS tools like Slack, Zoom, Asana, and Trello to manage your daily business and operations.
- Prioritize customer experience over competitor analysis
Keeping tabs on your competitors is just as important as listening to your customers’ feedback. But if it comes to choosing between the two, you should go for customer experience.
Why? Well, that’s because as an SME just starting out, you’re already focused on establishing, planning, and laying the foundations for your business.
By doing so, you can surely perform a competitive analysis and identify your competitor’s strengths and weaknesses. But it is not practical to compete and hope to win the customers of an established company.
What if you earn them, bring them to your business, only to lose them when you can’t deliver consistent quality?
It is therefore better to focus on retaining your existing customers and stabilizing the quality of the product/service you offer. In this process, there is a chance that you can outwit your competitors.
- Facilitate employee morale
As a young company, your employees are your assets. Their dedication and effort are your resources.
We recommend facilitating employee morale for rapid growth. You can do this by:
- Communicate often
- Appreciating every little effort
- Give uninterrupted breaks without work
- Equip them with the right tools
- Incorporate fun and profitable employee activities into routine
- employee profit sharing and stock plans
With these, they’ll feel motivated to perform at their best (and take your business to the next level)!